Keynes’s Early Beliefs and Why They Still Matter

In the late 1930s, under the shadow of a looming war, John Maynard Keynes looked back at his early views and revised them in a classic essay, “My Early Beliefs.” He saw his own views and those of his young colleagues as rather thin when it came to analyzing human nature. A belief in an exclusive and very narrow conception of rationality, he now felt, was erroneous and naïve. Humans were hardly purely rational, and a system of economics now had to deal with uncertainty and unstable behavioral relationships. With this, Keynesianism turned away from classical economics. The relevance today, writes this author, is obvious. Economics turned back toward a belief in hyper-rationality in the 1970s and has not yet recovered. Hence, among other things, austerity in Europe.