Hyman P. Minsky on John Maynard Keynes

“Keynes believed that the policy implications of his theory were profound; not only did the theory point to ways in which a closer approximation to full employment can be sustained, but he envisaged that continuing full employment combined with an emphasis on consumption and public goods would lead to an egalitarian change in income distribution. The rentier income of the capitalist would disappear and the upper tail of the income distribution would be snipped off by taxation. He believed that both measures to raise the consumption function and the socialization of investment were necessary to sustain full employment and were desirable as social goals.”

“There is a paradox in Keynes's fall in esteem. With respect to our economy, Keynes set out to explain two main problems: why our economy was given to fluctuations and whether it was possible to achieve a closer approximation of full employment than had been achieved thitherto. Keynes's answer to the policy question was that government expenditures and tax receipts could serve as a steering wheel, and that one requisite for such a steering wheel to be effective is that government be a bigger part of the economy than it was before the Great Depression. Our success since World War II in avoiding anything more severe than the recession of 1981-82 has been due in large part to the effects of our much bigger government.”