Keynesian economics did more than change the ways in which governments deal with recession. It made respectable the notion that momentum can be given to an economy by public spending and during recessions by any public spending whatsoever. It therefore opened the door for vast increases in government expenditure which, rather than having made us wealthier, have continuously reduced our potential to improve living standards. And now, with the onset of recession, governments have become determined to spend our way to prosperity in ways that threaten to flatten out our growth potential for years on end.
In his presentation, Steve Kates will discuss modern economic policy from the perspective of the classical economics which Keynesian theory replaced.
Dr Steven Kates is currently teaching economics at the RMIT University in Melbourne. He was for 24 years Chief Economist of the Confederation of Australian Industry (now the Australian Chamber of Commerce and Industry) and has just completed an appointment as Commissioner on the Australian Productivity Commission. His research work has centred on the pre-Keynesian theory of the business cycle whose insights he believes are now sorely missed as governments flounder from one expedient to the next in trying to repair the damage their earlier interventions have created. A paperback edition of his 1998 Says Law and the Keynesian Revolution , which outlines the theoretical case against deficit financing and public spending in dealing with recessions, will be published by Edward Elgar Publishing in June.