Transatlantic dialogue looks to Keynes for lessons


Keynes conference in Turin
Lord Robert Skidelsky delivers the keynote address at a conference cosponsored by the Einaudi Center and the Fondazione Luigi Einaudi in Turin.

Scholars from both sides of the Atlantic met in a 17th century Italian palace in October to assess the legacy of British economist John Maynard Keynes, author of The General Theory of Employment, Interest, and Money and one of the 20th century’s most influential thinkers.

The theme was not just macroeconomics, but also the nature of uncertainty, the unpredictability of human behavior, and the relationship between two continents – and two institutions – with strong intellectual and family ties.

The three-day conference, “The Relevance of Keynes to the Contemporary World: Eighty Years Since the ‘General Theory,’” took place at the headquarters of the Fondazione Luigi Einaudi in Turin. It was cosponsored by Cornell’s Mario Einaudi Center for International Studies and organized by Roberto Marchionatti and Mario Cedrini, economics professors at the University of Turin.

A resurgence of interest

Keynes has enjoyed something of a comeback 80 years after the publication of his best-known work and 70 years after his death.

John Maynard Keynes
John Maynard Keynes (1883-1946) 

The economic platforms of the two major U.S. political parties in part reflect the split between Keynesians, who favor public spending to spur economic recovery in times of crisis, and neoclassicists, who seek to influence private sector behavior by adjusting interest rates and the flow of money.

In Europe, the divisions are arguably even deeper and more consequential. Austerity prescriptions by neoclassicist policy makers have led to massive protests in Greece, Spain, and elsewhere. Dissatisfaction with European monetary policy is widely considered to be a factor in the recent vote by the UK to leave the European Union.

The economic and political crises in Europe and the U.S. have been accompanied by an intellectual crisis, observed Cornell’s T.H. Lee Professor of World Affairs Ravi Kanbur, who presented a paper at the conference.

Ravi Kanbur
Cornell's Ravi Kanbur was the World Bank's chief economist for Africa. 

“The instabilities and failures of the market economy was a very big theme in Keynes’ writing,” Kanbur said in an interview. “That theme was very much forgotten in the go-go years of the last decade of the last century and the first years of this century. All this came to a head with the financial crisis of 2008-09. The economic profession was thrown into a tizzy. ‘What’s going on? Why didn’t we see this happening?’”

Those questions have led scholars to reexamine Keynes’ work, said Matthew Evangelista, a professor of government and director of Cornell’s Judith Reppy Institute for Peace and Conflict Studies.

“Keynes had really gone out of fashion, and there was a false confidence that markets could just keep expanding,” he said. “But that turned out not to be. Keynes understood this very well.”

The limits of analysis

A central theme of the conference was that no single tool or approach is sufficient to understand or manage a modern economy, both because economies are complex and because human beings are not always rational actors.

That was the focus of keynote speaker Lord Robert Skidelsky, an emeritus professor of political economy at the University of Warwick and author of a magisterial three-volume biography of Keynes. Skidelsky served as an Andrew Dickson White Professor-at-Large at Cornell from 2010 to 2016.

Hiro Miyazaki
Einaudi Center director Hirokazu Miyazaki says he values Keynes' anthropological insights.

While Keynes is widely known for his belief in the efficacy of fiscal stimulus, Skidelsky stressed the importance of what Keynes called “radical uncertainty” – the idea that economies are not completely knowable or predictable.

“Keynes believed that humans are not machines but complex beings influenced by many different things,” said Hirokazu Miyazaki, the Einaudi Center’s director and John S. Knight Professor of International Studies.

For Miyazaki, Keynes’ writings help illustrate “how to place economic policy and its effects in a broader, human perspective.”

“As an anthropologist, I tend to seek a vision of multiplicity – multiple interests and multiple motivations and multiple scenarios and options imagined,” he said in his talk. “Keynes is very helpful for this.”

Family connections

The relationship between the Mario Einaudi Center for International Studies and the Fondazione Luigi Einaudi is nearly as tangled and close as the relationship between the U.S. and Europe.

Mario Einaudi
Mario Einaudi (1904-1994)

The Einaudi Center was founded by the political theorist and Cornell professor Mario Einaudi in 1961, and named after him in 1990. The Fondazione Luigi Einaudi was founded in 1964 and led by Mario Einaudi for the next 20 years. It was named in honor of his father, an economist who served as Italy’s president from 1948 to 1955.

Both institutions support research in economics, international affairs, and other disciplines, and emphasize post-graduate training.

Today, Mario’s son, a retired U.S. diplomat also named Luigi, is one of the Einaudi Center’s most important benefactors, providing grants for travel and research through the San Giacomo Charitable Foundation in Washington, DC. The Einaudi family has also been a strong supporter of the Cornell Institute for European Studies.

The two organizations have been working to strengthen their connections. The Fondazione Luigi Einaudi hosts Cornell summer study programs and other Cornell events, and Cornell faculty members serve on the editorial board of the Annals of the Luigi Einaudi Foundation, the foundation’s flagship publication.

The Einaudi Center and the foundation are planning future collaborative work on issues such as immigration and food justice. To help make this happen, Cornell’s Matthew Evangelista will begin a term as a member of the foundation’s scientific committee in January 2017.