The Economy: We Are All Keynesians Now

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propensity to consume partly through its scheme of taxation, partly by fixing the rates of interest, and partly, perhaps, in other ways."

A few other economists of Keynes's time had called for more or less the same thing. Yet Keynes was the only one with enough influence and stature to get governments to sit up and pay attention. He was the right man at the right time, and his career and fame derived largely from the fact that when his theories appeared the world was racked by history's worst depression and governments were desperately searching for a way out.

Contrary to the Marxists and the socialists, Keynes opposed government ownership of industry and fought those centralists who would plan everything ("They wish to serve not God but the devil"). While he called for conscious and calculated state intervention, he argued just as passionately that the government had no right to tamper with individual freedoms to choose or change jobs, to buy or sell goods, or to earn respectable profits. He had tremendous faith that private men could change, improve and expand capitalism.

Perhaps Immoral. Like any genius, Keynes had plenty of faults and shortcomings. Even his admirers admit that he could be maddeningly abstruse and confusing. MJ.T.'s Paul Samuelson, for example, thinks that Keynes downplayed the importance of monetary policy. His few outright critics feel that, while he knew how to buoy a depression-stricken industrial economy, he offered little in the way of practical information about how to keep a prosperous modern economy fat and secure. Keynesian theories are certainly unworkable in the underdeveloped nations, where the problem is not too little demand but insufficient supply, and where the object is not to stimulate consumption but to spur savings, form capital and raise production.

Such critics as former U.S. Budget Director Maurice Stans still worry that Keynes makes spenders seem virtuous and savers wicked, and thus subtly threatens the nation's moral fiber. Other doubters contend that earlier obscure economists originated some of the ideas that Keynes popularized, and that all he did was wrap them up in a general theory. But even his severest de tractors bow to his brilliance, use the macroeconomic terms and framework that he devised, and concede that his main theories have largely worked out in practice.

What Did He Say? Though Keynes's gospel has only recently come to full flower, a school of fervid apostles has been preaching it in the U.S. for more than a generation. Harvard's Alvin Hansen, the first great Keynesian teacher, taught it to hundreds of economists, many of them now in high positions. Hansen's brightest student was Paul Samuelson, who later wrote a Keynesian-angled college textbook on economics that has gone to 2,000,000 copies and influenced the thinking of count less teachers and students.

Franklin Roosevelt was at first no fan of Keynes — "I didn't understand one word that man was saying," he sniffed after being lectured by Keynes at the White House in 1934 — but some of his economists gradually began to lean on Keynesian language and logic to rationalize huge deficits. In World War II, Washington planners used Keynesian ideas to formulate their policies of deficit spending.

Congress adopted the Keynesian course in 1946, when it passed

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