Keynes and the Confidence Fairies

Budgetary constraints were never the primary object of policy for John Maynard Keynes. They were constraints, not objectives. However, Keynes identified the psychological channels through which budgetary discipline and other policy conventions might influence investment. He even accepted that in rare circumstances the psychological factors might overwhelm direct policy interventions. Unfortunately, the polarisation of the current debate means traditional Keynesians are unlikely to search out this aspect of his work and the confidence faeries are unlikely to read any of Keynes’s work. This article draws attention to this aspect of his work.