Peter Clarke's swift, concise, trenchant
observations of John
Maynard Keynes and the evolution of Keynes's thinking presents a contrarian case that Keynes is not an advocate of deficits. Instead, Clarke presents Keynes as working through his experiences in India, in the First War at Treasury, and in the post-war period as a Bloomsbury groupie while writing for the Manchester Guardian, and coming to see that the wise government will, in downturns or recessions or depressions, seek to stimulate investment and spur employment. Keynes did not advocate stimulating consumption. Keynes was self-consciously pragmatic and experimental. Also, argues Clarke, Keynes was writing his theories and conclusions for the British parliamentary system, not for the American congressional system. The recommendation for deficit spending was an American adaptation. Keynes became more celebrated in America, after 1936, then he was in war-darkened Europe. But then the admiration turned into a kind of fad. At luncheon with
FDR advisers and other luminaries in Washington in 1944, Keynes jested that he was the only non-Keynesian at the table. Clarke reminds that Keynes was charismatic in public and private, and his powers were such that the listeners were often converted more than they were convinced.
Milton Friedman remarked long after Keynes's death that everyone was a Keynesian and everyone was not a Keynesian. In sum, the Keynes theories of government spending, taxes, stimulus, employment, inflation and deflation, currency, the gold standard are so comprehensive today, so widely debated, that there is no escape. The Obama administration and its guru
Larry Summers boast of their Keynesian plan. It means what you want it to mean. The original polymath and his age and arguments are long gone. Only the word connects what we see now, with the $1 trillion stimulus package, and the sudden mistakes of the FDR administration that led to the W recession of 1937.
And he's still wrong. I take Amity Shlaes position mixed with some Austrian common sense. I would have loved to see Hayek or Friedman debate with Keynes.