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2007 | Buch

John Maynard Keynes

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Inhaltsverzeichnis

Frontmatter
1. An Introduction to Keynes and His Revolutionary Views
Abstract
Dear reader, may I ask you who you believe was the greatest Englishman of the 20th century — a man whose efforts enabled the possibilities for democracy and a civilized society to flourish on our planet? Some may answer Winston Churchill, but it is the purpose of this volume to convince you that the Englishman was John Maynard Keynes, an economist who never held elected political office.
Paul Davidson
2. How the Great War and Its Aftermath Affected Keynes’s Thinking
Abstract
Upon graduation from Cambridge in 1906, Keynes scored second on the Civil Service Exam. In a letter dated October 4, 1906 to his friend Lytton Strachey, Keynes noted that in this Civil Service Exam “real knowledge seems an absolute bar to success. I have done worst in the only two subjects of which I possessed a solid knowledge, Mathematics and Economics. … For Economics I got a relatively low percentage and was 8th or 9th in order of merit — whereas I knew the whole of both … in a real elaborate way” (Skidelsky, 1983, p. 175). Harrod (1951, p. 121) points out that later on Keynes explained his poor performance in economics by saying, “I evidently knew more about economics than my examiners”.
Paul Davidson
3. Keynes’s Middle Way: Liberalism is Truly a New Way
Abstract
The question of whether unfettered individual self-interest decision making in economic affairs can promote the social good has vexed philosophers and economic thinkers for a long time. Based on Adam Smith’s 1776 writings about the “invisible hand” in the Wealth of Nations, classical economic theory had developed a large superstructure to explain that a system of laissez-faire, where the role of government was not to interfere with the economic activities of the marketplace, would result in the maximum welfare of the community. The worldly wisdom of economists and politicians during the Victorian age was that an economy prospers best when market forces are unhampered by government actions. Government may raise taxes to pay for a military defense and to enforce law and order on the community, but the State should never try to influence total economic activity.
Paul Davidson
4. The Before and After of Keynes’s General Theory
Abstract
On New Year’s Day, 1935, Keynes wrote a letter to George Bernard Shaw. In this letter he stated:
To understand my new state of mind, however, you have to know that I believe myself to be writing a book on economic theory which will largely revolutionize not I suppose at once but in the course of the next ten years the way the world thinks about economic problems. When my new theory has been duly assimilated and mixed with politics and feelings and passions, I cannot predict what the final upshot will be in its effect on actions and affairs, but there will be a great change and in particular the Ricardian Foundations of Marxism will be knocked away.
I can’t expect you or anyone else to believe this at the present stage, but for myself I don’t merely hope what I say. In my own mind I am quite sure.
Paul Davidson
5. The Conceptual Difference between Keynes’s General Theory and Classical Theory — Savings and Liquidity
Abstract
A sage once said that the definition of a “classic” is a book that everyone cites but no one reads. Since it was published in 1936, John Maynard Keynes’s book The General Theory of Employment, Interest and Money is a classic in the sense that economics professors at some of the most prestigious universities, particularly in the United States, have not read Keynes’s book. In fact, ever since World War II, in highly regarded universities’ economics departments, students are told that The General Theory of Employment, Interest and Money is so obscure and confusing that they need not (and should not) read it. For example, a founder of the so-called New Keynesian theory, Harvard Professor N. Greg Mankiw (1992, p. 561) has written that
The General Theory is an obscure book … [it] is an outdated book. … We are in a much better position than Keynes was to figure out how the economy works. … Few macro economists take such a dim view of classical economics [as Keynes did] … Classical economics is right in the long run. Moreover, economists today are more interested in the long-run equilibrium. … [There is] widespread acceptance of classical economics.
Paul Davidson
6. Further Differentiating Keynes’s Aggregate Demand Function
Abstract
To differentiate Keynes’s general theory from classical theory’s “special case” and to explain why the aggregate demand function is not identical to the aggregate supply function, Keynes developed a new and expanded taxonomy for the components of the aggregate demand function.
Paul Davidson
7. The Importance of Money, Contracts, and Liquid Financial Markets
Abstract
The neutral money axiom is an essential building block not only of 19th-century classical theory, but as the previously cited quote from Professor Blanchard indicated, it is also a matter of faith underlying the conventional wisdom of today’s mainstream macroeconomic models of the economy. Since in classical theory producible goods and services exchange for other producible goods and services and the supply of producibles always equals the demand for producibles (Say’s Law), then there is no need for money, except as a counting device — a numeraire — in the production and exchange processes.
Paul Davidson
8. World War II and the Postwar Open Economies System
Abstract
As early as 1931, Keynes began to experience episodes of severe pains in his chest and shortness of breath that “were tell-tale signs of coronary artery insufficiency, with resulting anginal pains” (Skidelsky 1992, p. 627). A little over a year after the publication of The General Theory of Employment Interest and Money (1936a), in May 1937, Keynes suffered what today would be diagnosed as an attack of coronary thrombosis (Skidelsky, 1992, p. 634). From May until the end of September 1937, Keynes was confined to a private hospital for convalescence. Even after release from hospital, Keynes was told by his doctors that he must take significant periods of rest each day and even stay in bed one day a week.
Paul Davidson
9. Classical Trade Theory versus Keynes’s General Theory of International Trade and International Payments
Abstract
The classical law of comparative advantage and classical theory’s presumption of the desirability of freely flexible exchange rates1 are the foundations of mainstream economists’ claim that free trade and unfettered international finance markets are socially desirable since they promote maximum efficiency and prosperity globally. On the other hand, Keynes’s analysis of the operation of a monetary economy suggests that, like Say’s Law, the conventional wisdom regarding the importance of the classical law of comparative advantage and the desirability of flexible exchange rates can be “misleading and dangerous”.
Paul Davidson
10. Reforming the World’s Money
Abstract
In The General Theory, Keynes argued that if an economy was operating at less than full employment, then the nation’s central bank, while maintaining the stability of financial markets, should focus primarily on providing all the liquidity that the economy can absorb in order to reach full employment. For more than a quarter century following World War II, the major central banks around the world tried to meet the role that Keynes had prescribed for them in his General Theory.
Paul Davidson
11. Inflation
Abstract
Classical theory assumed a Say’s Law full-employment economy where money was neutral and increases in the supply of money could not affect employment and real output. Thus, as the 18th-century Scottish philosopher and classical economist David Hume argued, any increase in the quantity of money in the economy must directly increase the price level (i.e., cause inflation). Nobel Prize winner and classical monetarist theorist Milton Friedman is usually credited with coining the statement “inflation is always and everywhere a monetary phenomenon” where inflation is merely too many dollars chasing too few goods.
Paul Davidson
12. Keynes’s Revolution: The Evidence Showing Who Killed Cock Robin
Abstract
In his 1935 New Year’s Day letter to George Bernard Shaw, Keynes indicated that he was writing a book that would revolutionize economic theory through its real-world description of an economy where liquidity and money contracts played a dominant role in the organization of production and exchange processes. For several decades after World War II economists spoke about this Keynesian Revolution in economic theory and policy. In 1971, even an American president, Richard M. Nixon, announced, “now I am a Keynesian”. Today, however, the teaching of Keynes’s revolution in theory and policy is dead, at least in economics textbooks, the writings of mainstream economists, and speeches of government policy makers, whether they be “liberal” or “conservative”.
Paul Davidson
Backmatter
Metadaten
Titel
John Maynard Keynes
verfasst von
Paul Davidson
Copyright-Jahr
2007
Verlag
Palgrave Macmillan UK
Electronic ISBN
978-0-230-23547-2
Print ISBN
978-0-230-22920-4
DOI
https://doi.org/10.1007/978-0-230-23547-2