He Was Right

The Return of the Master
Robert Skidelsky
PublicAffairs, $24.95, 256 pp.

Former Federal Reserve Chairman Alan Greenspan was hauled before a Congressional Committee last year to explain why he had been blindsided by the global financial cataclysm. To his credit, he didn’t duck the question, although his reply was a hall-of-fame understatement. It seems, he said with welling eyes, that there had been “a flaw” in his model of the financial economy.

Indeed. For twenty years, Green­span was the most important financial regulator in the world—the “Maestro,” who time and again steered the global economy through one tricky financial shoal after another, only to discover that his great boom was built on quicksand. It was a fake, a fraud—at its ugliest, a crass device for shifting huge amounts of income from working people to the very rich.

Greenspan was speaking truth, however, when he pointed to his “model” as the source of the disaster. John Maynard Keynes would have agreed. It was Keynes who famously pointed out that “the world is ruled by little else” than “the ideas of economists and political philosophers, both when they are right and when they are wrong.” Robert Skidelsky is a British historian, also trained as an economist, who has devoted much of the past thirty years to producing a magisterial three-volume account of Keynes’s life and thought. He published an abridged...

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About the Author

Charles R. Morris, a Commonweal columnist, is the author of The Two Trillion Dollar Meltdown (Public Affairs), among other books, and is a fellow at the Century Foundation.