Keynes’ influence does not increase so much as it spreads. Pre, Paleo, Neo, Post, and New Keynesians all emerged when some novel specimen of economic deficiency came to notice and required attention. The web of personalities, influences, and diagrammatic icons now connected to Keynes is so extensive that describing them without controversy would in itself amount to a considerable feat of scholarship. A minimally antagonistic trace of these influences might be:
Pre Keynesians evolved recognizable theories of aggregate demand, diagnosed the essential problem of capitalism as the periodic failure of demand to justify a glut of productive capacity, propounded the multiplier effect, and re-vivified the immemorial paradox of thrift;
Paleo Keynesians (e.g.: Keynes) advocated the enhancement of demand via government spending financed through public indebtedness — a policy that did succeed when made manifest amid the annihilation of physical capital and the humanitarian disaster of World War II;
Neo Keynesians synthesized the Keynesian impulse with economics’ neoclassical foundation, only to have their resultant causal model dashed on the theoretically counter-implied stagflation of the 1970’s;
Post Keynesians have returned to their Keynesian sources in search of the formal dynamics of economic causation that we see alluded-to often, but never quite explicated, in Keynes’ writings; and
New Keynesians have won control over economic policy through the first decade of the 21st Century 1 by convincing the public that their neoclassical synthesis failed because of its emergent view, which they have now remedied in a new reductionist theory.Further speciation is sure to follow as further economic difficulties present themselves for repair.
But Keynes’ successors have yet to escape what we see as the essential debility of the mainstream faithful who have accepted the economic system’s capacity for self-regulation into their hearts. In their presumptions to know where the economy is and where it needs to go, both denominations reference a dynamic they have not been able to construct in any media exterior to the human cortex. The realm of argument can produce only absurdities when mapping a route from an unspecified origin to an unknowable destination.
Neoclassical economics is satisfied that the general optimum specifies a state toward which an economy objectively must, and morally should, trend. This specification theoretically defines an economic dynamic in terms of where the economic state is in relation to where it wants to go. The Keynesian dynamic is considerably less distinct: it presumably responds to the wastage of labor availability owing to the surfeit of under-utilized outputs from earlier production; and it proceeds toward a state that is in some sense ‘more balanced’.
When one first begins to think about economic causality, it is hard not to side with the classics: if ‘general optimum’ means what it is supposed to mean, then labor and capital should be expected to adjust to one another as required for an overall maximization of value; and society would presumably have much to gain from a science of adjustment to the optimal economic state. But the classics failed to quantify their notion of general optimality, which invites doubt as to the optimum’s power in controlling material events, or to even exist beyond the realm of abstraction. Assurances that the economic order is naturally self-righting are difficult to trust when they originate in a merely formal system.
A loss of faith in laissez faire’s ability to bring forth the best of all possible material circumstances created the need for a Keynes who would address real things that were matters of real concern to the moneyed and political elites. He asserted that labor could be brought into productive accord with capital through the shrewd application of means under the elite’s command, viz.: interest rates, deficit spending, manipulation of the currency, the size of government, tax policy, et al. These instrumentalities are comprehended in terms of their effects on an equation summing elements of aggregate demand; and Keynesian theories assert passive interrelations among these elements, as well as their responses to policy initiatives.
But the conceptual fauna by which Keynes presents economic order to examination by reason have as
yet proven deficient as mensurable creatures. The Keynesian lexicon is populated by gross aggregates
subject to elastic definition, arbitrary measurement, and statistical fraud in service to a governing
regime. Any argument can be made to sound reasonable if presented in terms of well-chosen abstractions;
but science does not begin until the abstractions necessary to a hypothesis are measured. Imprecise
measurements on ill-defined objects only create a pantomime of activity — one whose only certainty
of effect is to create the impression that ‘something is finally being done’. Indeed, there
are also those who believe their prayers have altered the course of hurricanes; and consider their faith
confirmed when the storm passes them by. Such is the need for belief in the presence of fear, and for
activity as evidence of political potency.