Above: bust of John Maynard Keynes on a concrete ledge in the Keynes Theatre at Kings College Cambridge (he is holding what looks like his General Theory).
In this article for the Left Foot Forward website Dr Richard Carr (Lecturer at the Labour History Research Unit at Anglia Ruskin University) talks about the death of Keynesianism: http://www.leftfootforward.org/2014/06/is-keynesianism-now-dead/
However Dr Carr seems to contradict himself in the first couple of paragraphs telling us “Cheap money has, albeit eventually, produced a consumer led recovery… So is Keynesianism, de rigueur in 2012, now dead?”
As I understand it, Keynesianism is expansion of the money supply to create growth, rolling forward the economic debt created and relying on gentle inflation to magic away the shortfall as the economy recovers over the succeeding years.
The problem is that the theory cannot be implemented in a democracy without the input of politicians who cannot resist manipulating the economy to give themselves electoral advantage (by bribing the segments of the electorate they rely on for votes).
Borrowing is highly addictive, and therefore although the Keynes model may seem rational in theory, it is a highly irrational option in practice. It is like a depressed person saying “I will just try heroin once, enjoy the one-off high, and then live a clean and wholesome life thereafter”. Every social worker would advise against taking such a foolish and self-destructive step.
That is why I would always advocate controlling the money supply as advised by the Austrian School – however painful it might be, the recovery will be on absolutely sound foundations, will last much longer and with individual liberty and collective democracy preserved (indeed, guaranteed).
To precis Margaret Thatcher: live within your means, if you can’t afford it you can’t have it, stability comes from moderation.
Later Richard Carr demonstrates the moral bankruptcy of the Labour party: “Labour’s jobs guarantee fundamentally depends on City traders raking in bumper bonuses. Taxing said bonuses may indeed poll well, but that is an odd position to be in post 2008.”
And I am glad that Dr Carr acknowledges the reality of the Conservative economic miracle: “…more jobs, growth back, and inflation controlled” (in my view this has happened in large part by simply controlling the dampener of immigration but any politician who admitted this would immediately be subjected to the “racist” chorus).
But tucked away almost as an afterthought Richard Carr makes his most important observation: “Keynes realised that economics was only a means to an end – what he called ‘the good life’. “
Anyone who has worked in marketing and advertising will know that the good life cannot come from materialist consumption (because self-actualisation is not possible through possession of material goods), therefore the pursuit of economic growth is a chimera.
The challenge for the political class will be to reconfigure society so that the economy and population are in a stable equilibrium and human happiness is generated through the quality of social interactions, an on-going emphasis upon health and well-being, and an expansion of intellectual pursuits.