The Twenty-First Century World Crisis: A Keynes Moment?

Orthodox economists, whatever their vintage, are puzzled: How could the current deep recession triggered by the 2008 financial crisis be worsening despite the efforts being made to return to stability? For a brief moment after the crisis, Keynes became fashionable, but his ideas have again been forgotten. Technocrats and politicians do not find an answer in Keynes for the cause of the crisis, or as to the policies that they should implement. Again there is widespread fear that being too Keynesian could generate a collapse of the system. In this paper, we intend first to explain why the ongoing crisis is not a recession but a structural crisis of the capitalist system. The system's decline started well before 2008 and clearly reflects the core message of the General Theory, namely, that the capitalist system has a fatal tendency to decay. A fresh reading of Keynes provides the answer as to what finally transformed the tendency into an accelerating process that is destroying the pillars of capitalism. It also indicates what should be done immediately to prevent chaos and the restoration of a backward social and economic system. The authors address the remaining question of why so few Keynesians of the first generation and many new post Keynesians do not recognize Keynes's prophecy.