As your humble servant reflects on the effects of the 2008/2009 global financial and economic crisis on economies all around the world and the varying responses we have seen from governments by way of policy interventions, he sometimes wonders what precisely some of the great economists of the past would have done to resolve the economic challenges that even to this day continue to plague some countries.
Think of the likes of Adam Smith and John Maynard Keynes and what specifically they might have recommended as appropriate policies that governments could have implemented to deal with all of the fallouts from the most recent worldwide recession. What have you come up with?
This issue is important from two perspectives. First, the world in which we now live and work is a far different place than what both Smith and Keynes would have experienced. Advances in technology alone would justify that inference.
Second, and perhaps more importantly, throughout history, great minds are known to have changed positions on various issues based on the emergence of new data and evolving circumstances. Having witnessed all the changes in the global economic landscape over the past several decades, would Smith and Keynes have maintained the core of the economic beliefs for which they have both become enormously famous?
To illustrate this last point, Keynes, in an eminent speech entitled National Self-Sufficiency, that was delivered in Dublin, Ireland, in April 1933, relinquished his earlier belief in the benefits of free trade. In that speech, Keynes said: “I was brought up, like most Englishmen, to respect free trade not only as an economic doctrine which a rational and instructed person could not doubt, but almost as a part of the moral law. I regarded ordinary departures from it as being at the same time an imbecility and an outrage. I thought England’s unshakable free trade convictions, maintained for nearly a hundred years, to be both the explanation before man and the justification before Heaven of her economic supremacy.
“As lately as 1923 I was writing that free trade was based on fundamental ‘truths’ which, stated with their due qualifications, no one can dispute who is capable of understanding the meaning of the words.
“Looking again today at the statements of these fundamental truths which I then gave, I do not find myself disputing them. Yet the orientation of my mind is changed and I share this change of mind with many others. Partly, indeed my background of economic theory is modified – I should not charge Mr Baldwin, as I did then, with being ‘a victim of the protectionist fallacy in its crudest form’ because he believed that, in the existing conditions, a tariff might do something to diminish British unemployment.
“But mainly I attribute my change of outlook to something else to my hopes and fears and preoccupations, along with those of many or most, I believe, of this generation throughout the world, being different from what they were. It is a long business to shuffle out of the mental habits of the pre-war nineteenth century world. It is astonishing what a bundle of obsolete habiliments one’s mind drags round even after the centre of consciousness has been shifted.”
To conclude, if Keynes could have changed his position in relation to the benefits of free trade, why can’t our governments in the Caribbean revolutionise when clearly the economic doctrines they are following have become obsolete and the socio-economic policies they are implementing are not working? Don’t our governments understand the importance of adapting to economic changes taking place all around – domestically, regionally and internationally?
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