Keynes Tells Us to Praise the Mercantilist “Army of Heretics and Cranks” Who Argued for Lower Interest Rates

We should pay our respects to the “army of heretics and cranks” who in earlier periods argued for lower interest rates.

In The General Theory, Keynes acknowledged that he was refurbishing and updating

sixteenth and seventeenth century . . . [economic writers generally known as] Mercantilists.

This was ironic, because Keynes’s teachers in Britain, and Keynes himself early in his career, had regarded Mercantilist thought as a “fallacy” long since exploded.

Now Keynes saw an

element of scientific truth in Mercantilist doctrine, [especially in their view] that an unduly high rate of interest was the main obstacle to the growth of wealth [and in their] preoccupation . . . [to] increase . . . the quantity of money [in order to] . . . diminish the rate of interest.

In addition to the Mercantilists, Keynes acknowledged his debt to the economist Thomas Malthus (1766–1834), a few other economists, and even some 20th century figures, Sylvio Gesell and Major C. H. Douglas, whom he had previously dismissed as

no better than . . . crank[s].

In The General Theory, he described Gesell, best known for advocating stamped money whose value would expire if not spent by a certain date, as

an unduly neglected prophet . . . [with] flashes of deep insight.

Douglas, another proponent of what is sometimes called easy money, he somewhat backhandedly praised as

at least . . . not wholly oblivious of the outstanding problem of our economic system.

These people together Keynes called his

brave army of heretics

in which classification he happily included himself.

—Hunter Lewis, Where Keynes Went Wrong: And Why World Governments Keep Creating Inflation, Bubbles, and Bust (Edinburg, VA: Axios Press, 2011), Kindle e-book.