February 10th, 2014

J. M. Keynes: The Damage Still Done by a Defunct Economist

by Prof. Richard Ebeling Seventy-eight years ago, on February 4, […]

ca. 1940s — British Economist and Financier John Maynard Keynes — Image by © CORBIS

Seventy-eight years ago, on February 4, 1936, the British economist John Maynard Keynes (1883–1946) published what soon became his most famous work, “The General Theory of Employment, Interest, and Money.” Few books, in so short a time, have gained such wide influence and generated so destructive an impact on public policy. What Keynes succeeded in doing was to provide a rationale for what governments always like to do: spend other people’s money and pander to special interests.

In the process Keynes helped undermine what had been three of the essential institutional ingredients of a free-market economy: the gold standard, balanced government budgets, and open competitive markets. In their place Keynes’s legacy has given us paper-money inflation, government deficit spending, and more political intervention throughout the market.