Keynes as the Einstein of Economic Theory

This article seeks to provide a new perspective on Keynes by emphasizing the link between the General Theory and Einstein’s relativity theory. Although some economists have suggested such a link, no economist has fully explored it in the literature. This article holds that there are significant analogies between the two theories both in terms of general worldview and specific methodological principles. One can argue, for example, that, in line with Einstein’s relativity theory, Keynes subscribes to an anti-atomist stance and shows that time plays an essential role in economics.

In my view, the advantage of adopting this approach to Keynes is twofold. One is that the General Theory no longer appears as the work of an isolated theorist looking for an idiosyncratic or ad hoc way out of the difficulties of the old paradigm; it becomes instead the coherent product of a new stage in the evolution of economic analysis, influenced by the conceptual changes brought about by physics, the most advanced theoretical science. The other advantage of this approach is that it places the role of Einstein’s theory in the right perspective. It is a bit odd that one of the most significant intellectual achievements of humankind has not yet been recognized as a major influence on economics, despite the latter’s age-old acquaintance with physics.

General Points of Connection between Keynes and Einstein

The existence of a link between the General Theory and relativity theory is not a new idea. A. C. Pigou (1936, 115) suggested such a connection in his review of Keynes’s book: “Einstein actually did for Physics what Mr Keynes believes himself to have done for Economics. He developed a far-reaching generalisation under which Newton’s results can be subsumed as a special case.” However, it is difficult to deny that economists have not picked up on Pigou’s observation. Although an increasing number of scholars today acknowledge the positive implications for all the social sciences of Einstein’s revolution and twentieth-century physics in general (see, e.g., Bramhall 1986, Dow 1996, Mirowski 1989, and Chick 1990), only James Galbraith ([1994] 1996) has paid sufficient attention to the relationship between Einstein and Keynes.

There is no doubt that an important reason for this neglect can be found—or not found, as the case may be—in Keynes’s own writings. In the General Theory, he certaintly did not indulge in analogies between economics and the physical world, perhaps owing to his own habit of regarding the social and the natural sciences as quite different methodologically. However, this is not a sufficient reason for failing to extend Pigou’s suggestion of a link. Two main types of connections between Keynes and Einstein may be detected. The first is general and has to do with the popularity of Einstein in the twenties. The second is more specific and concerns the simple ideas that underlie the General Theory and relativity theory.

Let us start with the first connection. As Abraham Pais documented well in his 1994 book Einstein Lived Here, following the dramatic and widely publicized confirmation of his theory of general relativity provided by the empirical tests made during the total eclipse in 1919, Einstein became a world figure and was immensely popular with the media (see also Friedman and Donley 1985, 8–20). In a review of Pais’s book, Michael Shortland (1997, 156) notes that

Charles de Gaulle once remarked that our graveyards are full of indispensable men. Preserved in myth even as they decay, such men serve as ideal types, even mythical objects, especially in periods of rapid change when many people looked to the buried past for guidance. The rise of hagiography in the Victorian age, coincident with Carlylean hero-worship, gave expression to a range of emblematic lives that served as role models…. Science … has its own list of stars, but none shines brighter than Albert Einstein.

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