Wednesday 30 December 2009

With due respects to "Keynes" – The influential Economist

Years ago, my father told me that my paternal grandfather was worst hit by the 1929 “Great Depression” and so was their family.

As an Economics student, I have read about depression and also learnt how it can be reversed thanks to being introduced to an British Economist – John Maynard Keynes a.k.a. J M Keynes and his brand of economics known as “Keynesian Economics.” But then, this was almost two decades ago when I was a student.

Of late, the current economic depression, its impact on demand generation and a chance to read an article in “The Economist” by accident has lead me to introspect Keynes relevance to recent times.

To my limited knowledge of Economics, Keynesian Economics is all about Government’s or State’s intervention to provide fiscal stimulus (i.e. spend money on infrastructure / healthcare / education and other basic necessities) in order to generate demand in the market leading to employment generation.

However, as an inquisitive student, I was always curious to know how Keynes policy would be applicable or bear fruit when applied to market economies like India where economic disparities are so wide and where micro-economics is more relevant than macro-economics (that was advocated by Keynes).

To my surprise, even a reputed magazine like “The Economist” subscribes to this view.

The Economist after a review of books written by disciples of Keynes says, “Keynes’s disciples are right that their prophet’s visions go far beyond the stimulus packages with which his name is now associated. But it is much less clear how these ideas should be applied to the realities of contemporary economic policy. Beyond a broader faith in governments’ role, the question of “What would Keynes have done?” is surprisingly difficult to answer.”

The books reviewed by “The Economist” are:

Keynes: The Twentieth Century’s Most Influential Economist. By Peter Clarke.

Keynes: The Return of the Master. By Robert Skidelsky.

The Keynes Solution: The Path to Global Economic Prosperity. By Paul Davidson.

Picture:- John Maynard Keynes

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