Raising Keynes: An old economist finds new rock-star status
Keynesian economics is being hailed as key to ending the collapse.
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Recent rounds have been dominated by Mr. Friedman, the New York-born champion of free markets, but his opponent, an English university don with a penchant for the arts, has recently staged a dramatic comeback.
Few seem to be cheering anymore for unregulated capitalism. From the forthcoming Obama administration to the British government, “Keynesian” economics is now widely invoked as key to saving the world from a new great depression.
For admirers of Mr. Keynes, whose radical idea was that governments could avoid recessions by running deficits, the economist’s resurgence is a vindication after decades in the shadow of Friedman’s followers, including Ronald Reagan and Margaret Thatcher.
More than 60 years after Keynes’s death, his nephew smiles at the revival of his uncle’s ideas.
“He was never altogether out of fashion,” says Stephen Keynes, an octogenarian scion of one of Britain’s most famous families and, like his uncle, a direct descendant of Charles Darwin. “It’s just that certain people have associated his name with inflation, which was not what he advocated.”
This isn’t the first time an American president struggling to regain control of a spiraling economy has sought guidance from Keynes. In 1938, his ideas were embraced, albeit reluctantly, by Franklin D. Roosevelt, with the president announcing it was up to government to “create an economic upturn” by making “additions to the purchasing power of the nation.”
The notion was promoted by Keynes (pronounced “Cains”) in his 1936 magnum opus, “The General Theory of Employment, Interest, and Money,” which stated that government should borrow when the economy slows to keep people employed, because private sector investment won’t be enough. Another major legacy of Keynes was leading the British delegation to the Bretton Woods conference of 1944, where he played a key role in creating the World Bank and the International Monetary Fund.
In today’s Britain, as a debate rages over how to kick-start the faltering economy, few days pass without the economist’s name invoked in newspapers.
At Cambridge itself, a “Keynes Society” is now being established to promote new ideas from around the world on economics, the arts, science, and climate change. Nick Butler, chairman of the Cambridge Centre for Energy Studies, told fellow scholars that the society would not just pay tribute to Keynes, but “revive his sense of pragmatic creativity, which seems so lacking, and so necessary at the moment.”