Profile of Keynes – Why search for a new Keynes?

Soros Institute for New Economic Thinking held a massive conference lately to discuss the economic thinking agenda ahead. And what better place than Bretton Woods which hosted a similar meeting in 1945 leading to much of the ideas we have now. The conference has so many economists, papers, ideas etc. Some economists have even criticised that Soros has assembled economists which believe in his ideas and are trying to force them on to the world.

Surfing through these ppts and papers, I came across this superb piece on Keynes by John Cassidy of New Yorker. It was written in 1998 after the SE Asian crisis and we were discussing same things as we were discussing then as well. The SE Asian crisis became an international economic crash and many economies came under stress. There were calls then to create a new bretton woods system and reform the international monetary system. People were looking for a new Keynes to set in the agenda.

Cassidy goes back to what Keynes had proposed way back in 1945 which was not implemented as US opposed it. He says do not look for a new Keynes and instead read and implement what he suggested then.

He then reviews the meetings at Bretton Woods in 1945 and how Keynes and White laid the path for future economic systems. Keynes even then wanted some system to check current account surplus economies but was not agreed by US as they were the surplus economies. Keynes agreed as US was key to the BW agenda and would be required to invest in war-torn economies. Thes there were his proposal to create an international currency Bancor issued by a Global Central Bank (International Clearing Union) which was vetoed by US as i would have to contribute maximum towards the bank and replace US Dollar as world currency.

Superb article.  Discusses Keynes life and how he became an economist as well.

Amazing how similar arguments are made now and nothing was done to reform IMS in 1998. And now we are going through similar set of arguments.  

Superb essay. It is a pity we associate Keyesianism only with givernment spending and intervention. He had many more contributions which should do monetarists proud as well. And then we must r’ber his sugegstion for govt. spending was to get out of great depression. He was not really talking about government spending in normal times which was extended by Keynesians later. But then that is how history is. You cannot really correct it.

One Response to “Profile of Keynes – Why search for a new Keynes?”

  1. Scott Says:

    Keynes advice would have been easier to follow back then. The USA had more money. Now, they don’t. Today they have lots of debt. Who’s going to finance a bank to the world. USA? Europe? BRIC Countries?

    Paraphrased, what was proposed at Bretton Woods in 1944 was simply free markets suspended in molasses. That the world has unravelled now is not an indication that a version of Bretton Woods needs to be reestablished but an acceptance that this IS the status quo, the natural state, Bretton Woods just delayed the inevitable making the shock more severe.

    As an aside, it should not be a surprise that Soros is the sponsor to the aforementioned conference. He has profited in the past from failed attempts at market manipulation by governments around the world.

    The New Yorker article points out, Keynes was contemptuous of those who employ “sophisticated trading strategies” / speculators, the forerunners of todays hedge funds. By extension, it follows he would also be contemptuous of those trying to manage the market employing the same techniques. One would assume this would include the attendees of the Soros conference.

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