“One thing is certain: if there is another Keynes out there, he or she will be someone who shares Keynes’s most important qualities. Keynes was a consummate intellectual insider, who understood the prevailing economic ideas of his day as well as anyone. Without that base of knowledge, and the skill in argumentation that went with it, he wouldn’t have been able to mount such a devastating critique of economic orthodoxy. Yet he was at the same time a daring radical, willing to consider the possibility that some of the fundamental assumptions of the economics he had been taught were wrong.”
-Introduction by Paul Krugman to The General Theory of Employment, Interest, and Money, by John Maynard Keynes
Nearly 80 years ago, the Great Depression and World Wars inspired a debate between two of the greatest economists of the 20th century, John Maynard Keynes and F. A. Hayek. The global economic paralysis and social upheaval of their time could not be explained or remedied by then current economic theories. Both men relied heavily on knowledge of past research and experience to forge recommendations for a new path forward. Since then, their alternative perspectives have largely shaped political discussion of macroeconomics. Although Keynes’ ideas garnered significant weight first, Hayek’s warnings have proved extremely prescient regarding the outcome of government intervention.
Today’s global economy appears more reminiscent of that period than any time since. Industrialized nations are teetering on the edge of another recession, struggling to find solutions in the face of impotent monetary policy. Meanwhile, within the developing world, radical changes are being brought about by revolts against enshrined leadership. Numerous lessons learned during the early 20th century have been forgotten and must be re-learned. However, much has also changed about the global economy throughout the decades. While the old lessons remain important, modern theories are warranted to address today’s political and economic issues.
So far, the Great Recession has failed to spur any radical changes from previous conceptions of macroeconomics or political theory. Witnessing mass unemployment and increasing levels of poverty around the globe, one can only hope that new theories and practices will be developed that inspire a brighter future. While I certainly don’t expect to become the next Keynes (or Hayek), I believe the qualities noted above that made Keynes special are worth striving towards. Moving forward it’s incredibly important that theorists fully understand the strengths and weaknesses of historical theories, yet are willing to step beyond the boundaries and approach today’s questions from a fresh perspective.
Stemming from the current economic malaise and general dissatisfaction with government is a willingness to accept novel ideas. The directions taken will likely determine the length of the current crisis, as well as size and forms of governance for years to come. The time is ripe for another Keynes. Hopefully our generation will find and listen to him or her.