Monday, April 30, 2012


Economics can be awfully boring and I admit it was a struggle to get through "Keynes, the Return of The Master." I wanted to understand his message a little better and perhaps succeeded. You may not have heard of Keynes as in some circles he is very much out of favour. But after the Great Depression his ideas were heralded as the solutions to handle future depressions.

He is dismissed by conservative thinkers who now seem to have the bigger stage. Keynes is criticized as the guy who wants to increase spending during a depression or recession even to the point of a deficit. Those who think that is terrible (and some of them seem to be in control) say that it is far better to cut expenses. They overlook that his theory includes the idea that governments should run surpluses when times are good and then spend when it is needed for the very slow times that otherwise result in unemployment. In fact he thinks that running a surplus keeps growth from getting out of control when it could precipitate a crisis.

I discovered that underlying his mathematical and psychological thinking is a different kind of philosophy than one hears much of these days. The purpose of economics is not to make finances more efficient. Keynes feels that the only purpose is so that people could live "wisely, agreeably and well." He didn't restrict that to the rich, but felt income inequality was part of the problem. One of his most famous quotes is " the long run we are all dead."

As ordinary citizens we hear a lot about how important it is to protect the job creators, but in truth we are all job creators. Meeting our needs and wants is what gives someone else a purpose (and an income). We in turn use our talents and energies to meet other people's needs and wants. Governments are not the problem as was famously said by Ronald Reagan, but they can facilitate the solutions.

The author recounts history noting that governments swing from conservative to liberal and back to conservative. The problem is that society goes too far in one direction creating a crisis that causes a swing in the opposite direction. One of the problems comes from a political context. Rich people are at bottom interested in protecting and expanding their wealth and power. A philosophy that justifies what they want to do to benefit themselves is just another tool. With their wealth comes power that can be leveraged to attain their goals.

The author, Robert Skidelsky has written a lot of books on economics including a much more substantial book on John Maynard Keynes. This one is struggle enough, but it is fairly current covering events up to 2009. He recognizes that Keynes had his limitation, lived in a different era, but that his wisdom still shines and should be heeded.

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