Was John Maynard Keynes considered a failure?

Herewith my answer to another question on Quora.

You don’t want to get too tied down by the General Theory. It’s complexity undermines its validity and he appears to have been transfixed by Einstein’s general theory of Relativity which genuinely did extend the boundaries of physics rendering what we now call Classical Physics as merely a special case. Go to the extremes of matter moving close to the speed of light or the interaction of sub-atomic particles (or waves – see Heisenberg’s Uncertainty Principle) and the classical laws of physics break down. But that does not mean that classical physics is redundant. It is still used for every day understanding and technology including rocket science! I suspect that Keynes wanted to be seen as having done something similar for economics, but he didn’t.

However he did undoubtedly extend our understanding of fiscal macroeconomics beyond the received wisdom of Alfred Marshall and the Cambridge school, which were largely based on microeconomics, and those theories are as valid today as they were then.

There are three broad elements to macroeconomics: fiscal, monetary and international trade. The first two are now broadly understood, but I see little evidence of any understanding of the economics of international trade amongst our politicians and bureaucrats. Free trade is commonly regarded as a general panacea but in fact it breaks down in the case of substantial deficits. A good example of this is the EU Single Market. That is free trade, yet the UK’s experience of being in the single market has been a disaster, resulting in a trade deficit now of nearly 7% GDP, which undermines investment and growth. Clearly business will not invest into a contracting market, and UK GDP/capita growth has plummeted in parallel.


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