Advancing a Free Society

Keynes a la Mode

Thursday, December 1, 2011

One result of the financial crisis and the ensuing global economic slowdown has been a revival of interest in the thinking of John Maynard Keynes. Much of what is being written about Keynes is an attempt to make him relevant to today’s problems and to persuade a modern audience that Keynes was right about a lot of things. Along these lines, economists Roger E. Backhouse and Bradley Bateman have recently authored, Capitalist Revolutionary: John Maynard Keynes.1 Backhouse is a professor of history and the philosophy of economics at the University of Birmingham in Britain and Bateman is a professor of economics at Denison University

Backhouse and Bateman argue, as the book’s title implies, that although Keynes wanted a substantial amount of government intervention, he did believe in preserving large elements of capitalism. This part of the book is somewhat persuasive, although their discussion of Keynes’s famous “socialization of investment” advocacy was not completely convincing. But the authors also have another important theme: They argue against the classical liberal view that government should basically keep its hands off the economy. Their attempt fails. They get some basic and important facts wrong, have trouble accounting for the stagflation of the early 1970s that persuaded many economists to abandon the Keynesian model, often misstate the views of Keynes’s critics, and occasionally use subtle shifts in language and even ad hominem attacks to undercut the views of free-market economists, most notably Milton Friedman.

Continue reading David Henderson...