New Directions in Post-Keynesian Theory
Edited by Louis-Philippe Rochon and Salewa ‘Yinka Olawoye
Louis-Philippe Rochon and Salewa ’Yinka Olawoye The current – and ongoing – crisis has presented interesting challenges to policy makers as they scramble to propose a wide range of policies to deal with the continuing recession. Yet, policies proposed at the beginning of the crisis are radically different from those proposed currently, three years later. In a way, we are now back at square one: adopting pre-crisis policies post-crisis. At the beginning of the crisis, shortly following the G20 meetings in Washington (November 15, 2008), many countries around the world, including Canada, the United States, Europe, and the UK, adopted an unprecedented degree of activist fiscal policies, ranging, among other policies, from bank and private sector bailouts to direct subsidies to households. This led some economists and pundits to claim aloud that the Master had returned, an obvious reference of course to Keynes (see Skidelsky, 2009). Further, at the Toronto G20 summit held in June 26–27, 2010, it was even recognized that “unprecedented and globally coordinated fiscal and monetary stimulus is playing a major role in helping to restore private demand and lending”. Fiscal policy seemed to be an acceptable policy choice once again. For a while, it seemed that fiscal policy had regained much of its lost luster, dusted off the shelves, and accepted once again as a credible tool of macroeconomic stabilization. Yet, to anyone with a memory span of more than a few years, these policies seemed somewhat oddly misplaced, given that until then, the consensus among economists...