Mark Blyth’s important polemic Austerity: The History of a Dangerous Idea seeks to put much of this in perspective. Blyth, a professor at Brown University, is no two-handed economist. He pulls no punches in making the case against austerity. His idiom is not that of modern macroeconomics – no theoretical equations, econometrics, stylised models, or even data tables. Rather, Blyth writes in the tradition of Keynes, slashing away at orthodoxy and the orthodox, emphasising the power of ideas as well as interests in shaping outcomes, ranging widely over the history of economic and political thought, expressing deep scepticism about financial actors, and rejecting the curtailment of spending as the solution to a period of excess. Much of what he says is valid and compelling. On many previous occasions – notably efforts to return to the gold standard during the interwar period – austerity has proven to be a disastrous policy. Contrary to widespread belief, the historical record suggests it is more plausible to blame the rise of Hitler on the depression under way as he rose to power than on the previous hyperinflation.
more from Lawrence Summers at the FT here.