The time has clearly come for those of us who've not yet done so to blow the dust off our copies of the great man's General Theory of Employment, Interest and Money. As an interesting article by James Pearson points out, the book was much more ambitious in scope than simply setting out some policies to prevent depression. Pearson writes:

Keynes, at a minimum, looked to redefine the relationship between the
state and the market in capitalist societies in order to find a “middle
way” between laissez faire and socialism. His new order required, in
turn, a general reorientation in behavior and outlook such that the
older culture of saving, self-denial, and minimalist government might
be replaced by one more tolerant of consumption, debt, and government
spending.

He sees Keynes as an architect of what Daniel Bell later described as the central “cultural contradiction” of capitalism, the tension between consumerist hedonism and the need for savings to build capital.

Serendipitously, having read this article, I opened this morning's Financial Times to find that historian Niall Ferguson has written a good column blasting Paul Krugman's appropriation of Keynes to justify 'depression economics' policies – mainly massive increases in government spending and debt. Ferguson argues that the recent rise in long bond yields is an inevitable result of massive deficit spending, and what's more a desirable market response. Interestingly, like Pearson, he's challenging the new conventional wisdom that Keynes has the answers to the current crisis – I suppose an anti-Keynes backlash was inevitable.

I'm on the Fergusson side of this particular clash of the titanic celebrity profs, but rather than just surf the columns, I'm going to have to turn back to the original text. If only Keynes had managed to make the General Theory as readable as his other books, which I've returned to much more often. Essays in Persuasion or The Economic Consequences... are stuffed with the best kind of English prose – not so the General Theory. Pearson agrees with me:

The General Theory is notoriously difficult for the layman to
read or understand, containing as it does a bewildering mix of abstract
theory and seemingly unrelated excursions into subjects like stock
market speculation and mercantilism. Even Paul Samuelson, one of
Keynes’s American expositors, found it to be “a badly written book,”
full of “mares’ nests of confusions,” where the reader encountered
flashes of insight interspersed with tedious algebra. Keynes left it
for others, like Samuelson, to work out fully the implications of his
tour de force. The Economic Consequences of the Peace, by
contrast, contained a powerful and lucid argument that no one could
misunderstand or dismiss. Nevertheless, the two works, while vastly
different in these respects, hammered at a common theme—namely, the
obsolescence of the pre-war order in Europe, along with all of its
associated ideas and assumptions.

And there I suppose is the core of what we can all agree on about the current economic situtation: the obsolescence of the old order. How will capitalism reinvent itself this time around?