Finance, Speculation and Stability: Post-Keynesian Policies for Modern Capitalism

Maynard Keynes’s best known remark is: ‘In the long run we are all dead’ (Keynes, 1923; C.W., vol. IV, 1971, 65, emphasis in original). This led an IMF wit some years ago to crack: ‘Well, he’s dead and we’re in the long run’. Though Keynes’s remark is well known, its context is not. It occurs in his 1923 Tract on Monetary Reform in which he is cheeking his old teacher, Alfred Marshall. For he continued: ‘Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again’ (65). He was arguing for a change in emphasis, from concentrating on the economics of the long period, of the long-period determination of normal competitive equilibrium prices and quantities by the forces of supply and demand, Book V of Marshall’s Principles, then the bible of most English-speaking economists, to more attention to analysis of, and policy for short-run happenings. But, just before he died, in his last article in the Economic Journal, in speeches to the House of Lords and at his Political Economy Club at Cambridge (by then presided over by Dennis Robertson), he bemoaned the fact that the pendulum had swung too far the other way, to an undue concentration on the short period and the neglect of fundamental and lasting truths to be found in the insights of our founder Adam Smith and Keynes’s own mentor, Marshall.