Lord J M Keynes: The forgotten crusader of capitalism

The Wall Street collapse of October 29, 1929 initiated the greatest depression in world history. Millions were lost and many were bankrupted. An economy boiling with boom bursted with a bang and the shock waves transmitted to the whole world. When every one was wondering what had happened and all were cursing the economic liberty of capitalism for the disaster there was one man who anchored the retreat to the glorious era- John Maynard Keynes.

 JM keynes, an economist of neo classicist genre was a firm believer of superemacy of market forces but Great depression shook his belief and he started a new era in economic policy making, an era where fiscal policy was to rule. People had lost hopes and were retreating from capitalism taking the escape to socialism. It was at this point of time that Keynes came to the rescue of capitalism. He gave 'the Fed' its most effective weapon of open market operations and propounded the theory of 'Pump priming' in his 'General Theory' which was the inspiratition behind the New Deal Policy of  President Roosevelt that led US journey towards recovery and restored public confidence in Capitalism. Keynes showed through his theory that it was govt. that needed to lead through expenditure when private investment fell short of the desired level and manipulations in govt. expenditure level can be a moderating force in economy.

However, the hero of great depression was forgotten in the country he helped to rescue. Especially after Milton Friedman led retreat to the classical era and restored faith in rationality of market in the calm era of economics US economists started questioning Keynesian assumption of market imperfections. These economists were reluctant in giving fiscal policy its worthy status and wanted the govt. to leave the job of economic regulation in hands of 'the Fed' solely. As had happened earlier monetarism proved fatal and when recession came in 2007 macro economics was standing helplessly because it had lost all its tools in the hands of monetarists and the accuracy of econometrics had made its dynamics paralysed. It had lost its way; the way JM Keynes had shown. What is more astonising is that even now many economists in US are not ready to realize their mistake of forgetting Keynes and want rehabilitation of economy to be done through Fed solely. Its not a question of their belief but is the question of strength of world economy and proven tools should be used. Keynes' analysis wasn't perfect but it was taking macro economics in the right direction. Rather that forgetting it the forgotten crusader of capitalism should be given his worth and his analysis should be improved to help economics foresee and deal with crisis.