Wednesday, December 23, 2009

Keynes: The Return of the Master, by Robert Skidelsky

If you are not familiar with all the - to me anyway - rather arcane language which is used to describe the varieties of economic theory, then you might find some parts of this book hard to grasp. In fact, the author even states that some of the ideas or theories held dear by various economic schools of thought, may seem mad to many people.

With regards to the global financial crisis the gist of it is, the beautiful numbers of the economic modeling were held more important to these economic theorists than reality itself.

Biographer Robert Skidelsky, Emeritus Professor of Political Economy at the University of Warwick, is perhaps most well known for his three volume life of John Maynard Keynes. Many years ago I read the first volume, but didn't pursue the following volumes. From memory, I thought his Skidelsky's style a bit dry and flavourelss.

This short book is okay if you're a lay reader, but only just. It's divided into three parts. The first deals with the global financial crisis, and how it all came about. The second part details Keyne's economic ideas, plus other economic schools of thought. The final section wraps up with some Keynesian solutions to the world's current economic dilemmas.

I can't say I enjoyed this book much. Reading about economic prescriptions is not really my cup of tea. My mind kept wandering back to the wonderful John Kenneth Galbraith's book The Affluent Society, which was more enjoyable on matters economic.

On the other hand, I'm not really qualified to review this type of book. I know little of the subject and struggle with some of the concepts.

1 comment:

Suddenly Fourty said...

Nassim Taleb rails against economists and other "experts" in his bestseller Black Swan. I'm inclined to see his point. Economics like most sciences attempts to reduce observations to a handful of equations.

Physics for example explains reality with several fundemental General Relativity equations (for the macro) and Quantum Mechanical equations (for the micro). But by no means to physicists try to use these equations to explain the behaviours of complex systems like living organisms which are described by an enormous number of variables.

The trouble with economics is that it tries to do the latter when it comes to our society's fortunes. The GFC is an outcome of such hubris. Some bright boys extrapolated our future on the basis of some whiz-bang model on a spreadsheet that presumed to capture all the relevant factors.

Hindsight seems nice because it makes past events look like they are related. Yet those events would have told us nothing about the future as they transpired. And it is this reality that seems to escape the faculties of these economists that to this day make so many of these fearless forecasts that the Media lap up and regurgitate to the average schmoe.