Keynes’ masterpiece at 90 |
THIS month marks the 90th anniversary of the publication of the General Theory of Employment, Interest and Money (1936) by John Maynard Keynes, a treatise that still has a tremendous bearing on intellectual discourse and economic policymaking, and profound impact on the theory and practice of economics. It’s instructive to revisit its legacy and the way it shaped economic discourse. His contributions cover a wide swathe; in 1930, he wrote the two-volume Treatise on Money, after penning Monetary Reform (1923). As a public intellectual, he came to prominence in the aftermath of World War I through his Economic Consequences of Peace (1919), prophesising that the proposals at Versailles would lead to another major war (World War II).
Before delving into the main ideas of General Theory, one must stress that what’s known as Keynesian economics is entirely the interpretation of his written work by other economists. The famous IS-LM framework, for example, was the interpretation of his ideas by J. Hicks.
A number of economists (for example, Axel Leijonhufvud), accordingly, distinguish between ‘Keynesian economics’ and the ‘economics of Keynes’. A well-known case in point is his 1933 letter to US president Franklin Roosevelt in the context of his New Deal that considerably expanded the public sector’s economic footprint. Almost every economist today would label such expansion as ‘Keynesian’. However, in his letter, Keynes warned against certain expansionary policies, cautioning “whether some of the advice you get is not crack-brained or queer”.
Moving to the contents of the book, it’s important to first emphasise that a short summary does not do justice to the depth and extent of its ideas. As far........