Barack Obama was reelected US president this November. He had inherited (and managed) the Great Recession that devastated the rich economies for the greater part of 2008–2009. He still struggles over a jobless recovery (which, for most, feels like recession for all practical purposes) in the face of a double-dip recession in Europe in four years and slackening growth in the emerging world. Great crises are a reminder that we just don’t know what the future brings.
John Maynard Keynes (1883–1946) never tried to conceal that he knew more than most people, according to John Kay of the Financial Times.2 Yet he knew the limits of his knowledge: About these matters—the prospect of a European war, the price of copper 20 years hence—there is no scientific basis on which to form any calculable probability whatever. We simply do not know. True enough. He made these observations in 1921 and 20 years later, the United Kingdom was engaged in a desperate and bloody war with Germany and Japan. This may sound obvious but bear in mind the financial disaster in recent times was born in the hubris that financial markets are almost flawless machines that can readily manage risk and adjust, and government regulation only works to make them inefficient.
J. M. Keynes
In his book, Keynes: The Return of the Master, Professor Robert Skidelsky, a noted economic historian whose three-volume biography of Keynes was published in 1983, 1992, and 2000, pointed ...