John Maynard Keynes was the best economist in the 20th century!
1. John Maynard Keynes?
Below is an excerpt from Wikipedia – John Maynard Keynes.
John Maynard Keynes, 1st Baron Keynes[2] CB FBA (/keɪnz/ KAYNZ; 5 June 1883 – 21 April 1946), was a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. He built on and greatly refined earlier work on the causes of business cycles, and was one of the most influential economists of the 20th century and the founder of modern macroeconomic theory.[3][4][5][6] His ideas are the basis for the school of thought known as Keynesian economics, and its various offshoots.
2. John Maynard Keynes on YouTube
3. Keynes’s best book
Below is an excerpt from Wikipedia – The General Theory of Employment, Interest and Money.
The General Theory of Employment, Interest and Money of 1936 is the last and most important book by the English economist John Maynard Keynes. It created a profound shift in economic thought, giving macroeconomics a central place in economic theory and contributing much of its terminology[1] – the “Keynesian Revolution”. It had equally powerful consequences in economic policy, being interpreted as providing theoretical support for government spending in general, and for budgetary deficits, monetary intervention and counter-cyclical policies in particular. It is pervaded with an air of mistrust for the rationality of free-market decision making.
4. “The General Theory of Employment, Interest and Money” on YouTube
5. Keynesian economics
Below is an excerpt from Wikipedia – Keynesian economics.
Keynesian economics (/ˈkeɪnziən/ KAYN-zee-ən; sometimes called Keynesianism) are the various macroeconomic theories about how in the short run – and especially during recessions – economic output is strongly influenced by aggregate demand (total demand in the economy). In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy; instead, it is influenced by a host of factors and sometimes behaves erratically, affecting production, employment, and inflation.[1]
Keynesian economists generally argue that, as aggregate demand is volatile and unstable, a market economy will often experience inefficient macroeconomic outcomes in the form of economic recessions (when demand is low) and inflation (when demand is high). These can be mitigated by economic policy responses, in particular, monetary policy actions by the central bank and fiscal policy actions by the government, which can help stabilize output over the business cycle.[3] Keynesian economists generally advocate a managed market economy – predominantly private sector, but with an active role for government intervention during recessions and depressions.[4]
6. Discussion
Simply put, in economics, Keynes sits between Adam Smith (Who is Adam Smith, anyway?), the father of capitalism, and and Karl Marx (Who is Karl Marx anyway?), the father of communism.
Specifically, while Keynes was unquestionably an advocator of the free market, he recognized that (1) the free market cannot possibly be all self-functioning and self-stabilizing, and (2) a critical and indispensable “balancing” force is the government, especially in time of crisis (e.g., the Great Depression).
Simply put, on the role of the government, Keynesian economics can be summarized in two points:
- The government saves in good economic times.
- The government spends in bad economic times.
Unfortunately, most democracies today, especially the U.S., as well as the U.K. to a lesser extent, seem to remember Keynes’s point 2 only, without any memory of his point 1, resulting in a bad reputation for Keynesian economics, especially for fiscal hawks.
Fortunately, one country stands out in “following” the real Keynesian economics (i.e., the government not only spends but also saves): China!
7. More discussion
Time is the best judge for everything, including John Maynard Keynes.
Here is the reality of the 21st century:
- China’s dramatic comeback: China’s economy is more planned than free.
- The precipitous decline of America: America’s economy is opposite to China’s.
Keynesian economics makes a world of sense today. Two main reasons:
- It is a valid theory, developed on top of past economic theories, including both Adam Smith’s works and Karl Marx’s works.
- It was developed mostly in Britain, a great country with a long history, without an excessive delusion of exceptionalism.
In contrast, exceptional at birth, America is proving to be not exceptional at all. Hence, most, if not all, of the theories, economic as well as political, developed in the name of American exceptionalism over the past 200 years are likely to be proven false over time.
Two examples:
- Milton Friedman is mostly an economist of the past, thanks to his extremism on the “free market” and individualism. For more, read Milton Friedman: a man of the past?
- Governance is hard. Few Americans have any idea about it, thanks, mostly, to Thomas Jefferson (a la “that government is best which governs least”).
China’s comeback over the past few decades has restored the world to its “norm” before 1492, from politics to economics.
More profoundly, two messages to America:
- Just because America is hugely resourceful in nature, it does not mean America can be good forever, without even having a functional government.
- Governance is hard. America is way behind China in governance.
For more, read History 2.0 – China’s Comeback vs. America’s Decline.
8. Closing
To me, John Maynard Keynes was the best economist in the 20th century, preceded by Adam Smith (Who is Adam Smith, anyway?), the best in the 18th century, and Karl Marx (Who is Karl Marx anyway?), the best in the 19th century!
Keynesian economics makes a world of sense today, although it has been mostly abused in the West, with the government spending only, without savings.
Now, please sit back and enjoy the long video below.
