Saturday, June 20, 2009

John Maynard Keynes

Today it is John Maynard Keynes, his British contemporary, who is cited, debated and followed. Yet [Irving] Fisher laid the foundation for much of modern monetary economics; Keynes called Fisher the “great-grandparent” of his own theories on how monetary forces influenced the real economy. --The Economist, February 12, 2009, Out of Keynes's shadow: Today’s crisis has given new relevance to the ideas of another great economist of the Depression era

Keynes's theory inverted the relationship between savings and investment. Instead of the amount of savings determining the amount of investment, the amount of investment determined the amount of savings. It also inverted the relationship between consumption and savings. If the inducement to invest was determined at least partly by consumer demand, then the greater the propensity to consume rather than save, the greater the inducement to invest. Consuming, in short, was preferable to saving. --John B. Judis, A Man for All Seasons: The misunderstood John Maynard Keynes, The New Republic, February 4, 2009 (via Arts & Letters Daily)

If we're all going to be Keynesians now, there is no reason our games shouldn't reflect that. And if you think these new cards make the game more arbitrary and random than it was before, or that it's unfair to simply take from some players and give to others then you can appreciate how things really are in New Jersey. --Tom, Keynesian Monopoly! Radio Free NJ, January 5, 2009 (via Jonah Goldberg at The Corner)

The Bretton Woods system, set up with Keynes's help in 1944, was the international expression of liberal/social democratic political economy. It aimed to free foreign trade after the freeze of the 1930s, by providing an environment that reduced incentives for economic nationalism. At its heart was a system of fixed exchange rates, subject to agreed adjustment, to avoid competitive currency depreciation. --Robert Skidelsky, Where Do We Go from Here? Prospect, January 2009

For all its eloquence and impressive textual authority, for all its generous willingness to take seriously critics of Keynes whom Keynesians laughed at until little more than a decade ago, Skidelsky’s attempted rescue of Keynes’s economics founders on the single greatest practical deficiency of Keynesian policy: its blind faith in the wisdom, justice, and competence of civil servants. --David Frum, The genius of capitalism, The New Criterion, April 1994, review of John Maynard Keynes: The Economist as Savior, 1920–1937 (1992), by Robert Skidelsky


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