When did Keynesianism become the dominant school in economics circles? Was it during the New Deal? What do modern economists say about the New Deal? On what do they base these conclusions? Why is Keynesianism the school of economics accepted by the academics? Why is the Austrian school rejected?
Hayek and His Lamentable Contemporaries
Shortly after Keynes’ General Theory was published in 1936.
Mainstream economists think it was a mixed bag, but overall better than doing nothing.
Keynesianism prescribes an important, prestigious role for the economist in managing monetary policy. Austrianism prescribes a hands-off approach, and no cushy government jobs for economists. Academics generally subscribe to doctrines as dictated by their interests.
I apologize for the absence.
If Keynesian economics took hold of academia almost immediately adter Keynes’ General Theory was published, what school dominated academia up until that time? Was it similar?
I mean, what reasons would mainstream economists give for their acceptance of Keynesianism?
bump
I would say Alfred Marshall’s view was the one overthrown by Keynes. Irving Fisher had some time in the sun, but the '29 crash ruined his reputation along with his finances. Marshall, although pointlessly mathematical like Keynes, believed in long-run equilibria in free markets, unlike Keynes.
Krugman, Keynes greatest champion, wrote:
The key to Keynes’s contribution was his realization that liquidity preference — the desire of individuals to hold liquid monetary assets — can lead to situations in which effective demand isn’t enough to employ all the economy’s resources.
Therefore, according to Krugman and some other mainstreamers, government spending must step in to fill the gap in effective demand.
lolz for not mentioning prices.
Inflationism, like communism, has always been around. Keynes gave them an ideological rebirth.
The reason Keynesianism is accepted by academics is that defending another school of thought would mean denouncing the people who write their paychecks.