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Keynes’s General Theory

Seventy-five Years Later


Edited by Thomas Cate


Cheltenham, UK & Northampton, MA, USA: Edward Elgar, 2012

 Hardcover. viii + 348 p. ISBN 978-184524114. £95.00 / $149.95


Reviewed by Peter Clarke

Trinity Hall, Cambridge



This volume of essays begins with a well-known quotation from a letter that John Maynard Keynes wrote in 1935 to George Bernard Shaw (as one famous egotist to another): “I believe myself to be writing a book on economic theory which will largely revolutionise—not, I suppose, at once but in the course of the next 10 years—the way the world thinks about economic problems” [1]. Here we are, three-quarters of a century later, still discussing that book. The essays usefully drawn together here come from twenty authors in France, the Netherlands, the United States, Brazil, Belgium, Canada, Australia, Great Britain and Germany, which thus presumably indicates how the world now thinks about economic problems. But, as all readers of this journal will appreciate, there are big differences between—to go no further—the francophone world and the anglophone world, and also between theory and practice. At the time of writing, the name of Keynes is often invoked in debates his own country but the British Government is ignoring his maxim to look after unemployment and the deficit will look after itself; whereas in France almost the opposite now seems to be true.

Keynes’s reception in France is one of the themes illuminated in the essay by Gilles Dostaler, an engaging writer whose tragic death in 2011 is commemorated in this volume by his fellow Canadian economist, Robert Dimand. The fact that Dostaler was one of the founding professors at the Université du Quebec à Montreal and pursued his interests, first in Marx and later in Keynes, in this context is perhaps significant, not least in suggesting that his vantage-point was some way outside the current mainstream of economics in the United States. Chicago, the spiritual home of the new classical economics that so largely displaced American Keynesianism, may be only a thousand kilometers from Montreal as the crow flies, but measured in intellectual distance Montreal is closer to Europe than to Chicago. Dostaler was naturally interested in the interactions between Keynesian economics and the Marxist tradition. Few were as sympathetic to both approaches as Joan Robinson, with her characteristic left-wing view of “what Keynes really meant”; but Dostaler contests Robinson’s confident assertion that “Keynes could never make head or tail of Marx” [245]. Instead, his essay offers some fresh perspectives, not least on the surprising degree of mutual admiration between Keynes and Lenin, which neither cold-war Keynesians nor postwar French communists would have been happy to acknowledge. It is surely incorrect, however, for Dostaler to argue that Keynes “applauded the Bolshevik Revolution” on the strength of a letter that he wrote in March 1917 (on the western calendar), which obviously refers to the February Revolution [253]. I mention this small point now simply because Dostaler, a fine scholar, would no doubt have wished to make such a correction himself. His essay is one of the best in the volume and it will have wide appeal to scholars outside the economics profession.

Some of the other essays, however, are more narrowly conceived in their professional scope, terminology and methodology. One can sympathise with their authors in facing the task of persuading their colleagues—just as the General Theory was famously addressed by Keynes to “my fellow economists”—that they should pay attention at all. The benign influence of mathematics in bringing new rigour to modern economics has also brought a malign exclusion of non-mathematical insights. It was Keynes, himself a mathematician by training, who came to see (as Roger E. Backhouse and Bradley W. Bateman succinctly comment) “that using mathematical models of the economy in a fixed and rigid way kept him from being able to capture the kinds of human behaviours that were at the heart of capitalism’s inability to provide stable employment” [217]. M. G. Hayes puts his point starkly in arguing that “Keynes’s direct influence on economic theory and policy has so far been minimal” [54]. He means (and actually regrets) that modern academic economics has formally adopted so few of Keynes’s concepts. The degree of truth in such an assertion is corroborated in a different timbre by Robert Dimand in his survey of modern macroeconomics: “Practising macroeconomists are only imperfectly aware, at best, of the recurrent themes of their subject because of the easy step from ignorance of the past to conviction that that there is no relevant past to know” [104].

It is surely regrettable that an academic discipline as important as economics should nowadays often display such determined ignorance about its own intellectual evolution. It is not just that the pedigree of received ideas benefits from some examination: it is also a waste of effort to keep reinventing the wheel. Many of the economists writing here need no instruction on this point, since it is precisely for such reasons that they have cultivated their own diverse interests in Keynes. But even here there is some misplaced ingenuity, for example in the essay by Matthew Luzzetti and Lee E. Ohanian. They make the perfectly reasonable suggestion that one reason for the impact of the General Theory was that “Keynes was in the right place at the right time” [177]. But to support this by saying that “the book seems to have been written in 1935” [161], as though speculation on this point was all we can rely on, ignores an entire literature, published over the last thirty years, that could actually have established relevant points about the chronology, context and reception of the theory of effective demand. So there remains a need for historians and philosophers and students of other intellectual disciplines to engage with card-carrying economists in understanding these important milestones in the development of their discipline. This volume of essays certainly deserves a warm welcome and a readership outside as well as within the economics profession.


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