John Maynard Keynes

Happy Birthday, Mr. Keynes!

Today, June the 5th, in 1883, John Maynard Keynes is born in Sussex. He grows to be a professorial man with a round face, thin hair, a mouth as big as Carly Simon's, eclectic interests, and a towering reputation as a political economist. He develops a theory of macroeconomics that makes him a leading intellectual figure of the twentieth century. It calls for deficit spending by government during recessions, offset by surpluses during boom times, to smooth out the upsies and downsies of capitalist economies.

Keynes dies in 1946 before his ideas gain general acceptance, but just before. His grows to be the dominant western position following WWII. To be frank, that is because it provides respectable cover for politicians who want to spend more than they have. They conveniently forget the second part of it and keep spending during the good years, too, which by the seventies discredits the entire scheme. Critics including Friedrich Hayek and Milton Friedman supplant Keynes as the brighter stars of political economics and philosophy. Their ideas are far less permissive and so do not gain popularity among the political classes.

Not everyone forgets his work, though. The institutionalist John Kenneth Galbraith never lets go of it. Neither does today's American economist cum partisan pundit Paul Krugman. In 2008, the Bush administration's last major act plunges back into Keynesianism in a big way with TARP. The Europeans follow suit. A few months later the newly sworn in Obama administration takes it a quantum level further with Porkulus. The results, universally disappointing and perhaps damaging, have quickly thrown Keynes's views back into disrepute, though Krugman and the ruling parties of the western world still talk them up once again for political reasons rather than economic ones, their arguments built on the fallacy of argumentum ad ignorantium.

The question of the effectiveness of Keynes's ideas remains unanswered. It may be they would work had government the discipline to pay off its debt when times are good to make up for its prodigality when they are not, but by now it is perfectly clear that is not going to happen. It may on the other hand be that the theory itself would fail even were it ever implemented. We do not know, and we never will. It never has been tried and by now the one conclusion we can reach is that it never will be.

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Comments 10 comments

katyzzz profile image

katyzzz 4 years ago from Sydney, Australia

Interesting and I thought many of his themes are still accepted, the so called experts now seem to get it wrong quite regularly, a good and timely reminder and a hub well done


Attikos profile image

Attikos 4 years ago from East Cackalacky Author

Most of those experts are working from hidden agendae. It's a shame you can't believe much of what you hear in public discourse, but there you are. Maybe it's always been so. Thanks for stopping by and commenting, Katy. Come again.


AlexDrinkH2O profile image

AlexDrinkH2O 4 years ago from Southern New England, USA

Outstanding hub - thank you.


Attikos profile image

Attikos 4 years ago from East Cackalacky Author

I enjoyed writing it, Alex. Thanks for your comment.


LandmarkWealth profile image

LandmarkWealth 4 years ago from Melville NY

The last paragraph sums up the failure of his theory. It has never really been tried. It is essentially impossible to apply because it requires a sense of altruism among those in charge of dispursing fiscal stimulus. However, I think Keynes often gets mischaracterized as a marxist. He was infact a brilliant man who had some interesting ideas that were simply impractical and unrealistic. Even Dr Milton Friedman, who was in great disagreement with Keynes, had great respect for him. Keynes was wrong, but not a political economist in the like of Krugman, who is simply embarrasing to the profession.


Attikos profile image

Attikos 4 years ago from East Cackalacky Author

I think Krugman left the Church of the Economy and converted to the faith of partisan politics long ago. Thanks for stopping in, LandmarkWealth. Come again.


Letitialicious profile image

Letitialicious 4 years ago from Paris via San Diego

Keynes is certainly at the center of international debate on the economy today!


Attikos profile image

Attikos 4 years ago from East Cackalacky Author

You'd think we'd have moved past that, wouldn't you? The pols keep raising that zombie, though. They get so much vote buying fuel out of it I suppose they can't resist.


wba108@yahoo.com profile image

wba108@yahoo.com 4 years ago from upstate, NY

I believe the popularity of Keynes can be attributed to false conclusions drawn from our experiences in ww2 and its aftermath. Because of America's great successes in ww2 we came to believe in the power of the government to solve almost any problem. In the aftermath of ww2 we enjoyed a long period of unprecedented economic growth which appeared to be the result of a jump start due to ww2 military production. Our economy in the late 1940's and 50's grew despite top tax rates close to 90% and high debts from ww2.

The problem here is that economists failed to realize that America's economic boom was largely do to the fact that America emerged as the sole remaining advanced industrial nation to supply goods to the world and not because of government deficit spending.


Attikos profile image

Attikos 4 years ago from East Cackalacky Author

I agree with you wholeheartedly, wb108. The way I've always put it is that after the conflagration of WWII, the US had the only intact advanced industrial machine on the planet. Global markets were wide open, starving for goods, and willing to pay any price to get them. That scenario transferred vast wealth to the United States very quickly, Washington with its residual extraordinary war powers was in a position to take control of it, and deficits created the illusions it needed to buy compliance from the States and the people. It had little more than that to do with stimulus spending. The federal government built its postwar culture of politics and power on that basis, and it is still running on that track. Many of today's problems stem from those conditions.

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