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September 18, 2009
Books of The Times
The Old Economist, Relevant Amid the Rubble
By DWIGHT GARNER
Skip to next paragraph KEYNES
The Return of the Master
By Robert Skidelsky
221 pages. PublicAffairs. $25.95
John Maynard Keynes (1883-1946) was, on the page and off, formidable. He was tall, an impeccable dresser in dark suits and homburgs, a product of Eton and Cambridge, a director of the Bank of England. His words could be withering. “When I argued with him,” the philosopher Bertrand Russell said, “I felt that I took my life in my hands.”
Keynes also had, paradoxically, the sensitive soul of a poet. He was a member of the Bloomsbury group and a favorite of Virginia Woolf’s. He collected modern art and rare manuscripts. He married a Russian ballerina. He was an early environmentalist, given to utterances that stick in the mind. “We are capable of shutting off the sun and the stars,” he warned in 1933, “because they do not pay a dividend.”
These things matter about Keynes because his economic ideas, relevant again amid the rubble of the global financial crisis, had a humane and moral dimension, one that Robert Skidelsky underlines in “Keynes: The Return of the Master.”
Mr. Skidelsky is the author of a magisterial three-volume biography of Keynes (the final volume was published in 2000) and is emeritus professor of political economy at the University of Warwick in England. He knows more about Keynes than anyone alive, but his new book is not a pocket-size distillation of his earlier biography. It’s an attempt to translate and update Keynes’s ideas for a sleek, turbulent era.
This is not an obviously simple task. Keynes’s most influential book, “The General Theory of Employment, Interest and Money,” (1936) published during the Great Depression, is famously impenetrable. But its central idea held sway for nearly 30 years after World War II: that markets are not self-correcting.
In “Keynes: Return of the Master,” Mr. Skidelsky surveys the vast body of Keynes’s work. But he boils the thinking down to a few essential points. Central among them is that market economies are fundamentally uncertain; large shocks like the recent meltdown are not anomalies but normal if unpredictable events. Government should intervene in a crisis — as the Obama administration has since the fall of Lehman Brothers last year — supplying a judicious but firm hand on the tiller.
Mr. Skidelsky is righteous in his thunder about how Keynes’s ideas have been spurned in recent decades. He scolds the free-market ethos of the Reagan and Thatcher eras as well as the thinking of anti-Keynesian New Classical economists. He does not entirely blame the usual suspects (banks, hedge funds, credit-rating agencies, the Fed) for the current crisis. He indicts laissez-faire philosophy.
“The root cause of the present crisis lies in the intellectual failure of economics,” Mr. Skidelsky writes. “It was the wrong ideas of economists which legitimized the deregulation of finance, and it was the deregulation of finance which led to the credit explosion which collapsed into the credit crunch. It is hard to convey the harm done by the recent dominant school of New Classical economics. Rarely in history can such powerful minds have devoted themselves to such strange ideas.”
When Mr. Skidelsky pulls out a napkin and begins to scribble down figures, this book is slower going. It is probably safe to say that “Keynes: The Return of the Master” is aimed at the general reader, if that general reader owns excellent reading glasses and enthusiastically devours the daily business section from front to back.
A not entirely untypical sentence is: “The most general I.M.F. commodity-price index (fuel + nonfuel) peaked in July 2008 at 218 (2005 = 100) and dropped to its lowest level in December, when it was down at 98, recovering to 102 in January 2009 and falling again to 100 in March.” Oof.
This book is provocative in its discussion of the moral aspect of Keynes’s thinking. He had the curious and refreshing idea that financial institutions have a duty to the public interest as well as to shareholders. He worried about the pursuit of money at the expense of all else. What ethical value, he asked, attends a life of “moneymaking and bridge”?
Mr. Skidelsky observes: “His conclusion was that the pursuit of money — what he called ‘love of money’ — was justified only to the extent that it led to a ‘good life.’ And a good life was not what made people better off: it was what made them good. To make the world ethically better was the only justifiable purpose of economic striving.”
Keynes’s altruism sometimes made him sound like Custer at the last stand. “I find no shame at being found still owning a share when the bottom of the market comes,” he wrote. “Any other policy is antisocial, destructive of confidence and incompatible with the working of the economic system.” Maybe this was how he explained himself to Virginia Woolf when, in 1920, he lost the money the Bloomsbury group had invested with him. (The debt was later cleared.)
Keynes ultimately saw economics not as a natural science but a moral one. He was loath to rely on pure mathematics and risk models. Not everything could be reduced to numbers.
When it comes to deciphering Keynes’s ideas for the current moment, we can only speculate about details and particulars. As Mr. Skidelsky points out, “Keynes had little specific to say about financial regulation, since the banking system was not at the center of the storm of the early 1930s.”
But Keynes has always seemed at his most appealing and prophetic at times of roiling financial discontent. Robert Lucas, the University of Chicago economist, joked last year that “everyone is a Keynesian in a foxhole.” If the American economy stabilizes and begins a genuine rebound, there will be plenty of born-again Keynsians outside of those foxholes too.
http://www.nytimes.com/2009/09/18/bo...html?ref=books
The Return of the Master
By Robert Skidelsky
221 pages. PublicAffairs. $25.95
John Maynard Keynes (1883-1946) was, on the page and off, formidable. He was tall, an impeccable dresser in dark suits and homburgs, a product of Eton and Cambridge, a director of the Bank of England. His words could be withering. “When I argued with him,” the philosopher Bertrand Russell said, “I felt that I took my life in my hands.”
Keynes also had, paradoxically, the sensitive soul of a poet. He was a member of the Bloomsbury group and a favorite of Virginia Woolf’s. He collected modern art and rare manuscripts. He married a Russian ballerina. He was an early environmentalist, given to utterances that stick in the mind. “We are capable of shutting off the sun and the stars,” he warned in 1933, “because they do not pay a dividend.”
These things matter about Keynes because his economic ideas, relevant again amid the rubble of the global financial crisis, had a humane and moral dimension, one that Robert Skidelsky underlines in “Keynes: The Return of the Master.”
Mr. Skidelsky is the author of a magisterial three-volume biography of Keynes (the final volume was published in 2000) and is emeritus professor of political economy at the University of Warwick in England. He knows more about Keynes than anyone alive, but his new book is not a pocket-size distillation of his earlier biography. It’s an attempt to translate and update Keynes’s ideas for a sleek, turbulent era.
This is not an obviously simple task. Keynes’s most influential book, “The General Theory of Employment, Interest and Money,” (1936) published during the Great Depression, is famously impenetrable. But its central idea held sway for nearly 30 years after World War II: that markets are not self-correcting.
In “Keynes: Return of the Master,” Mr. Skidelsky surveys the vast body of Keynes’s work. But he boils the thinking down to a few essential points. Central among them is that market economies are fundamentally uncertain; large shocks like the recent meltdown are not anomalies but normal if unpredictable events. Government should intervene in a crisis — as the Obama administration has since the fall of Lehman Brothers last year — supplying a judicious but firm hand on the tiller.
Mr. Skidelsky is righteous in his thunder about how Keynes’s ideas have been spurned in recent decades. He scolds the free-market ethos of the Reagan and Thatcher eras as well as the thinking of anti-Keynesian New Classical economists. He does not entirely blame the usual suspects (banks, hedge funds, credit-rating agencies, the Fed) for the current crisis. He indicts laissez-faire philosophy.
“The root cause of the present crisis lies in the intellectual failure of economics,” Mr. Skidelsky writes. “It was the wrong ideas of economists which legitimized the deregulation of finance, and it was the deregulation of finance which led to the credit explosion which collapsed into the credit crunch. It is hard to convey the harm done by the recent dominant school of New Classical economics. Rarely in history can such powerful minds have devoted themselves to such strange ideas.”
When Mr. Skidelsky pulls out a napkin and begins to scribble down figures, this book is slower going. It is probably safe to say that “Keynes: The Return of the Master” is aimed at the general reader, if that general reader owns excellent reading glasses and enthusiastically devours the daily business section from front to back.
A not entirely untypical sentence is: “The most general I.M.F. commodity-price index (fuel + nonfuel) peaked in July 2008 at 218 (2005 = 100) and dropped to its lowest level in December, when it was down at 98, recovering to 102 in January 2009 and falling again to 100 in March.” Oof.
This book is provocative in its discussion of the moral aspect of Keynes’s thinking. He had the curious and refreshing idea that financial institutions have a duty to the public interest as well as to shareholders. He worried about the pursuit of money at the expense of all else. What ethical value, he asked, attends a life of “moneymaking and bridge”?
Mr. Skidelsky observes: “His conclusion was that the pursuit of money — what he called ‘love of money’ — was justified only to the extent that it led to a ‘good life.’ And a good life was not what made people better off: it was what made them good. To make the world ethically better was the only justifiable purpose of economic striving.”
Keynes’s altruism sometimes made him sound like Custer at the last stand. “I find no shame at being found still owning a share when the bottom of the market comes,” he wrote. “Any other policy is antisocial, destructive of confidence and incompatible with the working of the economic system.” Maybe this was how he explained himself to Virginia Woolf when, in 1920, he lost the money the Bloomsbury group had invested with him. (The debt was later cleared.)
Keynes ultimately saw economics not as a natural science but a moral one. He was loath to rely on pure mathematics and risk models. Not everything could be reduced to numbers.
When it comes to deciphering Keynes’s ideas for the current moment, we can only speculate about details and particulars. As Mr. Skidelsky points out, “Keynes had little specific to say about financial regulation, since the banking system was not at the center of the storm of the early 1930s.”
But Keynes has always seemed at his most appealing and prophetic at times of roiling financial discontent. Robert Lucas, the University of Chicago economist, joked last year that “everyone is a Keynesian in a foxhole.” If the American economy stabilizes and begins a genuine rebound, there will be plenty of born-again Keynsians outside of those foxholes too.
http://www.nytimes.com/2009/09/18/bo...html?ref=books
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