What Went Wrong in 2008, As Told by a Keynesian.

AuthorMcKinley, Vern

Money and Government: The Past and Future of Economics By Robert Skidelsky 512 pp.; Yale University Press, 2018

To get a balanced view of the lessons from the 2007-2008 global financial crisis, the well informed must read what a full range of authors have to say about what caused the crisis and what primary lessons should be drawn from it. I have tried to do that not only by reading and reviewing volumes by those repulsed by the ensuing government interventions, but also by those favorably disposed to them. Books such as Atif Mian and Amir Sufi's House of Debt ("House of Flawed Analysis," Winter 2014-2015), Adair Turner's Between Debt and the Devil ("When Intervention Fails, Intervene," Spring 2016), and Binyamin Appelbaum's The Economists' Hour ("Milton Friedman Caused the Financial Crisis and Other Tales," Winter 2019-2020) fall into the latter category. All those authors blame blind faith in the market and the deregulation bogeyman, among other causes, for the financial crisis.

British economic historian Robert Skidelsky falls into the latter camp. Skidelsky is aJohn Maynard Keynes scholar and has published a three-volume biography of the economist. He is also a professor at the University of Warwick.

History/"History of Economic Thought" is the daunting title of Part One of Skidelsky's book Money and Government, and he does his level best to deliver on that promise. This part traces through the origins, value, demand for, and quantity theory of money, the gold standard, and bimetallism. It closes with a review of the economic role of the state and mercantilism.

It has been quite some time since I read a book with sections so deeply reminiscent of my undergraduate economics courses. Much of the discussion has a textbook feel to it, complete with explanatory equations, diagrams, and graphs. For those familiar with many of these topics through prior study, these chapters likely provide much more background material than necessary to understand the later discussions of the global financial crisis and how Skidelsky believes it changed the role of government.

Rise and fall of Keynes /

Skidelsky describes the pre-Depression era "old macroeconomy" as resting "on a tripod of gold, balanced budgets and free trade." He summarizes much of his life's study of Keynes in Part Two of Money and Government:

The Great Depression set off a period of experiments in thought and policy. Keynesian economics was the most successful of the results.... It was...

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