Bradley Bateman, Toshiaki Hirai, and Maria Cristina Marcuzzo, eds. The Return to Keynes.

Hernandez-Julian, Rey

Bradley Bateman, Toshiaki Hirai, and Maria Cristina Marcuzzo, eds. The Return to Keynes, (Cambridge, MA: The Belknap Press, 2010, p. ix, 312).

The Return to Keynes is an ambitious collection of essays united under the theme that Keynes and Keynesian thinking an increasing part of mainstream economic thinking. Following the US stagflation of the 1970's, much Keynesian thinking began to fall out of favor. This trend reversed about a quarter of a century later, and the book argues that by the first decade of this century, "everyone" was going back to Keynesian thought. The editors narrate that the accepted norm for politicians and policy makers became to speak against Keynes while acting in a way that is actually consistent with the policies that he would suggest.

The next three chapters are dedicated to a survey of this return in several places, examining the past, present, and future of Keynesian Economic Policy. First chapter narrates the US experience with deficit-funded stimulus, and ends stating that following the dot-corn bubble, it became increasingly clear that people's expectations are irrational, and thinking began to return to Keynes. A particular example is made of fiscal policy under George W. Bush. The next chapter follows the Japanese experience. This chapter, although it includes some nice models and an excellent example of Keynesian world view, lacks the clean narrative impact of the previous chapter. It is often repetitive and mentions facts that seem disconnected to the main point of the text. A following chapter chronicles the European experience of the last-century, including history and evaluation of the EMS and the EMU. Some points made here have become a large part of recent news coverage, such as the fact that EU countries typically hold deficits in violation of the union's policies. The chapter concludes comparing the relative efficacy of monetary and fiscal policies, and states the importance of fiscal policy in countries that share a monetary authority.

The book then moves away from speaking of the return of Keynes to a study of conversations within the field of economics. A set of chapters discusses the transition from an old to a new Keynesian-Neoclassical synthesis, offers an exposition of Tobin's view of Keynes, and, through a Wicksell-Keynes connection, shows the continuity between new ideas and the older, established ones. Third section examines how we read Keynes: from an examination of how Keynes used math in his General Theory, to an examination of how Keynes has been read by others and the particular ways in which Keynes used words. It is worth nothing that there is some disagreement between the way Keynes is read by the chapters' authors and some alternative readings by other scholars, such as Michael Emmet Brady.

The book's final section brings us back to thinking about Keynes's return and takes a normative turn. What can we learn from Keynes? What would Keynes have us do today? This section highlights the many ways in which we are following his contributions in existing policy. Finally, there are several interesting and powerful policy implications that Keyne could propose regarding current global imbalances.

Despite the book's title, I do not believe that the book actually presents a convincing case that Keynes has "returned." Half of the book is devoted to questions that have nothing to do with resurgence in the adoption of Keynesian thinking. Chapter 5, for example, talks about how Tobin was exposed to and influenced by Keynes, but makes no connection between tills and the 'return to Keynes' of the last decade. The main content of Chapter 12 consists of a paper written in the 1960's and delivered in 1979, making its connection to Keynes's return somewhat tenuous. The same could be said, to some degree, of the entirety of the book's third section which is devoted to the reading and interpreting of Keynes. The authors and editors could have developed a clearer connection between the content of individual chapters and the theme that is suggested by the title and the introduction.

In those sections where the book actually discusses the return to Keynes, it was not clear that the behavior by governments can be explained only, or even best, by a return to Keynesian thinking. Although deficit spending has increased, politicians still praise and promise balanced budgets. Could there not be some other explanation? Could it be that neither Keynes nor the traditional monetarism is the best model to explain optimal monetary theory? The book could have, at some point, at least addressed some alternative explanations of what we observe and argued that none of these is as convincing as an increased adoption of Keynesian orthodoxy. The book should, at least, present and refute its opponents' basic arguments. Alternatively, the book could have presented more evidence in support of its proposition that, regardless of what they may say, fiscal and monetary authorities actually do follow the policies suggested by Keynesian modeling. Is there some other explanation of their behavior? To the extent that such arguments were present in the book, they were neither developed nor convincing enough.

Rey Hernandez-Julian

Assistant Professor of Economics

Metropolitan State College of Denver

Denver, Colorado