Wednesday, August 10, 2005

Why Is Keynes Relevant Today?

John Maynard Keynes was far and away the most influential economist of the twentieth century -- bar none. His writings, as well as the institutions which he helped to establish, continue today to affect our lives. His theories on how modern economies operate are not only vigorously discussed in universities and research institutions, they are also at the very heart of daily conversations taking place in brokerage firms, finance ministries, and central banks throughout the world.

But, why are Keynesian ideas relevant today?

The main reason is that his ideas, and the refinements that came later, have remained useful. They help us to logically organize our thoughts about the economy and make predictions that can later be confronted with data. But, even before we get to the point of comparing our predictions with the data, Keynesian ideas are unusually persuasive. They produce in us a state of conviction and confidence which few other systematic theories of the economy can accomplish.

Does this mean that Keynesian economics is a straight-jacketed catechism of decided propositions, devoid of any controversy or debate? On the contrary, it is the controversy which is most interesting thing about Keynesian theory. It is the breadth of his enormous intellect and his ardent defense of economics as a serious subject of consideration that beckons us to understand the prodigous mind of this man. Remember that he addressed his General Theory of Employment, Interest, and Money to his fellow economists, whom he felt he needed to persuade first. But, more than this, it is his coterie of friends, his intellectual peers, the historical events during his life, and his knowledge of the scientific limitations of economic analysis that draw us to him. We feel a genuine sense of confidence in his thinking that few other economists command. He has become a figure of authority in economics.

This blog is dedicated to discussing various aspects of Keynes theories and his life in an informal, but nevertheless helpful and intuitive way. Each piece will be very short -- a miniature --which will highlight some interesting aspect of Keynes' life and work, or what came later. Hopefully it will also help us to better understand not only Keynes and his times, but also why we remain so fascinated in this man despite the passage of years.

3 Comments:

At Wednesday, January 25, 2006 1:56:00 AM, Anonymous Anonymous said...

The reason Keynes is relevant today is that he had a general theory with the following general result that he expressed in the form of elasticities so that a reader of the GT could,if he sought to,compare Keynes's elasticities with the results given in 1933 in Pigou's book ,The Theory of Unemployment,which were all expressed in the form of elasticities.Pigou's neoclassical result simplfies to w/p=mpl,where w= the money wage,p=the price level,and mpl is the marginal product of labor derived from a neoclassical aggregate production function.Keynes's result is that w/p=mpl/(mpc+mpi),where mpc is the marginal propensity to consume,amd mpi is the marginal propensity to invest.The special neoclassical theory holds only in the limiting case where mpc+mpi=1.If mpc+mpi<1,you obtain a set of stable,multiple unemployment equilibria.

 
At Wednesday, January 25, 2006 1:56:00 AM, Anonymous Anonymous said...

The reason Keynes is relevant today is that he had a general theory with the following general result that he expressed in the form of elasticities so that a reader of the GT could,if he sought to,compare Keynes's elasticities with the results given in 1933 in Pigou's book ,The Theory of Unemployment,which were all expressed in the form of elasticities.Pigou's neoclassical result simplfies to w/p=mpl,where w= the money wage,p=the price level,and mpl is the marginal product of labor derived from a neoclassical aggregate production function.Keynes's result is that w/p=mpl/(mpc+mpi),where mpc is the marginal propensity to consume,amd mpi is the marginal propensity to invest.The special neoclassical theory holds only in the limiting case where mpc+mpi=1.If mpc+mpi<1,you obtain a set of stable,multiple unemployment equilibria.

 
At Friday, October 12, 2012 3:51:00 PM, Anonymous Anonymous said...

Keynes theory is very relelvant to the time that we are living in.take a look around you and see for yourself if this same theory should be applied today.certainly yes!

 

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