David on Keynesian Revolution

“As was the case with the Keynesian theoretical revolution, the Keynesian policy revolution in the United States did not need to be tied to The General Theory. It could have occurred without The General Theory, and much of it ― specifically the emphasis given to monetary and fiscal policy ― was as much a C.E.D. revolution as it was a Keyneisan revolution. Our interviews support this view, and it explains an interesting event recounted in a story about a seminar at which Keynes repudiated what was then thought to be Keynesian economics. This Keynesian policy revolution could be garnered from the Treatise as easily as from The General Theory, and indeed was. Ironically, this policy revolution, while in many ways the least revolutionary aspect of the Keynesian revolution, was the most contentious at the time. People care about policy in ways they do not care about theories or textbooks. That it took place in the 1930s made this policy revolution all the more contentious.”

“There were many ways in which the Keynesian revolution could have developed. It could have extended to core theory and connected to Robertson's and Hayek's work, but it did not, in large part because of the interest of the Keynesian revolutionaries in policy. Complex core theory has little to say about policy; surface theory has much to say. Thus much of the early work in Keynesian economics involved the development of policy-related surface theory. A key place for this development was the Harvard seminar centered around Alvin Hansen, who had come from the University of Minnesota as the first Littauer Professor and who became the one tenured Harvard faculty member accepting Keynesian ideas. With Hansen the young Keynesians had a powerful faculty ally who, like them, was primarily interested in policy, not complex theory. Thus, like a river, the Keynesian revolution followed the path of least resistance, and it was this area of theoretical policy that constituted that path.”