THE ENDURING LEGACY OF JOHN MAYNARD KEYNES John Maynard Keynes who attended the Versailles Conference (1919) as a delegate of the British treasury had argued that the treaty was a Carthaginian. Many discerning writers believe that the unusually harsh peace terms led to the specter of hyper inflation and rise of Hitler. The Economic Consequences of Peace which Keynes wrote in 1919 is a relatively lesser known book but perhaps his most prescient. The General Theory of Employment, Interest and Money, his magnum opus debunked the classical myth of automatic economic equilibrium when an economy is in acute depression. Keynesian prescription of “Dig the hole and fill them up” convinced Franklin Roosevelt to launch his New Deal programmes of massive public investment which primed the pump of private investment and ensured that the US economy was near full employment and contributed 50% of the world output in 1944. Thus Keynes eschewed the dogmatic market economics of Adam Smith who had written in ‘The Wealth of Nation’ (1776) that “the private pursuit of self interest would lead, as if by an invisible hand, to the wellbeing of all”. Joseph Stiglitz wryly observes in his book The Price of Equality that in the aftermath of the global financial crisis 2008 no one would argue that the banker’s pursuit of their self interest has led to the well being of all. At the most it led to the banker’s wellbeing with the rest of the society bearing the cost. While a large number of countries like USSR, China, Cuba, Eastern Europe and East Germany followed the socialist model of centrally planned economy, USA, and most of Western Europe followed a cocktail of a Smith and Keynes – a kind of liberal free market economy. Most governments provided merit goods like education, health and social security; and quite appropriately as late as 1965 the Time magazine put Keynes on the cover declaring “We are all Keynesians now”. In the mid 1970s USA had to navigate through stagflation, a phenomena Keynes had never envisioned. Milton Freidman became thus the presiding deity of Monetary Economics with control of money supply as the key for countering America’s prolonged recession. Volker, the Federal Reserve Bank Governor became the executioner through incredible repo rate hike. From the heady pedestal of an infallible economist Keynes became a pariah in economics with Macro Economics being divided into two great factions viz. Salt Water Economics who are essentially Keynesians and Fresh Water Economics who considered that vision as nonsense. Paul Krugman is therefore understandably thrilled that after the global financial crisis in 2008 there is a rediscovery of Keynes & resurgence of his ideas when public policy puts a premium on public investment as the most effective antidote to prolonged depression. The book under review: ‘Keynesian Reflections- Effective Demand, Money, Finance and Policies in the Crisis’ by three economists Toshiaki Hirai, Maria Cristina Marcuzzo and Perry Mehrling is therefore a timely contribution to the present debate on the relevance of Keynes to our troubled times. Naguchy, in a seminal essay in this book argues that the old Keynesian orthodoxy of the IS-LM variety would need to give way to rational expectation and real business cycle approaches into the model. Cardim and Carvalho argue that liquidity preference may be thought of as a theory of asset pricing rather than merely a theory of money demand. Fantacci observes that Keynesian proposition of a clearing union can substantially reform financial institutions today. It may be recalled, Keynes who attended the Bretten Wood conference 1944, had differed with his American counterparts who wanted the dollar to be the dominant currency. Keynesian suggestion for a neutral currency “Bancor” perhaps would have been a better recipe to the turbulent globalised world that we now witnessed. Keynes always believed that economics has to be seen as an extension of human possibility which should be directed to safeguard prosperity and harmony. He firmly believed that capitalism needs to be purged from its inherent shortcomings of leaving common man unprotected. In this backdrop India’s pursuit of bolstering infrastructural investment has a Keynesian ring about it. However, the tendency to downscale social sector spending in programs like MNREGA which put a premium of employment of vulnerable sections like SC/ST & women, can’t be more un-Keynes like. The Social Security Legislation (1935) by Franklin D Roosevelt remains by far the most politically uncontested piece of social welfare programme. The recent moves to acquire land without consent and making political capital out of farmer’s suicide are travesty to the enduring legacy of Keynes and FDR.