Keynes's Vision: Why the Great Depression did not Return (Routledge Studies in the History of Economics) |  | Author: John Philip Jones
Publisher: Routledge
Category: Book
List Price: $37.95
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Rating:  1 reviews
Sales Rank: 2,594,684
Media: Paperback
Edition: 1
Pages: 240
Number Of Items: 1
Shipping Weight (lbs): 0.9
Dimensions (in): 9.1 x 6.1 x 0.6
ISBN: 0415780004
Dewey Decimal Number: 330
EAN: 9780415780001
ASIN: 0415780004
Publication Date: January 15, 2010
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Product Description
John Maynard Keynes was the most influential economist of the 20th Century, whose doctrines had a huge impact on American prosperity in the years following the Second World War. This new book by John Philip Jones describes the main features of Keynes's work, including the fiscal and monetary policies he recommended, together with a detailed tracking of how his theories played out in the American economy.
The book focuses on each individual aspect of Keynes's doctrines: his revolutionary emphasis on the economy as a whole (the study that would later become known as macroeconomics); consumer demand and where it leads; investment demand and where it leads; the rate of interest and the influence of monetary policy; the role of government in controlling fiscal policy; and the overarching importance of expectations, optimism and pessimism. The book concludes with the seven major lessons drawn from the American economy in the latter half of the 20th Century and how these lessons were forecast by Keynes.
An excellent introduction to Keynes and his legacy for students and non-specialist members of the public who want to know more about how the economy is controlled and stimulated, it is also of considerable interest to students of modern economic history.
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4.5 stars-Uncertainty and Expectations (optimistic and pessimistic) of the future are the core of the GT February 15, 2009
Michael Emmett Brady (Bellflower, California ,United States)
The author has written a very good popular history of Keynes 's contributions to economic theory and policy in the General Theory(GT).He also has presented an excellent account of the range of Keynes's intellectual interests and many and varied accomplishments.
The heart of the economic problem at the macro level is speculation.Speculation always arises from banker financed bubbles.The businessman's expectations in such periods are optimistic .Unfortunately, all bubbles deflate without warning,taking down huge numbers of consumers and businessmen,both speculators and non speculators, alike.This is due to the great uncertainty about the nature of the economic future.The author does a good job discussing and demonstrating how the uncertainty of the future makes for fickle expectations .Changes in expectations can occur almost overnight because the information base upon which the future is being evaluated is so small.This means that rapid swings from optimistic to pessimistic business expectations can result in a severe dearth of investment spending.The only conclusion one can reach is that the financial markets,unless heavily regulated to prevent most speculation,are inherently unstable and certainly not self correcting.The failure of the financial markets will generate large negative externality impacts as bank and business bankruptcies and liquidations lead to increaing levels of layoffs and home forclosures.A lack of confidence about future economic conditions leads to a downward spiral in economic activity.Consumers and businesses stop spending and start hoarding their money .This exacerbates the situation further and leads to increasingly pessimistic expectations ,which leads to a continuing erosion of confidence,leading to more bankruptcies and business liquidations.
There are a few criticisms.The first point that the author overlooks is that Keynes did not believe in the use of expansionary-contractionary fiscal and monetary policy carried out by government.He did believe in massive infrastructure spending on public goods,based on and coming from a seperate capital budget set up to finance long run physical investment that would generate a large social return and pay for itself over the long run.However,the current account budget would always have to be balanced.Keynes's policy recommendations were essentially preventative rules that would stop any financial crisis from occurring in the first place.This meant cutting off the source of funds to speculators that was coming from the loan practices of the private commercial, and investment ,banks.Loans were to be denied to speculators in a policy of credit restriction.The unsatisfied fringe of borrowers would always have to consist of speculators.At the same time ,Keynes advocated a policy of fixing the long run rate of interest permanently at a low level.
Second, Keynes realized that the difficulty of making decisions in an environment of uncertainty also impacted government decision makers in the public sector in the same way as they impacted decison makers in the private sector.Keynes's recommendations are essentially rules that,if followed,would prevent the bubbles from being created in the first place.Massive infrastructure provision would also provide private business with a modern transportation and communication system( roads,bridges,freeways,seaports,harbors,airports,dams,aqueducts,reservoirs,water projects,etc.) that would help make business more efficient by minimizing their time costs, while making their business plans and expectations more reliable .
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