Introduction

This introduction presents the key concepts discussed in subsequent chapters of this book. The book focuses on the policy implications of the work of John Maynard Keynes and provides an assessment of that legacy for developed economies, for developing economies, and for the international economy. Disenchantment with Keynesian policies in the United States developed in the mid-1970s, when the nation began to suffer simultaneously from rising prices and rising unemployment. Keynes foresaw the need for more planned international economic management than was established in the postwar period. Keynesians deny the ability of low interest rates to stimulate investment in the face of a catastrophic fall in the marginal efficiency of capital and hence lay great store in government investing instead. Leaving stimulation to private-market interest rates or publicly reduced interest rates (even to zero) may result in no new borrowing and no new production.