Keynes General Theory at 80

Keynes GT at 80

A few preliminaries for beginners.

In 1930s the capitalist segment of the world economy plunged into a great depression. The stock market crash and the mass bank failures created huge unemployment, social unrest and political uncertainty. The contagion was pervasive n the US, UK and Europe.

Keynes’  General Theory of Employment ,Interest and Money was conceived in the shadows of depression and  addressed  Itself to the problem of unemployment and offered a solution. For the pre- Keynesian classical orthodoxy balanced budget was an article of faith and they would never deviate from that fiscal conservatism even when the conditions of deflation would threaten the economic structure.

Keynes in his GT,  brought about  a transformation in the outlook and attitudes of  the economist and statesmen towards economic problems. By changing the character of public finance ie by advocating the unbalanced (deficit) budget to balance the economy , he introduced a radical policy shift towards lax fiscal policy to combat depression;monetery policy becoming  ineffective in  Liquidity Trap situation,Keynes, fiscal policy began to command more professional respectability and immediate public relevance.

Summing up its relevance I think it is Paul Davidson who wrote in his, The Age Of K eynes thus:” the economics which Keynes preached in his masterwork , the 1936 General Theory  Of  Employment interest and Money, split Cambridge opinion,outraged former teachers and colleagues of the moment and set in motion  an ideological quarrel among professional economists  which lasted a decade at least.’’

“ His mind was powerful, flexible and inventive, a  trio of qualities infrequently found in  each other’s company   ….he longed to divert public officials from mistaken policy to enlightened action,:

It is something very strange but true that when Keynesianism was on the decline and monetarism emerged as a counter revolution Nixon told: we are all Keynesians now/

The decade old global economic crisis gave fresh oxygen to the economics of Keynes and I have already written a small  monograph. In the remaining period of life I will read kural and the financial crisis more and supplement with my accumulated notes crying for publication