Leonstein
08-10-2005, 08:46
Almost everyone has heard of the guy at some point.
He was born in 1883, studied maths at first, and then switched to Economics.
He also lived the first part of his life as a homosexual, then switching back ( :confused: ) and marrying a Russian Ballerina.
He was a genius by anyone's standards, developing theory in probability mathematics, and then completely reshaping the way we think about macroeconomics.
While economists before him kind of assumed aggregate demand (ie what everyone in the country wants buy) was a variable that we just have to accept, he thought we could move AD around.
It's a long and at times complicated story, if you really want to know more, see wiki (http://en.wikipedia.org/wiki/Keynesian).
Inflation was not a big part in his story, and 70 years have passed, it is fairly obvious that a thing like stagflation would've happened that he hadn't planned for in his theory. Big Deal - if he had seen it, he'd acknowledged it and added it to his model. Don't quote stagflation as the reason Keynes was always wrong about everything. Many people do.
But (and that is a big "but") that was not all he wrote about. He had a much bigger picture view of society.
To him, uncertainty is the central part of life. We don't know what will happen, we can only make guesses. And when humans make guesses all kinds of other things come into the equation.
Freudian Economics anyone? He states that there are certain animal instincts which drive us to make decisions, that instead of looking at the raw data like rational people, the big manager "takes the helm, and directs the firm in a heroic fashion". It's testosterone, not rationality.
In other words: People are anally retentive (think about it - why do we say "sitting on a pile of money"? ;) ). They don't like to give money away, even for a return. Interest rates paid on savings strengthen that further.
He also makes the big distinction between "the state" and "government". For him, some private institutions are part of the state, like the Times Newspaper and such things.
He advocates a big state, but not a big Government necessarily.
Most importantly: Money isn't everything in life. He was an advocate of culture and arts, and he was appalled with this obsession with money evident in the time he was writing (ie the 1920s and 30s) - which he also believed to be a psychological problem.
So what do you think of the man and his ideas?
And importantly: Do you think it is a problem that generations of Economics textbooks have completely ignored most of his vision, instead focussing on the maths that was integrated into orthodox economics?
He was born in 1883, studied maths at first, and then switched to Economics.
He also lived the first part of his life as a homosexual, then switching back ( :confused: ) and marrying a Russian Ballerina.
He was a genius by anyone's standards, developing theory in probability mathematics, and then completely reshaping the way we think about macroeconomics.
While economists before him kind of assumed aggregate demand (ie what everyone in the country wants buy) was a variable that we just have to accept, he thought we could move AD around.
It's a long and at times complicated story, if you really want to know more, see wiki (http://en.wikipedia.org/wiki/Keynesian).
Inflation was not a big part in his story, and 70 years have passed, it is fairly obvious that a thing like stagflation would've happened that he hadn't planned for in his theory. Big Deal - if he had seen it, he'd acknowledged it and added it to his model. Don't quote stagflation as the reason Keynes was always wrong about everything. Many people do.
But (and that is a big "but") that was not all he wrote about. He had a much bigger picture view of society.
To him, uncertainty is the central part of life. We don't know what will happen, we can only make guesses. And when humans make guesses all kinds of other things come into the equation.
Freudian Economics anyone? He states that there are certain animal instincts which drive us to make decisions, that instead of looking at the raw data like rational people, the big manager "takes the helm, and directs the firm in a heroic fashion". It's testosterone, not rationality.
In other words: People are anally retentive (think about it - why do we say "sitting on a pile of money"? ;) ). They don't like to give money away, even for a return. Interest rates paid on savings strengthen that further.
He also makes the big distinction between "the state" and "government". For him, some private institutions are part of the state, like the Times Newspaper and such things.
He advocates a big state, but not a big Government necessarily.
Most importantly: Money isn't everything in life. He was an advocate of culture and arts, and he was appalled with this obsession with money evident in the time he was writing (ie the 1920s and 30s) - which he also believed to be a psychological problem.
So what do you think of the man and his ideas?
And importantly: Do you think it is a problem that generations of Economics textbooks have completely ignored most of his vision, instead focussing on the maths that was integrated into orthodox economics?