So I recently listened to an audiobook called “Struggle over the Keynesian Heritage.” It was the sequel to an earlier audiobook called “Keynes and the Keynesian Revolution,” which covered the life and ideas of John Maynard Keynes, the great British economist. Whether one agrees or disagrees with him, Keynes was the most influential economist of the twentieth century. “Struggle over the Keynesian Heritage” is about the debate over Keynes’ ideas and legacy, among groups that call themselves “Keynesians.”
This audiobook makes reference to the “Pure Neoclassical” school of economics, which defends the free-market tradition. This group makes few exceptions to their laissez-faire doctrine. Interestingly, the dominant strand of Keynesianism in post-World-War-II America has called itself the “Neoclassical Synthesis Keynesianism,” because they seek a middle ground between Pure Neoclassicism and Pure Keynesianism. This is complicated, as you might expect. But to sum it up, they believe that the free market is the best system in the long run (part of their Neoclassicism), but they believe that a fair amount of short-term government intervention is also needed during crises in the short run (part of their Keynesianism). They believe in interventionist monetary policies by central banks, and massive fiscal spending (often with big deficits) by legislatures. They did not have a very precise definition of what is “short run” and what is “long run,” but this distinction was nonetheless crucial for their philosophy. Some of the economics textbooks that I read in college were influenced by this brand of Keynesianism.
United States Federal Reserve headquarters
By contrast, the Post-Keynesians are much closer to the original ideas of Keynes himself. They believe that we need a considerable amount of government intervention all the time, not just in the “short run.” Keynes himself was a vocal critic of pursuing any kind of long-term benefits, proclaiming in an oft-cited passage that “in the long run, we are all dead.” For him, the short run was about the only important thing. Much irresponsibility has thus been done in his name, handing a poor economy to our children because “we won’t be around to suffer from its consequences” (to paraphrase what they might say). Their theories have problems that are rooted in the problematic ideas of Keynes himself, which advocated de facto socialism in lieu of capitalism. (Although I should note that they did not think of it as “socialism,” even though that’s basically what it was.)
John Maynard Keynes
This audiobook mainly covers the debate between these “Neoclassical Synthesis Keynesians” and the “Post-Keynesians,” the two major schools of Keynesian thought at the time that this audiobook was made. (It was made in 1989.) They make only passing references to the “Pure Neoclassicists” (whom they cover in another audiobook), and a relatively new group called the “Monetarists” (whom they cover in still another audiobook). Since this audiobook was first published in 1989, there have been some important developments in the evolution of “Keynesian” thought. For example, there are now two groups called the “New Keynesian” school and the “New Neoclassical Synthesis.” I freely admit that I am not very knowledgeable about these newer schools, so I will not try to cover them here. But suffice it to say that they do now exist, and that they have become important to our current debates.
John Maynard Keynes
One wishes that there could be an update to this audiobook that covers these recent developments, but this is still a fine audiobook even without such an update. This audiobook is an excellent introduction to the struggle over the Keynesian heritage, and I highly recommend it to anyone interested in the subject. (Incidentally, I agreed far more often with the Neoclassical folks than with the “Post-Keynesians,” or with any other group of “Pure Keynesians” – but that’s a subject for another post.)
See also:
Part of the audiobook series
Great Economic Thinkers
Struggle over the Keynesian Heritage
← Previous: The Austrian Case for the Free Market Process – Next: Monetarism and Supply Side Economics →
See also the audiobook series
Secrets of the Great Investors
Others to be covered later
See also the audiobook series
The Giants of Political Thought
Others to be covered later
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