On John Maynard Keynes: The Old Economist, Relevant Amid the Rubble
John Maynard Keynes (1883-1946) was, on the page and off, formidable. He was tall, an impeccable dresser in dark suits and homburgs, a product of Eton and Cambridge, a director of the Bank of England. His words could be withering. “When I argued with him,” the philosopher Bertrand Russell said, “I felt that I took my life in my hands.”
Keynes also had, paradoxically, the sensitive soul of a poet. He was a member of the Bloomsbury group and a favorite of Virginia Woolf’s. He collected modern art and rare manuscripts. He married a Russian ballerina. He was an early environmentalist, given to utterances that stick in the mind. “We are capable of shutting off the sun and the stars,” he warned in 1933, “because they do not pay a dividend.”
These things matter about Keynes because his economic ideas, relevant again amid the rubble of the global financial crisis, had a humane and moral dimension, one that Robert Skidelsky underlines in “Keynes: The Return of the Master.”
Mr. Skidelsky is the author of a magisterial three-volume biography of Keynes (the final volume was published in 2000) and is emeritus professor of political economy at the University of Warwick in England. He knows more about Keynes than anyone alive, but his new book is not a pocket-size distillation of his earlier biography. It’s an attempt to translate and update Keynes’s ideas for a sleek, turbulent era.
This is not an obviously simple task. Keynes’s most influential book, “The General Theory of Employment, Interest and Money,” (1936) published during the Great Depression, is famously impenetrable. But its central idea held sway for nearly 30 years after World War II: that markets are not self-correcting.
In “Keynes: Return of the Master,” Mr. Skidelsky surveys the vast body of Keynes’s work. But he boils the thinking down to a few essential points. Central among them is that market economies are fundamentally uncertain; large shocks like the recent meltdown are not anomalies but normal if unpredictable events. Government should intervene in a crisis — as the Obama administration has since the fall of Lehman Brothers last year — supplying a judicious but firm hand on the tiller.
Mr. Skidelsky is righteous in his thunder about how Keynes’s ideas have been spurned in recent decades. He scolds the free-market ethos of the Reagan and Thatcher eras as well as the thinking of anti-Keynesian New Classical economists. He does not entirely blame the usual suspects (banks, hedge funds, credit-rating agencies, the Fed) for the current crisis. He indicts laissez-faire philosophy.
“The root cause of the present crisis lies in the intellectual failure of economics,” Mr. Skidelsky writes. “It was the wrong ideas of economists which legitimized the deregulation of finance, and it was the deregulation of finance which led to the credit explosion which collapsed into the credit crunch. It is hard to convey the harm done by the recent dominant school of New Classical economics. Rarely in history can such powerful minds have devoted themselves to such strange ideas.”...
Read entire article at NYT
Keynes also had, paradoxically, the sensitive soul of a poet. He was a member of the Bloomsbury group and a favorite of Virginia Woolf’s. He collected modern art and rare manuscripts. He married a Russian ballerina. He was an early environmentalist, given to utterances that stick in the mind. “We are capable of shutting off the sun and the stars,” he warned in 1933, “because they do not pay a dividend.”
These things matter about Keynes because his economic ideas, relevant again amid the rubble of the global financial crisis, had a humane and moral dimension, one that Robert Skidelsky underlines in “Keynes: The Return of the Master.”
Mr. Skidelsky is the author of a magisterial three-volume biography of Keynes (the final volume was published in 2000) and is emeritus professor of political economy at the University of Warwick in England. He knows more about Keynes than anyone alive, but his new book is not a pocket-size distillation of his earlier biography. It’s an attempt to translate and update Keynes’s ideas for a sleek, turbulent era.
This is not an obviously simple task. Keynes’s most influential book, “The General Theory of Employment, Interest and Money,” (1936) published during the Great Depression, is famously impenetrable. But its central idea held sway for nearly 30 years after World War II: that markets are not self-correcting.
In “Keynes: Return of the Master,” Mr. Skidelsky surveys the vast body of Keynes’s work. But he boils the thinking down to a few essential points. Central among them is that market economies are fundamentally uncertain; large shocks like the recent meltdown are not anomalies but normal if unpredictable events. Government should intervene in a crisis — as the Obama administration has since the fall of Lehman Brothers last year — supplying a judicious but firm hand on the tiller.
Mr. Skidelsky is righteous in his thunder about how Keynes’s ideas have been spurned in recent decades. He scolds the free-market ethos of the Reagan and Thatcher eras as well as the thinking of anti-Keynesian New Classical economists. He does not entirely blame the usual suspects (banks, hedge funds, credit-rating agencies, the Fed) for the current crisis. He indicts laissez-faire philosophy.
“The root cause of the present crisis lies in the intellectual failure of economics,” Mr. Skidelsky writes. “It was the wrong ideas of economists which legitimized the deregulation of finance, and it was the deregulation of finance which led to the credit explosion which collapsed into the credit crunch. It is hard to convey the harm done by the recent dominant school of New Classical economics. Rarely in history can such powerful minds have devoted themselves to such strange ideas.”...