I’m not an economist. Never studied it. Just picked things up over many years. I like my way better. But as a result, I’ve never read Keynes. But my understanding has always been that Keynes – as in, what he actually said – is simply the idea that when the economy tanks, government spending should pick up the slack. So, when no-one is spending, government spends; when no-one is buying, government buys; when no-one is investing, government invests. It’s an emergency measure for when the shit hits the fan.
Which makes sense.
“Keynesians” – particularly the self-defining variety – are something quite different. Rather than use this as an emergency measure, they treat it as the norm. So, even when economic conditions are normal, Keynesian governments keep on spending, often on big vanity infrastructure projects, or subsidising large chunks of industry. This is all rather expensive, doesn’t work in a globalised economy, and runs up large debts. So Britain and western Europe got themselves into a great big mess in the 70s spending money they could no longer afford.
In other words, Keynes is like a fire extinguisher. It’s great if the house is on fire. But once the fire’s out, you have to rebuild the house. If you keep on spraying the fire extinguisher, you just end up with rubble covered in foam. And no house.
Keynes is a way of saving the house. Not rebuilding it. Seems to me that those “Keynesians” whose answer to every question on long-term economic policy amounts to taxing and spending the status quo have come up with a bastardised, ‘permanent’ Keynesianism, quite different to the original. A fire extinguisher that never goes out – even when the fire has. It didn’t work then and it wouldn’t work again.
Also, open question – what, fundamentally, is the difference between neoliberalism and pre-1945 capitalism, beyond the onrush of globalisation?