But whether Keynes’s ideas were ever as simple or consistent as some modern-day Keynesian economists suggest is a matter of great contention. The Economist noted as long ago as the 1960s that the ideas of Keynes the man were diverging from contemporary Keynesian economics. While Keynes emphasised austerity in the good times as much as stimulus in the bad, many Keynesians considered stimulus a “one-way road” in the 1960s and 1970s. As Keynes himself wrote in 1937: “The boom, not the slump, is the right time for austerity at the Treasury.” Even during his lifetime he was concerned that some people were accepting the conclusions of the General Theory too uncritically. In 1940, A.C. Pigou, one of the examiners of the Economics Tripos at Cambridge University that year, wrote to Keynes to complain that both staff and students were taking much of his work too literally: The chief bad thing we found was that a very large number of people had been stuffed like sausages with bits of your stuff in such a way that (1) they were quite incapable of applying their own intelligence to it, and (2) they perpetually dragged it in regardless of its relevance to the question… the parrot-like treatment of your stuff is due to the lectures and supervision of the beautiful Mrs [Joan] R[obinson]—a magpie breeding innumerable parrots. To the modern reader, the General Theory can appear very much a book of its time. It was written in a world facing very different problems from those of today. Keynes developed the theoretical ideas in his work to justify running a budget deficit of just 3% of GDP during recessions in a Britain where the state only accounted for around 25% of the economy. Today’s situation seems a world away in comparison. Peacetime deficits reached 13% of GDP in America in 2009, and in Denmark, Belgium and France, taxation approaches nearly 50% of GDP.
Posted on: Sun, 01 Dec 2013 14:29:24 +0000
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