The Fall and Rise of Keynesian Economics

During the 1970s, monetarism and the new classical macroeconomics ushered in an era of neoliberal economic policymaking. Keynesian economics was pushed aside. It was almost forgotten that when Keynesian thinking had dominated economic policymaking in the middle decades of the twentieth century, it had coincided with postwar economic reconstruction in both Europe and Japan, and the unprecedented prosperity and stable growth of the 1950s and 1960s. The global financial crisis of 2007-2009 and the recession that followed changed all that. Influential voices in both academic economics and amongst policy-makers and commentators began to remind us how useful Keynesian ways of thinking could be, especially in coming to terms with our current economic predicaments. When politicians across the globe were confronted with economic crisis, they introduced pragmatic and workable measures that bore all the hallmarks of Keynesianism. This book is about the fall and rise of Keynesian economics.

Eatwell and Milgate range widely across the landscape that defines their subject matter. They consider how powerful Keynesian ideas can be when applied to past and present economic problems. They show how helpful these ideas are in explaining why we came to find ourselves in the disorder we are in. They examine where and how the analytical and methodological foundations of conventional macroeconomic wisdom went wrong. They set out a blueprint for an alternative that provides a clearer, more consistent, and more applicable approach to understanding how markets work. They also highlight the interpretive shortcomings that have come to characterize Keynes scholarship itself. They do all of this within the context of a provocative reconsideration of some of the most pressing economic problems that confront financial markets and the global economy today. They conclude that Keynesian ideas are not just for crises, but for constructive economic policy making at all times.

John Eatwell has taught economics at Cambridge since 1970, and became President of Queens' College, Cambridge, in 1997. From 1980 to 1996 he was also a Professor in the Graduate Faculty of the New School for Social Research, New York. He was co-editor of the New Palgrave Dictionary of Economics. Recent books include Global Finance at Risk: The Case for International Regulation, Hard Budgets and Soft States: Social Policy Choices in Central and Eastern Europe, and Global Governance of Financial Systems: The Legal and Economic Regulation of Systemic Risk. He is a member of the House of Lords.

Murray Milgate is a writer and academic economist best known as co-creator and co-editor of the celebrated New Palgrave Dictionary of Economics and for his work on classical economic thought and Keynesianism. He taught economics at Harvard University and then the University of Cambridge, where he is Fellow and Director of Studies in Economics at Queens' College. He is a past recipient of Columbia University's Eccles Prize for Excellence in Economic Writing (1992). His many books include: Capital and Employment; The World of Economics; Ricardian Politics; and, most recently, After Adam Smith.