A Debate with Wynne Godley on the Neutrality of Fiscal Policy

Abstract

This chapter stems from a controversy I had with Wynne Godley in 2006. I met him during a lecture at the University of Paris XIII a few years earlier. I was very impressed. To our astonishment, Wynne Godley began his speech in perfect French, which is a quality increasingly rare in Anglo-Saxon intellectuals today. Apologizing even for some of his blunders, he explained that he had been an oboist in the orchestra of the Paris Opera after the Second World War. Godley’s conference was a lesson in macroeconomics. From simple relationships in a stock-flow consistent (SFC) model and statistics, he explained with great accuracy the position of the United States and the European Union at the time. Everything became clear. The character gave off a great kindness and calm, but showed great determination. Then I took him back to his hotel and we had a very interesting discussion on the University of Cambridge in the 1960s and 1970s. He was like a living encyclopedia, telling stories about all these characters that I had only studied in books: Joan Robinson, Piero Sraffa, and so on. It was difficult to leave and I decided to build a SFC model that would combine the main elements from my doctoral thesis of 1984. And Wynne Godley, with Marc Lavoie (2007), provided me with the framework to model my theoretical ideas.

My grateful thanks to Nick Parsons (University of Cardiff) and Leslie Redmond.