Keynes's General Theory, the Rate of Interest and Keynesian Economics

Geoff Tily argues that Keynes was primarily concerned with monetary policy, not fiscal policy. Viewed as a coherent whole, Keynes's work was concerned with the appropriate technique and infrastructure for the management of money at low rates of interest. More specifically, his rejection of the gold standard led ultimately to his proposal for an international clearing union to support domestic debt-management and monetary policies aimed at cheap money. His ideas became reality. With the start of the Great Depression, governments across the world began a (short-lived) era of the deliberate management of money. While many others have argued that 'Keynesian' economics is a misrepresentation of Keynes's theory, Tily argues that 'Keynesian' economics also permitted a gross misrepresentation of his economic policies. 'Keynesian' economics was a different theory opposed, and indeed rival, to Keynes's work. With the policy perspective restored, an alternative presentation of Keynes's economics, based on post-Keynesian economics, is permitted. In this book first published in January 2007, Geoff Tily argues that the economics profession has distorted and betrayed Keynes's legacy. In virtually all interpretations -- especially that taught to students -- Keynes is portrayed as concerned only with government expenditure as a means to cure economic crisis. Yet Keynes's central aim was the prevention of economic crisis. His prescription to do so concerned monetary not fiscal policy. From the moment the great depression began, Keynes began to influence greatly the monetary policy of the world. Countries, led by the UK and US, put in place capital controls and mechanisms to manage exchange rates, and changes to debt management and credit policies that permitted the orderly management of money at low long-term and short-term interest rates on what should have been a permanent basis. The Bretton Woods negotiations went some way to re-enforce and formalise these policies, but did not go far enough. The current crisis is rooted in the dismantling of the remnants of the Bretton Woods architecture and the liberalisation of finance that began even before 1970. Tily argues that we should not be surprised that the neglect of Keynes's policies is leading to a crisis of similar magnitude to the depression that motivated the development and implementation of those policies in the first place. It is to the same policies that we must turn, as the crisis becomes a reality. Geoff Tily has been a member of the Government Statistical Service since 1989 and the Government Economics Service since 2006. He did his MSc in economics at University College London and a PhD under the supervision of Victoria Chick.

Table of Contents:
Acknowledgements Introduction PART I: HISTORY Monetary Economics and Monetary Policy JMK and the Fourth Grand Monetary Discussion The Origins of Keynesian Economics PART II: THEORY The Saving-Investment Identity and the Transition to the General Theory The Theory of Liquidity Preference and Debt Management Policy The Monetary Theory of Real Activity PART III: MACROECONOMICS AFTER KEYNES Keynes's Response to Keynesian Economics The Keynesian Counter-Revolution and Thereafter The General Theory and the 'Facts of Experience' Conclusion Bibliography

About the Author :
GEOFF TILY works as an economist at the Office for National Statistics, UK. He has been a member of the Government Statistical Service since 1989. He was taught economics by Victoria Chick at University College London, UK.

Review :
! such an important book ! not merely another book on the history of Keynes's monetary thought. It provides compelling evidence of where 'Keynesians' of all shades have gone wrong and simultaneously provides them with the ammunition to generalize what passes for modern monetary theory and macroeconomics. It enables macroeconomists to put Keynes back into Keynesian economics. (Colin Rogers, University of Adelaide) This is an extraordinary book and a major and significant contribution to Post-Keyensian literature. (Jan Toporowski, School of African and Oriental Studies) Above all, this book is a good read, which may achieve that rare combination of a high level of scholarship with relevance to the policy advisor. (Mark Hayes, University of Cambridge)