Keynes: The Ghost of Economics' Past

I am far from the first to note how much John Maynard Keynes is in the air today. Several months ago, the Financial Times featured him as its Man in the News; this morning NPR ran a story on various economists' views on Keynes and the stimulus package. And, in two op-eds today by Benn Steil and Niall Ferguson, the ostensible resurrection of Keynes' ideas (as well as the economics profession in general) comes under harsh criticism.

Anyone who has read Robert Skidelsky's masterful biography of Keynes should find all of this rather interesting. For one thing, what we today call "Keynesian" doesn't really date to the man himself but to the American and British fiscal policies of the 1960s and 1970s, which predictably distorted Keynes through the lens of contemporary political ideology.

Furthermore, Keynes wasn't the raging big-government-stimulating-collectivist we seem to imagine him to have been. Here, for example, is Skidelsky in The Road from Serfdom:

"Keynes explicitly set out to refute the doctrine that only collectivism is capable of guaranteeing full employment. . . . Despite occasional use of collectivist language, Keynes was never a collectivist in the sense in which I have used the term--someone who wanted to replace private choice by government choice. Keynes want to insert governments into the 'gaps' of a free economy--to do things individuals wanted done, but which, in their private transactions, they could not achieve."

In other words, provision of public goods. Skidelsky goes on to note the convergence at times between Keynes and Friedrich Hayek in their celebration of "individualistic capitalism." Here, however, is the most arresting passage (emphasis supplied):

"So [for Keynes] it is the government's task to maintain an environment conducive to optimistic expectations--one which encourages businessmen to do their job of creating wealth and jobs. How it is to do this is essentially a second-order question: it depends on the facts of the case. Nothing was more contrary to Keynes's intentions than that governments should run permanent budget deficits. Nor was it Keynes's aim to redistribute income, nationalize the economy, or direct investment or the location of industry. His aim was simply to ensure a level of aggregate demand sufficient to enable market-clearing real wages to be established without price inflation. His theory was deliberately designed to make the microeconomic interventions favoured by the planners, regulators and corporatists irrelevant."

Comments

[brian]

Yeah, so what? Those descriptions of Keynes sound like the modern day left to me. Only hardcore partisans think Democrats want socialism. Democrats have also been the ones who have been saying that we should not run long term deficits--at least for the past 30 years or so. Today's left certainly mirrors Keynes--the true Keynes.

[louis vuitton]

The comments seem to be talking all around the question but not addressing the heart of the entreprenurial debate. The issue should be: How to get state capital around the financial logjam and into the hands of the entrepreneur.