Consensus, Dissensus, and Economic Ideas: Economic Crisis and the Rise and Fall of Keynesianism

Abstract

During the recent economic crisis, Keynesian ideas about fiscal stimulus briefly seemed to form the basis of a new expert consensus about how to deal with demand shocks. However, this apparent consensus soon collapsed into a continuing dissensus, with important consequences for policy. Neither conventional bargaining accounts nor existing theories of the role of ideas in policy outcomes easily explain the arc of international responses to the Great Recession. In this article, we propose that sociological arguments about professions, in conjunction with those about spaces of political contention as ecologies, provide a better understanding of the puzzle of Keynesianism's rise and decline. The internal dynamics of prestige and status within the profession of economics intersected with policy arguments between states so as to make macroeconomic policy a hinge issue, over which coalitions in both ecologies contended. This explains how Keynesian economists and political actors worked together in the first phase of the crisis to advocate for and implement fiscal stimulus. It also explains why aggrieved policy actors, who did not favor stimulus, could help disrupt the apparent consensus in the second phase of the crisis by promoting the views of dissident economists.