Monday, September 21, 2009

The Role of Keynes

David Warsh has an interesting column on Keynes. Read to the bottom to see Lucas's appreciation, which is most interesting.

Meanwhile, Mankiw reviews Skidelsky's new book on Keynes in the Wall Street Journal (subscription required). He notes:
In his preface, Mr. Skidelsky says that he is a historian, not an economist. The book bears out the claim, in both its strengths and weaknesses. Mr. Skidelsky is most engaging when he draws on his biographical work. Keynes, we are reminded, had a fascinating life. He was a widely read intellectual who wrote accessibly for the general public. He advised world leaders on the crucial issues of the day and socialized with the artists and writers of the Bloomsbury group. But most of "Keynes" is devoted to ideas, not history, and here Mr. Skidelsky is not playing his strong suit. To economists his discussion of macroeconomic theory will seem pedestrian and imprecise. To laymen it will seem abstract and hard to follow.
I also liked this line:

This brings us to the biggest problem with "Keynes." Mr. Skidelsky admits to being poorly trained in the tools that economists use: "I find mathematics and statistics 'challenging,' as they say, and it is too late to improve. This has, I believe, saved me from important errors of thinking."

Has it, really? Mr. Skidelsky would like to think that his math-aversion allows him to focus on the big ideas rather than being distracted by mere analytic details. But mathematics is, fundamentally, the language of logic. Modern research into Keynes's theories—I have conducted such research myself—tries to put his ideas into mathematical form precisely to figure out whether they logically cohere. It turns out that the task is not easy.

I enjoyed Skidelsky's 3 volumes on Keynes, and I will probably enjoy this book too. But I know the Mankiw is right about Skidelsky's weaknesses, and that is all the more important for the claim that Keynes is what is needed now.

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