Money and Government : A Challenge to Mainstream Economics

More about the book

In this remarkable work, Robert Skidelsky combines his expertise in a sweeping account of money and power. The prevailing economic view suggests that money and government should play a minimal role in economic life, portraying money merely as a medium of exchange and advocating for the 'invisible hand' of the market. However, this book argues that uncertainty makes money and government crucial in any market economy. Money is necessary because the future is unpredictable, and effective government can reduce this uncertainty, thereby diminishing the demand for money. Following Adam Smith, orthodox economics favored non-intervention until the Great Depression of 1929-32 challenged this perspective, leading to the rise of Keynesian economics as a new policy paradigm. Yet, the stagflation of the 1970s prompted a rejection of Keynesian policies in favor of neoclassical orthodoxy. Despite the severe 2008 financial crash, which was addressed with Keynesian measures, the pre-crash orthodoxy was reinstated, continuing to impose austerity measures that have left the global economy weak. This book seeks to introduce readers to the essential elements of Keynes's ideas, arguing that much of economic orthodoxy is not the hard science it claims to be. It aims to inspire the next generation of economists to recognize the vital roles of money and government in the economic landscape.