We are all ... or are we?

Throughout modern history commentators from various sources have resorted to declaring a particular viewpoint as the mainstream orthodoxy by suggesting that "we are all ....". Thus, in 1888, William Vernon Harcourt, a British politician (Liberal party) declared "we are all socialists now". Looking back 130 years, this now appears as ludicrous hyperbole. Even when made with genuine earnestness at the time, such declarations will almost always be proven to be incorrect by the fullness of time.


The phrase "we are all Keynesians now" was originally attributed by Time (1965) to arch-Monetarist and Nobel Laureate, Milton Friedman. A renowned anti-Keynesian, Friedman tried to clarify his stance in a 1966 letter: "In one sense, we are all Keynesians now; in another, nobody is any longer a Keynesian." What Friedman intended to convey by this statement is difficult to determine, but we know for certain that he was no great proponent for Keynesian economics; to the contrary. It is reasonable to suggest that Friedman was making the point that Keynesian economics had become the mainstream orthodoxy of the 1960s, to the detriment of other perspectives. In many ways this could be seen as a variant of Goodhart's Law: in this case, when a particular economic doctrine becomes mainstream, the economy ceases to operate as that doctrine suggests, thereby making its policy prescriptions valid.

The same phrase later became associated with (and then attributed to) US President Richard M. Nixon. A Republican, with natural tendencies towards less government intervention, Nixon pragmatically found himself embracing orthodox Keynesian interventionist policies during the early 1970s. In 1971, after removing the United States from the international gold standard, Nixon was quoted: "I am now a Keynesian in economics".

In 2002, UK Labour politician Peter Mandelson declared in an article in The Times that "we are all Thatcherites now", suggesting that acceptance of the policies of Margaret Thatcher was now rife, even among the other political parties in the UK. That these other parties had strongly fought and contested Thatcherite policies at the time of their instigation was now a matter of history.

Following the financial crisis of 2007, the phrase "we are all Keynesians now" gained new life, when economists called for massive investment in infrastructure and job creation as a means of economic stimulation. It is a matter of historical record that many governments opted for the exact reverse, bringing in 'austerity' policies.

Following the Iowa cucuses in 2012, Republican presidential candidate, Ron Paul offered a different perspective: 'I'm waiting for the day we can say, 'We're all Austrians now.'" Austrian economics has long been side-lined by mainstream perspectives. However, it takes the view that markets are better placed than governments to deal with economic issues. They argue that less government intervention is better, a laissez faire view of the world which is in stark contrast to Keynesian economics. However, while the right wing of the US political spectrum advocate less government, their aims tend to be more vocal than concrete. For government to vote to remove itself from economic intervention would seem tantamount to the proverbial turkeys voting for Xmas!

So are we all anything now? After all, before the publication of his General Theory.... in 1936 Keynes was as much as "classical economist" as anyone else. By 1936 he had changed his views, although he never became a Keynesian (in the same way as Marx never became a Marxist). As he was fond of noting: "When the Facts Change, I Change My Mind. What Do You Do, Sir?"

I would argue that economic perspectives are like popular music. In the 1950s and 1960s all popular music was mainstream, with few diverse genres. This was also true for economics. In the 21st century "pop music" is simply one genre among many others which make up popular music. This includes reggae, country, hip hop, house, trance, and many others. It is the same with economics: nowadays almost anything goes. Economists have increasingly gone tribal, with individual economists often having affiliations with more than one school. And where do I fit? Like Keynes, when the facts change I change my mind.