In his article, Krugman defends the role of Keynes while carefully qualifying his claims. I will pull out a few quotes to discuss – the entire articles is linked below:
Quote 1: Krugman differentiates Karl Marx and Keynes, at least in the way they should be remembered (or how their contributions should be remembered), by portraying Marx as trivial and Keynes as still relevant. Note that this article was written in 1998, just after the East Asian Financial crisis.
“By my reckoning, Karl Marx made about as much of a contribution to economics as Zeppo Marx made to comedy. Or as John Maynard Keynes more elegantly put it, ‘Marxian Socialism must always remain a portent to the historians of Opinion–how a doctrine so illogical and so dull can have exercised so powerful and enduring an influence over the minds of men, and through them, the events of history.’ Harsh words, but Keynes earned the right to say them.
For it was Keynes, not Marx, who cracked the code of crisis economics and explained how recessions and depressions can happen. As Japan and the rest of Asia have gone into an economic tailspin, it is Keynesianism, not Marxism, that offers useful guidance about how they might save themselves.”
Quote 2: Krugman suggests a possible a reason why Keynes isn’t a “household name” is because the position of economists is not fantastical enough. Thus, for an economist to gain that kind of fame, they have to be portrayed as a hero of some sort. This may be a crucial insight – as I consider how often I have heard Alan Greenspan (while a FED chairman) as the “most powerful man in the world”, even in everyday conversation with non-economists. During that time, it was widely believed that Greenspan was a primary architect in the success of the US economy.
Krugman also points out that Keynes himself did not overplay the role of economics – preferring the use of a medical metaphor rather than something more flashy (can the same be said of Krugman?).
“So why isn’t Keynes a household name? Perhaps because we want our gurus to look and sound the part. Our saviors are supposed to look like an Old Testament prophet and rage against the evils of the world; a fedora-wearing member of the Establishment, who wants to rescue the system rather than destroy it, can’t make it past the casting department, no matter how unconventional his private life or his ideas. Keynes also had an off-putting belief that good economics is the product of hard thinking. ‘Economics is a difficult and technical subject,’ he once wrote, ‘but nobody will believe it.’ Worst of all, instead of presenting depressions as a morality play, with villains and heroes, he portrayed them as a dangerous but treatable disease in an otherwise healthy patient. Indeed, he once expressed the hope that economists might someday be thought of like dentists–apolitical professionals brought in to resolve technical problems.”
Quote 3: And, finally, the hedging statement(s). One thing that I always find interesting is that there is always a fallback position should the argument of article be refuted – and they are always vague. In The Great Unraveling [Krugman, 1994] I found the use of such statements also quite prevalent.
“True, there was a long, 25-year stretch when many economists turned their backs on Keynes. They claimed, with some justice, that he made assumptions that could not be rigorously justified…”
“Now I’m not saying that Keynes was right about everything. But the essential truth of Keynes’ big idea–that an economy can fail if consumers and investors spend too little, that the pursuit of sound money and balanced budgets is sometimes (not always!) folly–is as evident in today’s world as it was in the 1930s. And in these dangerous days, we ignore or reject that idea at the world economy’s peril.”