Did Keynes come back?
I’m not an economist, but one thing about the coverage of the financial crisis has confused me. One thing that the left has seized on is the revenge of Keynesianism – the idea that old Thatcherite neo-liberal theories about what drives the economy had been supplanted by the idea that what really matters is maintaining or increasing public spending to stimulate demand.
But from a British perspective at any rate, the most significant economic interventions have been the slashing of interest rates, and the policy of quantitative easing. In other words, policies designed to encourage the return of spending and borrowing by manipulating the cost of money. Or, um, monetarism. Hey ho.