The 2008 crisis briefly revived Keynesian fiscal stimulus across academia and institutions
Evidence
Helping such ideas along was the fact that, as Henry Farrell and John Quiggin put it, “There was a significant Keynesian party hidden in the academy,” and it found unexpected allies. Neoclassical economists and fellow travelers who were publicly reassessing their own beliefs during the crisis, such as Martin Feldstein and Richard Posner, joined prominent Keynesian economists such as Paul Krugman and Joseph Stiglitz in the campaign for stimulus, lending Keynesian ideas a new prestige. Even international economic institutions that were famous for forcing austerity on developing countries, such as the IMF, began to argue that monetary tools were not enough to solve the crisis and that an active and coordinated fiscal policy needed to be applied. Parallel institutions that would shortly mount a counterattack against Keynesian policies and ideas, such as the ECB, largely kept out of the debate at this time, giving the Keynesians the stage. Finally, with the entire global payments system at stake and a “leave it to the market” policy that was untenable since the market was in triage, “governments quickly came to believe that monetary policy was insufficient on its own to help the real economy.” — Mark Blyth, Austerity, 159
Categorization
- XREF: Sets up the intellectual-history thread that connects to the broader austerity literature in Mattei and the ‘return of Keynes’ narrative. — connects to: Keynesian economics conquered academia before shaping public policy — Angus Burgin, The Great Persuasion: Reinventing Free…, 78; The 2008 crisis was fundamentally a crisis of economic ideas — Mark Blyth, Austerity: The History of a Dangerous…, 132; The 2008 crisis briefly turned mainstream economics criticism into a mass public phenomenon — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 452 (+3 more)
- SEED: Angle: the ‘hidden Keynesian party’ inside the academy as a case study in how intellectual fashions lie dormant within institutions and resurface in crises.
Broader Connections
- The global Keynesian stimulus push lasted barely a year before backsliding
#qualifies(0.85) — Mark Blyth, Austerity, 160 - The 2008 crisis briefly turned mainstream economics criticism into a mass public phenomenon
#corroborates(0.82) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 452 - Keynesian economics conquered academia before shaping public policy
#complicates(0.80) — Angus Burgin, The Great Persuasion, 78 - The 2008 crisis was fundamentally a crisis of economic ideas
#corroborates(0.78) — Mark Blyth, Austerity, 132 - Economics survived the 2008 crisis intellectually unscathed, unlike other disciplines under attack
#contradicts(0.78) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 456 - The 2008 crisis replaced triumphalist free-market rhetoric with open-ended austerity
#qualifies(0.72) — Max Haiven, Cultures of Financialization, 158