In this excerpt from ‘Keynes: the return of the master’, written by Robert Skidelsky (2009), Skidelsky argues that we need John Maynard Keynes in order to handle the financial crisis. Skidelsky says the following about the cause of the crisis:
I therefore believe that the root cause of the present crisis lies in the intellectual failure of economics. It was the wrong ideas of economists which legitimized the deregulation of finance, and it was the deregulation of finance which led to the credit explosion which collapsed into the credit crunch.
In order to overcome the crisis, Skidelsky proposes the following:
An economy hit by a shock does not maintain its buoyancy; rather, it becomes a leaky balloon. Hence Keynes gave governments two tasks: to pump up the economy with air when it starts to deflate, and to minimize the chances of serious shocks happening in the first place.
Skidelsky believes that the first lesson as begun to sunk in (e.g. through bail-outs, stimulus packages), but that the second lesson as not yet been learned, although governments have come up with reforms (see also: http://www.nytimes.com/aponline/2009/09/19/us/AP-US-Obama-Economy.html?ref=business ). It thus seems that there is a Keynesian approach to ‘healing’ the economy.
On Amazon.com, I found an interesting comment regarding Skidelsky’s book:
I am sure many economists will not like this book because they think these questions to be irrelevant and outside the realm of economics. However, reality-based economists will surely find lots of value in this timely book and perhaps the legacy of Keynes is a collection of very relevant questions to which each generation needs to find its own answers.
Perhaps the uncertainty about the future and current state of the economy will again lead to the popularity boost of Keynes’ ideas.