The Theoretical Analysis of Leon H. Keyserling and Economic Policy

Leon Keyserling was a Keynesian. He was also influenced by such persons as Rexford Tugwell of Columbia University who questioned the whole US ethos. Thus, with his Keynesian economic analysis, he had a moral commitment derived partly from Tugwell, but learned earlier from his own father. In the Conference of Economic Progress Report (1983) Keyserling indicated that the real message of Keynes was that “the maldistribution of income generated more savings than could be absorbed by investment, and that Government should draw down this excessive saving by public borrowing for purposes of public investment” (Keyserling, 1983, p. 8). Such a statement, to Keyserling, was relevant in 1930 and at the time of his death in 1987. In many ways, however, Keyserling was a rather iconoclastic Keynesian. Perhaps he saw Keynes’ The General Theory of Employment, Interest, and Money (1936) clearer than most. The “gist” of Keynes to Keyserling was aggregate demand. The policy implication was to Keyserling that aggregate supply or growth should be full employment growth and that the private consumer and the public sector were the chief instruments in maintaining aggregate demand and purchasing power equal to the full employment growth of aggregate supply, employment, and prosperity. It is possible that Keyserling recognized or stressed that different sectors of the economy must grow in relation to one another more than did Keynes on both the micro and the macro level.