Keynes

Some friends and colleagues ask if I have not been guilty of trying to dethrone Keynes in favour of Friedman.

In the long run we are all dead, as John Maynard Keynes memorably quipped, but humanity could at least get something out of it.

Some 65 years later, the governor of the Chinese central bank issued a public statement lamenting the fact that Keynes had not got his way.

Leaders meet this week in London in a world that would not seem unfamiliar to Keynes.

It was Keynes who noted that "even the most practical man of affairs is usually in the thrall of the ideas of some long-dead economist" .

Macroeconomics began with Keynes, but the word did not appear in the journals until 1945, in an article by Jacob Marschak.

What Keynes pointed out was that this picture is incomplete if you allow for the possibility that the economy is not at full employment.

But there was no consensus in the autumn of 1940 and agreement took Keynes four difficult years of negotiation.

Second, Keynes pretty much had the policy implications of the General Theory down long before he actually worked out the detailed analysis.

Keynes called them animal spirits, and he thought they were especially important in determining people's willingness to take risks.

Fractional reserves expand the money supply, which, until the age of Keynes and Fisher, was called inflation.

How much money is enough? In 1930, Keynes predicted that by 2030, we'd be working a 15-hour week.

Even John Maynard Keynes, the arch-slayer of the last remnants of commodity money, was an adamant supporter of fixed exchange rates.

economist John Maynard Keynes was one of its most vocal critics, arguing that it would not be effective in achieving its goals.

Keynes pointed this out in his foreword to the German translation of the General Theory, published in Germany during the Nazi period.

Schumpeter rivalled Keynes in range of experience and subtlety of thought, and surpassed him in breadth of scholarship.

In contrast to what Keynes wrote, Krugman allows for a situation where the public is indifferent between debt and cash.

To the great economist John Maynard Keynes, it was a "barbarous relic" of a primeval economic past.

On the surface, Keynes's belief that an individual necessarily contributes to inefficiency by stashing money under his mattress makes sense.

We were looking for this country park but took the wrong turning and landed up in Milton Keynes.

Keynes's popular achievement, Schumpeter had observed, was to project "his own personal view" through "an apparently general analysis" .

As Keynes remarked, it is of benefit at a time of unemployment to spend money on "digging holes in the ground" .

After dining with a group of Keynesian economists in Washington, in 1944, Keynes commented: "I was the only non-Keynesian there. "

At the end of the war, Keynes joined the British peace delegation at Versailles in France.

Now, also like Keynes, Prebisch may be due for a comeback, at least in Latin America.

As John Maynard Keynes observed, it is usually better to be conventionally wrong than unconventionally right.

Keynes saw that market efficiency, in a practitioner's sense, might be a force for economic instability.

Keynes did not, despite what you may have heard, want the government to run the economy.

NARRATOR: Governments, said Keynes, should spend against the wind.

The theoretical basis for much of this was laid down by the great Cambridge economist John Maynard Keynes.

At least in rich countries, that future is likely to be realised, as Keynes predicted, by about 2030.

One does not have to commit oneself to Keynes's long-term pessimism to see how it applies in a slump.

John Maynard Keynes, who never tried to conceal that he knew more than most people, also knew the limits to his knowledge.

His emphasis was on investment as the motor of the economy; but influential US Keynesians airily dismissed this as a peculiarity of Keynes.

So Keynes' animal spirits are returning and, with that in mind, here are seven predictions for the business world in 2011.

Keynes was equally surprised and forced to put his two favorite Impressionist paintings up for sale.

There was instead a historical Keynes who came up with lots of bright ideas as he confronted different problems.

So Keynes had to produce an answer to the Great Depression, or democracy would be swamped by totalitarianism.

Harvard University became an intellectual bridgehead for Keynes in America. John Kenneth Galbraith was one of Keynes's leading apostles.

John Maynard Keynes extolled Kreuger as "perhaps the greatest constructive business intelligence of his age. "

Particularly influential were the ideas of John Maynard Keynes, who formulated theories to try to explain the Great Depression.

Bennis says, "Just as every economist, knowingly or not, pays his dues to Keynes, we are all, one way or another, disciples of McGregor. "

Yet the revival of John Maynard Keynes should not lead us to ignore Milton Friedman: where will all that money go?

This was one of Keynes's insights.

John Maynard Keynes' " The General Theory of Employment, Interest and Money" wasn't published until that year.

Keynes disliked the "fetish of liquidity" but accepted that it was necessary to persuade investors to take risks.

NARRATOR: Keynes did not have long to live. Ill and overworked, his health gave way, but his reputation and influence outlived him.

Keynes's view was that we need different economic models at different times.

This liquidity-preference, as Keynes called it, governed the price of financial securities and hence the rate of interest.

The markets have highlighted a fundamental shortcoming in Keynes's ideas: He assumed that governments would always be able to borrow.

And one of these years we might actually end up taking Keynes's advice, which is every bit as valid now as it was 75 years ago.

Yet China had already begun to emphasize exporting. The reason may lie in John Maynard Keynes's analysis of mercantilism.

John Maynard Keynes once proposed a global currency, the Bancor, to be placed at the centre of the international monetary system.

He is hearing Keynes' voice in the air, and is distilling his frenzy from an academic Cambridge scribbler from a few decades past.

Krugman insists that Hayek is worse than he thought and that Keynes was better than he imagined.

Back in Milton Keynes the guys are pushing like hell and I think they enjoy this moment as much as last week.

Copies of Keynes are dusted off , the Fed lowers interest rates , the president and Congress cut taxes and hike spending .

By emphasizing incentives to produce, rather than incentives to consume , the early Keynes was evoking classical, supply- side analytics .

Now that a backlash against expansive government is taking hold , one of Keynes's old antagonists is getting his turn in the sun .

IN THE final chapter of his "General Theory" , Keynes foresaw "a somewhat comprehensive socialisation of investment" .

Keynes foresaw the inevitability of such interference from the board clearly as he shaped those institutions at Bretton Woods in 1944.

Human progress, as Keynes recognised, has always been underpinned by organisations.

JOHN MAYNARD KEYNES (Economist): There's a new danger of a serious rise of the cost of living.

Keynes was no where near the economist Fisher was.

Indeed, Keynes himself put forth his idea in a book called The General Theory of Employment, Interest, and Money.

Since Friedman spent much of his intellectual energy attacking the legacy of Keynes, it is natural to consider them opposites.

He was also Student of the Year for A-Level Graphic Design at Milton Keynes College, UK.

To Keynes, the implication was that a rich economy would have too much saving and not enough consumption.

While Keynes set the direction of Britain's wartime finance, Schumpeter was under observation by inept agents of the FBI.

The markets have frightened all but the US out of a post-crash flirtation with Keynes .

To paraphrase John Maynard Keynes, Greece's insurmountable debt is no longer Greece's problem.

It really is traced to Keynes' great book The General Theory, which in 1936 provided a new way for us to think about booms and recessions.

Keynes replied that if this were true it would apply to any new act of private spending.

John Maynard Keynes himself gently and wittily reproached the president for unnecessarily antagonising business.

But he does give a lucid and straightforward account of Friedman's challenge to Keynesian economics.

Second, Pigou and Keynes (as well as the other signatories) caution against both private sector and public sector austerity.

Part of the genius of John Maynard Keynes was his explanation of how economies could be caught in low growth traps.

For Keynes, the gold standard was not the self-regulating system that its advocates claimed it was.

John Maynard Keynes, the great economist, had a comparable insight about our 'uneven' world.

One of John Maynard Keynes's biggest contributions to economic theory was his "paradox of thrift. "

Ironically, John Maynard Keynes might not be a Keynesian if he were alive today.

Keynes, not coincidentally, had nothing to say about the proper components of fiscal stimulus.

and that the book had been refuted by Milton Friedman, though he admired Keynes's earlier work on monetarism.

Friedman's counterattack against Keynes began with the doctrine known as monetarism.

Keynes once wrote that the inevitable never happens, it is always the unexpected.

The economist John Maynard Keynes convincingly argued 70 years ago that thrift was no virtue during a recession.

This , Keynes and Hicks argued, was largely because hedges shifted their price risk onto speculators in return for a risk premium .

That's when British economist John Maynard Keynes articulated all the ways in which government could and should help bail out an economy.

Their third and greatest disagreement with Keynes was over the benefits of government spending financed by deficits. They demurred.

Keynes's vision of a cultural and intellectual paradise may have been naive.

The revival of Keynes has much to contribute both to economic analysis and to policy, but the net has to be cast much wider.

Today the long-dead economist is Keynes, and it is professors of economics, not practical men, who are in thrall to his ideas.

Significantly, the governor referred to Keynes's "far-sighted" plan of 1941.

Keynes thought that capitalism needed to be in fetters; Friedman thought it would behave if left alone.

The key to this insight was the role Keynes gave to people's psychological motivations.

Keynes started with a boomy theory but abandoned it, believing it predicted implausibly wild swings in the economy.

Until the early 20th century, the consumption demands theory has been generally recognized by the western economists through Keynes.

Keynes's sunny optimism was most striking in the midst of one of the darkest chapters of modern economic history.

For some, Keynes is the hero who rescued the West from the Great Depression, for others the villain to blame for the current mess.

NARRATOR: But in Washington, Keynes was still king of the hill. Nineteen years after he died, his face was on the cover of Time magazine.

John Maynard Keynes had made a similar proposal a few years before, calling his asset "Bancor" .

It is one Keynes himself had in mind when he put forward his ideas for the postwar monetary system at the Bretton Woods conference in 1944.

PAUL KRUGMAN: Keynes told us that in the long run it is ideas, not vested interests, which are dangerous for good or evil.

"The war has disclosed the possibility of consumption to all and the vanity of abstinence to many, " observed John Maynard Keynes in 1920.

It's important to understand that Keynes did much more than make bold assertions.

Thus Keynes knew from the experience of his in-laws the horrors of living in the worst of socialist economies.

Policymakers have responded to successive economic downturns in essentially the same Keynesian way since the 1950s.

Meanwhile, many macroeconomists completely rejected Keynes's framework for understanding economic slumps.

Keynes, representing Britain, was obsessed with the dangers of asymmetric adjustment between surplus and deficit countries.

Mr Krugman and others advocate a bold fiscal expansion, borrowing their logic from Keynes and his contemporary, Richard Kahn.

John Maynard Keynes had something similar in mind when he proposed an International Clearing Union.

Perhaps the worst part of these policies is that they are inconceivable without a leviathan state, exactly as Keynes said.

John Maynard Keynes, the great 20th-century economist, would have appreciated the apparent absurdity in these mixed messages.

In so doing, Geithner was playing a role made famous in the 1940s by the British economist John Maynard Keynes.

Admitting that Keynes was largely right , after all, would be too humiliating a comedown .

John Maynard Keynes famously likened the processes of stock exchanges to a newspaper beauty contest.

By combination of uncertainty with information completeness, Keynes laid the basis for the modern uncertainty theory.

In fact, Gesell's views received the stamp of approval of the renowned economist John Maynard Keynes in his General Theory.

Alfred Marshall, the man most responsible for Keynes's career choice, was also the one most responsible for the new way of thinking.

But we need to be reminded of the dictum of Keynes that "money will not manage itself" .

Both men were the product of vibrant intellectual communities: Keynes in Cambridge and Bloomsbury, Schumpeter in Vienna.

What Keynes called "animal spirits" are fundamental forces driving macroeconomic fluctuations.

Mr King once aspired to making central banking boring; John Maynard Keynes hoped economists might become humble technicians, like dentists.

Like all prophets, Keynes offered ambiguous lessons to his followers.

Current practice is to introduce notions of "animal spirits" , as John Maynard Keynes put it, through "add factors" .

And it had potent ideas from the likes of Gramsci and Marx and Keynes.

Keynes's ideas trickled down from Harvard to Washington, turning the federal government's conventional economic policies upside down.

Keynes in the above quotation was writing at the onset of the Great Depression.

The theory of stimulus is Keynes's, is (in my opinion) sound, and is as follows.

Charlie Munger likes reading, from genetics, to Keynes's academic articles, to architecture, and then to the philosophy and biography.

On what, exactly, did Keynes's faith in the future rest, apart from his upbeat temperament and can-do British spirit?

Why, then, did Keynes give his name to an influential school of economics, while Schumpeter, though still admired, is little read?

Keynes would trade from bed; Schumpeter spent a decade paying off debts incurred in the collapse of central European financial institutions.

The shorter-term challenge is to sustain aggregate demand, as Keynes would have recommended.

John Maynard Keynes's "beauty contest" analogy is representative of this attitude.

And by acting on that anti-Keynesian belief, they ended up proving Keynes right all over again.

In 1933, in the depths of the great Depression, the economist John Maynard Keynes wrote an open letter to President Franklin Roosevelt.

Keynes was basically right, but he should have added that it helps when one power can negotiate with one other power.

I don't know that Keynes was ever right that government spending could jolt a country out of a liquidity trap.

There never was a timeless "Keynes" whose every utterance had prophetic force.

They failed Keynes's test that it is better to be roughly right than exactly wrong.

Amazon. co. uk will be providing the service from its fulfillment centre in Marston Gate near Milton Keynes.

Equally unconvincing is the speculationabout what John Maynard Keynes would be saying were he alive.

Keynes would surely recognise the value of this kind of government intervention in the economy.

Why was Keynes's diagnosis of the Great Depression as a "colossal muddle" so compelling at first?

Keynes published a book to attack the war reparations imposed on Germany.

When it came to practical issues of economic policy, Keynes preferred to appeal to common sense rather than abstruse economic theory.

This programme completely ignores Keynes' dictum that states must face crises with counter-measures to support demand.

It is tempting to remind the chancellor of Keynes' maxim that we are all dead in the long run.

It may have looked like midnight but Keynes knew that morning would come again.

Keynes identified my problem: "The difficulty lies not in the new ideas but in escaping from the old ones. "

It does not appear to have disconcerted Keynes.

Adam Smith has made way for John Maynard Keynes as fiscal policy has been rehabilitated as a tool of economic management.

It has created what Keynes called irreducible uncertainty.

As Keynes was very clear about, the whole point of fiscal stimulus is to mobilize monetary policy and inject liquidity into the economy.

But Keynes's mathematical innovations and structural analyses were what fascinated me, not his ideas on economic policy.

The banks are safer and the car industry healthier, but the ghost of Keynes has failed to work his magic.

NARRATOR: Now teaching at the London School of Economics, Hayek feared that Keynes's brave new world was a big step in the wrong direction.

Keynes did so, but typically turned a challenge into an opportunity, proposing an international currency union.

Keynes "proved" that markets had no automatic tendency to full employment.

Citing Keynes gives us special licence to talk economics without using any.

During the 1930s, Keynes and his disciples argued that the economy could be boosted if the government borrowed money and spent it.

They have drawn on the ideas and research of Keynes from the 1930s, of Friedman and Schwartz in the 1960s, and of many others.

JOHN MAYNARD KEYNES: If expenditure on armaments really does cure unemployment, a grand experiment has begun.

In the past year, the spirits of Keynes and Hayek have done battle for the minds of China's policymakers.

Keynes was, Schumpeter recognises, a natural leader who gave others confidence and inspiration.

Keynes's essay explored something his modern disciples often ignore, namely what would happen when "the economic problem" was solved.

He was a gifted communicator, like manyprominent economists from Keynes to Paul Krugman.

That makes adjustment by deficit countries alone hugely undesirable, as Keynes would surely have argued.

Keynes believed that financial markets arrived in a pretty crazy fashion.

And that's why, ultimately, Keynes was rejected by the profession.

Joseph Schumpeter and John Maynard Keynes were two of the most admired economists of their time.

Most people would have agreed with Keynes when he wrote this to Hayek.

I fear that Dr. Krugman is one of those "practical men of affairs" who is the slave of a defunct economist named John Maynard Keynes.

ROBERT SKIDELSKY: Keynes's solution to unemployment was for the government to spend the money to restore and maintain full employment.

Economic downturns, Mr. Keynes and Mr. Samuelson taught us, occur when the aggregate demand for goods and services is insufficient.

The ghost of John Maynard Keynes, the father of macroeconomics, has returned to haunt us.

As I have said many times before, the great debate is still Keynes versus Hayek.

Gresham as opposed to Keynes may become the applicable economist of this new day.

It goes to show that John Maynard Keynes really had no idea what he was reading.

True, the New Deal meant public works programmes that Keynes had long advocated in response to the slump in Britain.

He moved to Harvard immediately on graduation in 1936, his arrival coinciding with the momentous publication of Keynes' General Theory.

Keynes's famous remark "In the long run we are all dead" is more widely quoted than understood.

In Keynes's day, governments permitted the global banking system to rip apart after the failure of Creditanstalt in Austria.

Seen in this light, the most recent stimulus programs completely satisfied Keynes' requirements.

Keynes had earlier in his career written prophetically about the potentially disastrous effects of inflation.

Keynes's liquidity trap represents a process whereby the public prefers cash to bonds.

But it won't be enough for government to become the buyer of last resort -- in Keynes's words, to prime the pump.

But our response has not been what Keynes expected.

But when nature fails us we console ourselves with Scripture, not science, and when markets fail us we turn to Keynes.

This is the same claim made by Keynes, but Krugman allows for the scenario where the Federal Reserve drives interest rates down to zero.

Long-time slaves to rational expectations and efficient market theories have gone back to basics and rediscovered Keynes.

If Keynes thinks the answer lies in regulation, the Mahabharata seeks to 'even' out the world through dharma.

This is an irony that Keynes would have appreciated, according to his biographer, Robert Skidelsky.

Keynes's theory suggests that in depressed economic conditions interest rates bottom out at some low-but-positive level.

What would Keynes say if he were, say, to appear on CNBC tomorrow?

The books will be printed using Amazon's proprietary print-on-demand technology at its Marston Gate site in Milton Keynes.

Keynes's academic life was in Cambridge, England; Schumpeter emigrated to Cambridge, Massachusetts, in 1932.

keynes argued that governments , in extremis , could boost demand by digging holes.

In time , purchasing , production and loans perk up , and Keynes is placed back on the shelf .

John Maynard Keynes, J. K. Galbraith and Milton Friedman all used it as a testing-ground for their ideas.

Keynes's work essentially changed the way economists view the functioning of the economy.

Yet the problem would have been familiar to John Maynard Keynes.

Keynes was writing about an absolute "fall in prices relative to costs, " during deflation.

However, Keynes could not secure American support for "creditor adjustment" .

Developed countries have acted much faster than in Keynes' day to boost demand with stimulus packages.

Keynes's argument is that by saving part of an income, a saver necessarily takes away from the income of another.

They should take as their motto Keynes's dictum that "economics is a moral and not a natural science" .

Keynes didn't believe in a self-correcting mechanism or in the efficacy of monetary policy in a depression.

That's crazy, I hear you say. To paraphrase Keynes, the markets can stay crazy longer than you can stay solvent.

But the world is no longer as Keynes described it.

According to Krugman , we have fallen into the " liquidity trap" as described by economist John Maynard Keynes .

The dilemma is summed up by Keynes's adage: "If I owe you a pound, I have a problem; but if I owe you a million, the problem is yours. "

The economists quoted most often are John Maynard Keynes and Hyman Minsky, both of whom are dead.

John Maynard Keynes, who died in 1946, and Milton Friedman, who died last week, were the most influential economists of the 20th century.

The school will reopen on Tuesday, on the advice of the Health Protection Agency, a spokesman for Milton Keynes Council said.

As Keynes wisely observed: "The inevitable never happens. It is the unexpected always. "

" " Krugman's policy seems geared to limit comments to "Yay Dr. K! " "Way to go! " "Keynes was right! " etc.

John Maynard Keynes argued just this when negotiating the post-second world war order.

The neoclassical aggregate production function and the portfolio approach are based on the marginal analysis method that Keynes used.

Mr. Obama and Keynes both assert that we're failing to make use of our economic capacity.

While the Democrats have genuflected to Keynes, the Republicans' supply-side theories originated in the tax-cutting of Calvin Coolidge.

On the positive side, we have the experience of the 1930s and the prescriptions of John Maynard Keynes to draw on.

As Keynes observed, acting alone results in self-fulfilling misery.

The global monetary regime would continue without the automatic mechanisms proposed by Keynes in 1944.

We learnt in class economics mostly Keynes economics, called the mainstream economics, textbook economics.

After all, Keynes talked about the "euthanasia of the rentier" .

Keynes and the Keynesians, Friedman and the Chicago School . . . what now?

When Keynes gave his last speech at the Bretton Woods conference, the world was still at war.

The abnormalities in the market would have confused even Mr Keynes.

Mr Zhou praised John Maynard Keynes's proposal in the 1940s for an international currency, the "Bancor" , based on commodities.

What never changed during the Depression and the Second World War was Keynes's positive mind-set.

What John Keynes is to economic, Drucker is to management.

Keynes's middle way would avoid the unemployment and the panics and manias of capitalism.

The trouble is that, as Keynes put it: "In the long run, we're all dead. "

Though Keynes hardly anticipated such repeated use of macro instruments, these policies have worked.

Here, John Keynes criticized Mises's and Hayek's theory that an extension of bank credit will lead to malinvestment.

John Maynard Keynes once remarked that statesmen, for all their surface practicality, were generally slaves to some defunct economist.

And why did economics, circa 1975, divide into opposing camps over the value of Keynes's views?

JOHN MAYNARD KEYNES: What we want is not no planning, or even less planning. We almost certainly want more.

Keynes developed the theory of liquidity preference in order to explain what factors determine the economy's interest rate.

In the economic sphere they can look back to Keynes for intellectual underpinning of the new fiscal realism forced upon them.

There are, however, real differences between what Keynes wrote and what Krugman now advocates.

The reason may lie in John Maynard Keynes's analysis of mercantilism .

Familiar, too, is an observation made by Maynard Keynes in 1931.

Keynes was right, but many of his followers weren't.

Economics is a "moral science, " Keynes wrote.

According to Keynes, the root cause of economic downturns is insufficient aggregate demand.

If we replace Keynes's "quarterly" and "monthly" with "daily" and "minute-by-minute, " then we have today's world.

What is fascinating is that it is an almost exact rerun of the debate between Keynes and the British Treasury in 1929-30.