John Maynard Keynes, 1933
It has become fashionable in many circles to denigrate Keynes and Keynesianism because unconventional monetary policy hasn’t worked.
I’m not going to mince words, people who make that argument are idiots. Unconventional monetary policy is not Keynesian stimulus.
Keynesian stimulus is about widespread demand: giving money to rich people is not Keynesian stimulus. The government spends, or even just gives money to people to increase their spending.
Unconventional monetary policy is not Keynesian stimulus.
Further, Keynesian stimulus only works where there aren’t supply bottlenecks. If you were to do (actual) Keynesian stimulus today it wouldn’t work, because oil would rocket past $150/barrel and the economy would immediately collapse.
Keynes did not concentrate on this issue because it wasn’t a problem in his time period: the world, and more importantly, the world’s keystone economy, America, was awash with the stuff. It wasn’t a bottleneck. The only bottleneck, before the US went off gold, was the gold-standard.
The bottleneck issue is also relevant to sinks and renewable resources: spending money indiscriminately in a way which leads to more commercial fishing, say, would be moronic, given collapsing fish stocks. Spending it in ways which lead to vastly more carbon or methane would also be idiotic.
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We are facing challenges Keynes did not, but that doesn’t mean he wasn’t right, that means that the policies he suggested need to be modified for the changing times. If you cannot do so, you do not understand either Keynes, or your own time.
This is the great problem with the work of the great political philosophers; of the sages: they come up with a solution specific to a time, and fools think that it should be applied verbatim for all of time, while other fools think “if it doesn’t work verbatim, it’s all crap.” Doing Keynesian stimulus would be simple, if it was desired. You just make sure the money gets to ordinary people and is used to reduce carbon emissions and uses of other bottleneck resources, while making sure that money doesn’t pool at the top. (Stopping money pooling at the top is mostly a solved problem. Start with 90% tax rates on all income over 1 or 2 million or so, close loopholes, and don’t privilege any income.)
But Keynesian stimulus hasn’t been done, either smart or stupid: not even the widespread demand part has been done. So people who rag on about “Keynesianism” are ragging on about a straw man: a policy which has not even been pursued.
Keynes wouldn’t have any problem prescribing solutions for today’s economic problems, and neither should anyone who understands his work. And those who deride Keynesianism either don’t understand it, or don’t actually want to see widespread prosperity.