The Keynes Solution: The Path to Global Economic Prosperity [Hardcover]

Paul Davidson (Author)

Book Description

Publication Date: September 1, 2009 | ISBN-10: 0230619207 | ISBN-13: 978-0230619203 | Edition: 1

Today’s financial crisis has led to a widespread lack of confidence in the laissez faire style of economic policy. In The Keynes Solution author Paul Davidson provides insights into how we got into the crisis—but more importantly how to use Keynes economic philosophy to get out of this mess. John Maynard Keynes was committed to making the market economy work—but our current system has been a dismal failure. Keynes advocated for an interventionalist government  role, in cooperation with private initiative, to mitigate the adverse effects of recessions, depressions and booms.  His economic policy helped the world out of the great depression and was an important influencer in the thinking behind FDR’s new deal policies.     In this book Keynesian expert Davidson makes recommendations and details plans for spending, monetary policy, financial market rules and regulation, and wages—all to reverse the effects of our past policies.   Keynes  renewed influence can be seen everywhere: in Barack Obama’s planned stimulus package, for example—and this book explains the basic tenet of Keynesian economics as well as applied solutions to today’s critical situation.

Editorial Reviews

Review

“A true believer, Mr. Davidson lays out Keynesianism in easy-to-understand language and makes a strong case that it is just as relevant today. There are some doubters who fear that Keynesian spending is dangerous because it produces unbalanced budgets. Mr. Davidson responds that deficits in times of crisis lead to prosperity when the economy recovers. The most tantalizing part, however, is the appendix, entitled “Why Keynes’s Ideas Were Never Taught in American Universities.” Mr. Davidson writes about how the work of one of his fellow Keynesians was attacked by William F. Buckley Jr. in the 1950s and how other peers watered down Keynes’s teachings to avoid similar controversy.”—Devin Leonard, The New York Times

 

“A constructive look at how to redesign the global financial system in the aftermath of the credit meltdown.”—Bloomberg.com

 

“Paul Davidson is the keeper of the Keynesian flame. Keynes lives (intellectually), and Davidson is one of the reasons.”—Alan S. Blinder, Gordon S. Rentschler Memorial Professor of Economic and Public Affairs, Princeton University

“Paul Davidson has persistently attacked conventional economics for having ignored Keynes’s emphasis on uncertainty, and the use of money as a store of value, in causing economic crises.  In this lucid new book, he exposes the intellectual mistakes which led to the present world economic downturn, and shows how Keynes’s ideas can help bring about a ‘civilized economic society’.”—Robert Skidelsky, author of John Maynard Keynes 1883-1946: Economist, Philosopher, Statesman

“Paul Davidson has given us a timely and lucid answer to the important question: What would Keynes have said?  He is particularly good on the disastrous condition of the mainstream economics, which ignored Keynes for decades, and is now exposed as having left us wholly unprepared for the crisis at hand.”—James K. Galbraith, The University of Texas at Austin, author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too

 

“America’s seminal economist, Dr. Paul Davidson, has written the clearest vision of money and math mechanics, to date. Not since the 18th century’s true mathematical logicians, De Morgan, Jevons, Clifford, Peirce and Veblen, have scientific ideas of logic, money and math mechanics been laid so clearly before our eyes. Never before, in the history of economics, has so much been revealed by such a simple, yet scientific, method. . . . I see it having the potential of reaching not only the academic economists, but most all political, academic and intellectual elites, along with many private citizens. This is what the nation and world really and truly needs--a clear and concise manual to explain and solve the world’s massive problems. Davidson has succeeded as no other in accomplishing this job.”—Economist L.A. Gillespie

“One of the best books I have ever read. What I found amazing was that [Davidson] was able to address and articulate the gaps among the common sense explanations that I have for what is going on today. In fact, his chapters on trade and the trade deficit are the best I have ever read. He is also the first economist that I have read who tackles the issue head on, and he ends up in an interesting place. He proposes a solution that closely mirrors what Buffett proposed in his essay on the dollar, although Davidson takes it a step further and gives an international credit solution. [T]his is a great, great book. I have made it my quest since March, 2001 to resolve these macroeconomic questions. For the last eleven months it has dominated my thinking, as the financial panic forced it to the forefront of my risk assessment. At last, I can move on. I no longer feel behind on my awareness. I recommend it heartily.”—Roger Farley, Ronin Capital

“I've just finished reading [The Keynes Solution] and am now in the process of adding it to my student reading lists as it is indeed a wonderful book. Cant make up my mind which is my favourite chapter. So much to choose from. If only our likely future (unfortunately) PM and Chancellor would read chapter 5.”—Robert Jones, Professor of Economics, Nottingham Business School

 

 

About the Author

Paul Davidson is Holly Chair of Excellence in Political Economy at the University of Tennessee, Knoxville. He has previously held Professorships at the University of Pennsylvania and Rutgers University. He is Editor of the Journal of Post Keynesian Economics, a former member of Brookings Economics Panel, and is the author, co-author or editor of twenty-two books and more than 200 articles. His books include Money and the Real World, Post Keynesian Macroeconomic Theory, International Money and the Real World: Economics for a Civilized Society, and Financial Markets, Money and the Real World.

Product Details

• Hardcover: 208 pages
• Publisher: Palgrave Macmillan; 1 edition (September 1, 2009)
• Language: English
• ISBN-10: 0230619207
• ISBN-13: 978-0230619203
• Product Dimensions: 8.5 x 5.8 x 0.8 inches
• Shipping Weight: 9.6 ounces (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (10 customer reviews)
• Amazon Best Sellers Rank: #344,779 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

7 of 9 people found the following review helpful:

5.0 out of 5 stars Valuable Insights for Investors, June 21, 2010

By 

R. Farley - See all my reviews
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This review is from: The Keynes Solution: The Path to Global Economic Prosperity (Hardcover)

This book is terrific. Like many investors, I am very wary of economic commentary because many commentators seem to be living in a parallel universe that has assumed away many of the practical realities that we see every day. Dr. Davidson's book not only discusses current economic issues in a pragmatic way, he also addresses the flaws and strained assumptions upon which policy makers have conducted economic policy. It takes someone who understands the flawed models of mainstream economics to illuminate these flaws for those of us who are merely observers.

Much more so than the Keynes solution itself, this book's greatest value comes from its insights into trade deficits, unemployment, the monetary system, and the realities of correcting trade imbalances. Many of the benefits of imports come at the cost of higher unemployment, and it is important to understand the real choices involved in addressing this situation.

Macroeconomic analysis can be frustratingly useless to investors. According to the famous investor Peter Lynch: "I've always said if you spend 13 minutes a year on economics, you've wasted 10 minutes." However, I sat down and read this book in one sitting, and I'd love to send it to Mr. Lynch, as it might just be the exception that proves his rule.

As a companion piece, I'd suggest Warren Buffett's 2003 article in Fortune magazine that originates Buffett's proposal of Import Certificates as a way to correct trade imbalances. Taken together, there is plenty of food for thought.

15 of 21 people found the following review helpful:

5.0 out of 5 stars Keynes Made Accessible and Relevant, September 6, 2009

By 

Scot Griffin (SF Bay Area, USA) - See all my reviews
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This review is from: The Keynes Solution: The Path to Global Economic Prosperity (Kindle Edition)

Paul Davidson has done a remarkable job of explaining John Maynard Keynes' key insights, most of which he first introduced to the world in his seminal 1936 "General Theory of Employment, Interest and Money." Unfortunately, for Keynes, that book is fairly impenetrable, so the general public is essentially unaware that the economics movement that bore his name (i.e., "Keynesian") is, in fact, a synthesis of the classical economics that Keynes rejected and Keynes' less controversial ideas. In other words, Keynes' own name was hijacked by what were, essentially, classical economists.

This book is an easy read and easy to understand because it uses the recent economic crisis to compare and contrast neoclassical economics (best exemplified by Milton Friedman and the Chicago School) to true Keynesian economics. If you really want to understand Keynes' insights in detail, pick up a used copy of Anatol Murad's "What Keynes Means," which is a fantastic primer.

If you are interested in reading other accessible economics books by heterodox economists, check out Steve Keen's "Debunking Economics." Like Davidson, Keen is a Post Keynesian economist.

10 of 15 people found the following review helpful:

4.0 out of 5 stars Comparison of two new Keynes books, December 18, 2009

By 

Hazel Henderson "Ethical Markets Media (USA a... (St. Augustine, FL) - See all my reviews
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This review is from: The Keynes Solution: The Path to Global Economic Prosperity (Hardcover)

The Keynes Solution by Paul Davidson and Keynes: The Return of the Master by Robert Skidelsky

These two new books re-introduce John Maynard Keynes to current policy makers dealing with the failure of de-regulated financial markets. They also introduce Keynes to a new generation and provide excellent background information on how Keynes' legacy is being re-applied in today's fiscal and monetary policies, stimulus plans and debates at the G-20 on how to reform global finance (see my own proposals at [...]).

Both Skidelsky and Davidson offer similar and excellent policy advice based on Keynes' concepts and proposals. Both authors call for a re-instating of an updated Glass-Steagall law to again separate "plain vanilla" retail banking still insured by FDIC to protect depositors and disallowing investment banks from participating in any government insured access to financial bailouts or subsidized credit from Treasury or the Federal Reserve. We at Ethical Markets have advocated this since 2008, along with the levying of a 1% financial transactions tax by G-20 agreement; a Financial Crisis Insurance Fund assed on all excessive risk-taking financial firms; a "too-big-to-bail" statute to allow for orderly break-up of oversized banks that pose systemic risk; banning credit default swaps not cleared on regulated exchanges, and other provisions to downsize overgrown financial sectors that have become predatory on the real economies of "Main Street."

Neither Skidelsky or Davidson go this far, although both cite the need to tame finance and its unregulated global casino unleashed on the world in the 1980s by US President Ronald Reagan and British Prime Minister Margaret Thatcher. Neither author addresses the issues still outside most economic boxes: the devastation of the planet's ecosystems by 300 years of fossil-fueled extractive industrialization. The need is to internalize such devastation and social costs into prices, company balance sheets and national accounts. Nevertheless, both these books do shed light on the deficiencies of political reforms currently debated in Washington, London and other capitals of OECD and G-20 countries. Both authors offer ideas for restructuring and reforming global financial architecture but stop short of fundamental re-thinking of models of human development beyond economics and GDP-measured growth. Skidelsky is the deeper thinker and draws conclusions from Keynes' longer-term vision on how to break the hold of money-obsessed economic ideas of "progress." Skidelsky goes beyond Davidson's prescriptive policies and examines ethical and moral issues ignored by economics and calls for more inter-disciplinary approaches to social progress. Neither author touches on the pressing need to reform money-creation itself and the fractional reserve banking which turned money-creation over to private banks as backed only by debt on their loan books. The widespread movement to audit, reform and even fold the private US Federal Reserve System into the US Treasury are not mentioned by either author as proposed by the American Monetary Institute. Clearly, we must now move beyond Keynes, important as his reforms are, and re-integrate public policy using inter-disciplinary systems approaches that enfold, but go beyond economics - revealed again by both authors as a profession with few if any pretensions as science.