Robert Skidelsky's final book argues for a modernized Keynesianism that would push government spending beyond the 37.7 percent of U.S. GDP it already consumes.
Robert Skidelsky's posthumous "Keynes for Our Times" argues for a modernized Keynesianism that would push government spending well beyond the 37.7 percent of U.S. GDP it already consumes, reviving a century-old debate over state intervention.
"'Skidelsky's brand of 21st-century Keynesianism exemplifies how the heralds of prominent thinkers often lose a sense of proportion when they elaborate on their heroes' ideas,' Samuel Gregg, president of the American Institute for Economic Research, wrote in the Wall Street Journal."
The 200-page volume, published by Yale University Press after Skidelsky's death on April 15, is his final work. It traces Keynes's economic thinking to G.E. Moore's "Principia Ethica" (1903), which led the Cambridge mathematician to treat economics as a moral science aimed at enabling friendship and aesthetic enjoyment rather than a purely empirical discipline. Skidelsky's prescriptions include extensive redistribution of wealth and income, massive public investment in "public projects," and a guaranteed public-sector job for anyone unable to find private employment.
The stakes are measurable. Government expenditure already consumed 37.7 percent of U.S. GDP in 2025 and 49.5 percent in the European Union, according to the review. Skidelsky's program would magnify that intervention, raising the question of whether the growth needed to sustain abundance could survive the transfer of ever more resources to the public sector.
The book's intellectual core is the clash between Keynes and Friedrich Hayek, who debated savings, consumption and stimulus in the journal Economica during the 1930s. Skidelsky faults Hayek for equating moral values with market values, while Gregg argues this mischaracterizes Hayek's case that markets drove civilizational growth by replacing predatory behavior with free exchange and coordinating knowledge across space and time.
Keynes's policy preferences flowed from his hostility to what he called the "Usurer." His obsessive concern with keeping interest rates low reflected a conviction that the real problem in the modern economy was "not the Capitalist but the Usurer," and that the creditor class should be put firmly in its place. Consistently low rates would rebalance the economy toward debtors and discourage hoarding, he believed, but Skidelsky concedes the price was the loss of an "anti-inflationary anchor."
That loss contributed to the Great Inflation that engulfed most Western nations between 1965 and 1980. Skidelsky attributes the outbreak to the Johnson administration's failure to curb civilian spending to pay for the Vietnam War, a reading Gregg says underestimates the role of governments and central banks prioritizing low unemployment through deficit spending and easy money, which produced demand-pull inflation.
Skidelsky nonetheless affirms that Keynes and Hayek were united in defending liberal civilization from the radicals of left and right, and warns that similar forces have resurfaced in populism and nationalism. His answer is a "modernized Keynesianism" to maintain "a continuously high level of labor demand," which he argues would ease the unemployment-driven angst that makes extremism attractive.
Gregg counters that the program would imperil the liberal civilization Keynes spent his life defending. "He was a splendid biographer of the man he described in another book as 'the master,'" Gregg wrote. "Skidelsky's specific rendering of Keynes's ideas for our times, however, would only further imperil the liberal civilization that Keynes spent his life defending."
This article is for informational purposes only and does not constitute investment advice.
