Introduction

Economics is not a subject much given to intellectual revolutions. Two hundred years ago Adam Smith may have wrought a revolution in convincing his contemporaries to place trust in the workings of unregulated markets. A century later a number of economists certainly produced a so-called ‘marginal revolution’ which turned economists away from a concern with growth and development towards a concern with value and distribution as governed by allocative efficiency. And fifty years ago, the publication of The General Theory of Employment, Interest and Money (1936) by John Maynard Keynes produced a Keynesian Revolution in economic thought — that is, the massive conversion of virtually all economists in the Western world to a new style of economic thinking in the unbelievably short period of 4–5 or at most 8–10 years. By the time Keynes died in 1946, Keynesian economics was well on the way to becoming a new orthodoxy, dissension from which characterised one as a crank or fuddy-duddy. For the next 30–35 years, governments everywhere adopted policies recommended by Keynes or at least associated with Keynes’s name. In more recent years, such policies have been largely abandoned as mistaken, but many economists continue to support Keynesian prescriptions and to attribute the apparent failure of policy-makers to come to grips with the twin problems of inflation and mass unemployment precisely to the pursuit of anti-Keynesian ideas.