Letter: What Keynes believed

Sir: I do not think that I have forgotten my Keynes or my history, nor does D. E. Moggridge (Letters, 21 October) demonstrate the contrary.

The fact is that Keynes refrained from attacking the balanced budget policy of the National Government for a year after Britain left the gold standard; attached supreme importance to getting down the long-term rate of interest (both in the Treatise on Money and his General Theory); and was continually alive to the psychological effects of government policy on business expectations.

Professor Moggridge's quotation from Keynes's Halley-Stewart lecture of 4 February 1932 is about the 'paradox of thrift', not specifically about budgetary policy. Keynes's more 'characteristic tone' comes out in a letter he wrote to a correspondent in Stockholm in April 1933, advising the Swedish government to pursue a conservative budget, 'if . . . this was to be helpful as a transitional measure to much lower interest rates'.

Of course I am not in favour of 'cutting down' in a depression. I support Wilfred Beckerman's call for 'concerted expansionary action' against the world recession (Letters, 21 October). What I am against is the attitude of mind which says 'Let's forget about inflation now; turn to that again in two or three years' time'. At 6 per cent, the growth of money wages continues to outstrip increase in prices. How, then, do the expansionists propose to secure the fall in real wages necessary to the recovery of employment without stoking up inflation?

Yours faithfully,

ROBERT SKIDELSKY

Department of Economics

University of Warwick

Coventry

22 October