Progressive arguments that Keynesianism provides a much-needed alternative to neoliberal free-market hegemony often overlook that Keynesianism has never disappeared. Throughout the neoliberal era, and in particular following the Global Financial Crisis, Keynesian stabilization policies have played a central role in propping up the private economy. But instead of promoting generalized economic growth and full employment, such policies serve to keep alive the very rentier interests that Keynes had intended his program to euthanize. The essay makes this evolution comprehensible by examining how Keynesians responded to the inflationary pressures that their demand-side program produced. To undercut inflationary pressures, they developed elaborate supply-side subsidization programs and sought to spur economic growth by fostering credit expansion. While such strategies rarely delivered inflation-free growth, they did much to transform America’s monetary and fiscal policy framework into a complex web of subsidies, backstops, and guarantees that serve to socialize the downside risk of property ownership. A Keynesianism that can help us navigate capitalism in the twenty-first century will need to start by developing an understanding of how existing stabilization policies keep alive the rentier class.

Martijn Konings, Making Money Modern: Keynesianism and the Search for Noninflationary Growth, Capitalism: A Journal of History and Economics, Volume 5, Number 2, Summer 2024, pp. 399-424, available here.