“Broadly speaking, [Keynesianism means] that the government has a specific responsibility for the behavior of the economy, that it doesn't work on its own autonomous course, but the government, when there's a recession, compensates by employment, by expansion of purchasing power, and in boom times corrects by being a restraining force. But it controls the great flow of demand into the economy, what since Keynesian times has been the flow of aggregate demand. That was the basic idea of Keynes so far as one can put it in a couple of sentences.”

—  John Kenneth Galbraith

Booknotes interview (1994)

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John Kenneth Galbraith 207
American economist and diplomat 1908–2006

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“From the late 1940s until the early 1960s, events seemed to prove the Keynesians correct. Then, beginning in the 1960s, several distinguished economists began to challenge Keynesian ideas. Their counterrevolutionary views, which in many ways mirrored those of the classical economists, were strengthened by events in the 1970s, when the economy’s behavior began to contradict some Keynesian ideas. But in 2008 and 2009, as the economy sank into the most serious worldwide recession since the Great Depression, Keynesian ideas were once again at the center of a heated debate about the causes of the problem and the appropriate remedies.”

Robert Hall (economist)

Robert E. Hall and Marc Lieberman, Macroeconomics (2012).

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“The usual and basic Keynesian answer to recessions is a monetary expansion. But Keynes worried that even this might sometimes not be enough, particularly if a recession had been allowed to get out of hand and become a true depression. Once the economy is deeply depressed, households and especially firms may be unwilling to increase spending no matter how much cash they have, they may simply add any monetary expansion to their board. Such a situation, in which monetary policy has become ineffective, has come to be known as a "liquidity trap"; Keynes believed that the British and American economies had entered such a trap by the mid-1930s, and some economists believed that the United States was on the edge of such a tap in 1992.
The Keynesian answer to a liquidity trap is for the government to do what the private sector will not: spend. When monetary expansion is ineffective, fiscal expansion—such as public works programs financed by borrowing—must take its place. Such a fiscal expansion can break the vicious circle of low spending and low incomes, "priming the pump: and getting the economy moving again. But remember that this is not by any means an all-purpose policy recommendation; it is essentially a strategy of desperation, a dangerous drug to be prescribed only when the usual over-the-counter remedy of monetary policy has failed.”

Paul Krugman book Peddling Prosperity

Source: Peddling Prosperity (1994), Ch. 1 : The Attack on Keynes

Xavier Sala-i-Martin photo

“It is commonly agreed that Keynes came up with the idea that public works are the best way to help the economy during a recession.
As a result, Keynesian economists seem to have developed a blind faith in the government in general, and in the system of public works in particular.
I do not share the same faith in the government.
I do not share the same faith in public works.<p”

Xavier Sala-i-Martin (1962) Catalan economist

http://www.columbia.edu/~xs23/keynes/keynes2.htm And this may help explain why.
Xavier Sala-i-Martin, Xavier Sala-i-Martin's Home Page http://www.columbia.edu/~xs23/keynes/keynes1.htm.

Alan Blinder photo

“First and foremost, Keynesian economics is a theory of aggregate demand and of the effects of aggregate demand on real output and inflation.”

Alan Blinder (1945) economist

"The fall and rise of Keynesian economics", (1988)

Michael J. Sandel photo

“The Second World War supplied the occasion for the spending, and Keynesian economics supplied the rationale. But Keynesian fiscal policy had political appeal even before the war demonstrated its economic success. For unlike the various proposals for structural reform, such as vigorous antitrust action or national economic planning, Keynesian economics offered a way for the government to control the economy without having to choose among controversial views of the good society. Where earlier reformers had sought economic arrangements that would cultivate, citizens of a certain kind, Keynesians undertook no formative mis­sion; they proposed simply to accept existing consumer preferences and to regulate the economy by manipulating aggregate demand.”

Michael J. Sandel (1953) American political philosopher

1. America's Search for a Public Philosophy
Public Philosophy (2005)

“Mundell’s models allowed a significant role for fiscal policy, especially under fixed exchange rates. However, the treatment was entirely Keynesian—an increased budget deficit operated solely by raising the aggregate demand for goods. Moreover, increases in government spending and cuts in taxes had pretty much the same effect on the economy.”

Robert Barro (1944) American classical macroeconomist

Source: Nothing Is Sacred (2002), p. 23

Amartya Sen photo

“That austerity is a counterproductive economic policy in a situation of economic recession can be seen, rightly, as a “Keynesian critique.” Keynes did argue—and persuasively—that to cut public expenditure when an economy has unused productive capacity as well as unemployment owing to a deficiency of effective demand would tend to have the effect of slowing down the economy further and increasing—rather than decreasing—unemployment. Keynes certainly deserves much credit for making that rather basic point clear even to policymakers, irrespective of their politics, and he also provided what I would call a sketch of a theory of explaining how all this can be nicely captured within a general understanding of economic interdependences between different activities… I am certainly supportive of this Keynesian argument, and also of Paul Krugman’s efforts in cogently developing and propagating this important perspective, and in questioning the policy of massive austerity in Europe.
But I would also argue that the unsuitability of the policy of austerity is only partly due to Keynesian reasons. Where we have to go well beyond Keynes is in asking what public expenditure is for—other than for just strengthening effective demand, no matter what its content. As it happens, European resistance to savage cuts in public services and to indiscriminate austerity is not based only, or primarily, on Keynesian reasoning. The resistance is based also on a constructive point about the importance of public services—a perspective that is of great economic as well as political interest in Europe.”

Amartya Sen (1933) Indian economist

Amartya Sen, "What Happened to Europe?", New Republic (August 2, 2012)
2010s

Ilana Mercer photo

“But public works, economic protectionism, cheap money, 'deficit-financed government spending,' and 'the animal spirits of the spendthrift' in the service of boosting 'consumption demand'… Doesn't Keynesianism simply appeal to the worst in human nature?”

Ilana Mercer South African writer

"John Maynard Keynes: Where’s The Genius?! (Part 2) http://www.economicpolicyjournal.com/2013/08/john-maynard-keynes-wheres-genius-part-2.html Economic Policy Journal, August 23, 2013.
2010s, 2013

Ian Bremmer photo

“Authoritarian governments are now trying to ensure that the increasingly free flow of ideas and information through cyberspace fuels their economies without threatening their political power.”

Ian Bremmer (1969) American political scientist

"Democracy in Cyberspace," Foreign Affairs (November/December 2010).

Robert Skidelsky photo

“Keynes's idea was very simple. Monetary and fiscal policy should have a single goal, jointly pursued, of maintaining a full employment level aggregate demand.”

Robert Skidelsky (1939) Economist and author

Source: John Maynard Keynes: The Return of the Master (2009), Ch. 8 : Keynes for Today

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