Maynard's Revenge: The Collapse of Free Market Macroeconomics

by Lance Taylor

It is now widely agreed that mainstream macroeconomics is irrelevant and that there is need for a more useful and realistic economic analysis that can provide a better understanding of the ongoing global financial and economic crisis. Lance Taylor ’s book exposes the unrealistic assumptions of the rational expectations and real business cycle approaches and of mainstream finance theory. It argues that in separating monetary and financial behavior from real behavior, they do not address the ways that consumption, accumulation, and the government play in the workings of the economy.

Taylor argues that the ideas of J. M. Keynes and others provide a more useful framework both for understanding the crisis and for dealing with it effectively. Keynes’s basic points were fundamental uncertainty and the absence of Say’s Law. He set up machinery to analyze the macro economy under such circumstances, including the principle of effective demand, liquidity preference, different rules for determining commodity and asset prices, distinct behavioral patterns of different collective actors, and the importance of thinking in terms of complete macro accounting schemes. Economists working in this tradition also worked out growth and cycle models.

Employing these ideas throughout Maynard’s Revenge , Taylor provides an analytical narrative about the causes of the crisis, and suggestions for dealing with it.

Genres: Economics

400 pages, Hardcover

First published December 21, 2010

Reviews

[Dave Peticolas · Rating 3 out of 5]

During the long period of relative calm in the world economy, macro economists forgot (or rather intentionally threw away) the many insights of John Maynard Keynes. The recent world financial crash and recession has demonstrated that Keynes and the economists who built on his insights are still very relevant. This book does a nice job of explaining how it all went down.

[Luke Ingram · Rating 1 out of 5]

This book tries to do far too much, leading to some chapters that are almost wholly incomprehensible to someone without prior exposure to a number of theories. The writing is dull and technical, yet somehow snarky at the same time. It is poorly laid out, jumping around in time and topic erratically, and it never feels like the author is trying to help the reader understand. And if the author isn't trying, why should you? Instead this feels more like a frustrated knowledge dump into the void. As a consequence I've learned very little economics and nothing I didn't already know about 2008 from this.

As an aside there are a few inaccuracies when discussing Austrian economics. The author claims an Austrian assumption of perfect foresight (no such thing), that the school provided a justification for lax monetary policy for Greenspan (they detest easy credit and were actively railing against Greenspan before the crash) and also that ABCT is just an "overinvestment" theory (it is a malinvestment theory). None of this is particularly important to the book, but does demonstrate the folly of trying to sum up the history of economics, the intricacies of Keynesianism and further developments in the 60s, the macro "counter-revolution" (funny choice of term) and then apply this to 2008 in 400 pages.

EDIT: Just finished - this guy couldn't write a recipe for a baked potato. Most tedious wank I've ever read, followed by a short, uninformative and myopic take on 2008.