海角大神

Raising Keynes: An old economist finds new rock-star status

Keynesian economics is being hailed as key to ending the collapse.

If economics were about boxing, the classic bout of modern times would have Milton Friedman in one corner and John Maynard Keynes in the other.

Recent rounds have been dominated by Mr. Friedman, the New York-born champion of free markets, but his opponent, an English university don with a penchant for the arts, has recently staged a dramatic comeback.

Few seem to be cheering anymore for unregulated capitalism. From the forthcoming Obama administration to the British government, 鈥淜eynesian鈥� economics is now widely invoked as key to saving the world from a new great depression.

For admirers of Mr. Keynes, whose radical idea was that governments could avoid recessions by running deficits, the economist鈥檚 resurgence is a vindication after decades in the shadow of Friedman鈥檚 followers, including Ronald Reagan and Margaret Thatcher.

More than 60 years after Keynes鈥檚 death, his nephew smiles at the revival of his uncle鈥檚 ideas.

鈥淗e was never altogether out of fashion,鈥� says Stephen Keynes, an octogenarian scion of one of Britain鈥檚 most famous families and, like his uncle, a direct descendant of Charles Darwin. 鈥淚t鈥檚 just that certain people have associated his name with inflation, which was not what he advocated.鈥�

This isn鈥檛 the first time an American president struggling to regain control of a spiraling economy has sought guidance from Keynes. In 1938, his ideas were embraced, albeit reluctantly, by Franklin D. Roosevelt, with the president announcing it was up to government to 鈥渃reate an economic upturn鈥� by making 鈥渁dditions to the purchasing power of the nation.鈥�

The notion was promoted by Keynes (pronounced 鈥淐ains鈥�) in his 1936 magnum opus, 鈥淭he General Theory of Employment, Interest, and Money,鈥� which stated that government should borrow when the economy slows to keep people employed, because private sector investment won鈥檛 be enough. Another major legacy of Keynes was leading the British delegation to the Bretton Woods conference of 1944, where he played a key role in creating the World Bank and the International Monetary Fund.

In today鈥檚 Britain, as a debate rages over how to kick-start the faltering economy, few days pass without the economist鈥檚 name invoked in newspapers.

At Cambridge itself, a 鈥�Keynes Society鈥� is now being established to promote new ideas from around the world on economics, the arts, science, and climate change. Nick Butler, chairman of the Cambridge Centre for Energy Studies, told fellow scholars that the society would not just pay tribute to Keynes, but 鈥渞evive his sense of pragmatic creativity, which seems so lacking, and so necessary at the moment.鈥�

Sales of books based on his theories have risen in recent months. An acclaimed three-volume biography of Keynes himself is regarded as recommended reading for a new generation of policymakers.

鈥淛ohn Maynard Keynes has been restored to life,鈥� wrote its author, Robert Skidelsky, last month in the British center-left journal, The New Statesman. 鈥淩usty Keynesian tools 鈥� larger budget deficits, tax cuts, accelerated spending programmes and other 鈥榚conomic stimuli鈥� 鈥� have been brought back into use the world over to cut off the slide into depression.鈥�

But there has been no greater testament to the faith placed in Keynesianism than the course charted by Britain鈥檚 prime minister, Gordon Brown. Last week, Mr. Brown unveiled plans for public works spending meant to ease recessionary pain by creating up to 100,000 jobs. Drawing a direct comparison with the public works projects undertaken by FDR, Brown also wants to tackle climate change by investing in rail, electric cars, wind power, and wave power.

Despite his reemergence as a policy rock star, voices arguing against a Keynesian response to the financial crisis remain unsilenced.

鈥淚 am surprised at how many Keynesians were in the woodwork on both sides of the Atlantic,鈥� says Chris Edwards, an economist at the Cato Institute, a US free-market think tank. Mr. Edwards, who talks of a resurgence of 鈥渒indergarten Keynesianism,鈥� expresses amazement at the number of PhD economists who, he says, are now reversing previous pronouncements.

鈥淚 think Friedman鈥檚 biggest concern right now would be how central bankers are putting so much money into the system,鈥� he adds, warning that younger Americans will be saddled with debt from boosting the economy. 鈥淜eynes was a brilliant guy, but his main policy thrust was to respond to the short-term crisis. Obama鈥檚 advisers are buying into the idea that the short term is the only thing that matters.鈥�

Elsewhere, even admirers of Keynes question whether attempts to stave off a new recession are truly Keynesian. Vincent Cable, a member of parliament and the economics spokesperson for Britain鈥檚 third largest party, the Liberal Democrats, suggests the Keynesian tag is being misused to describe British government measures.

鈥淲hat Obama is proposing to do is far more ambitious than what is being done in the UK, and Keynes would recognize that,鈥� says Mr. Cable, who studied economics at Cambridge in the 1960s under the 鈥渄isciples鈥� of Keynes, including Richard Kahn, Joan Robinson, and Nicholas Kaldor.

Cable concedes, however, that Keynes鈥檚 work is far from bedtime reading: 鈥淗is writing is pretty impenetrable.... Adam Smith and 鈥楾he Wealth of Nations鈥� is a good read. Keynes is not easy.鈥�

Keynes鈥檚 nephew, Stephen, says his uncle would approve of the economic policies being pursued by US President-elect Obama, describing them as 鈥渧ery clearly Keynesian.鈥�

Stephen Keynes adds, 鈥淚t does give me pleasure that the ridiculous Thatcher years now seem so absurd.... The whole world admires Obama鈥檚 steadfastness and self-confidence.鈥�