"[But] the Democratic administration was prepared to experiment until it stumbled into recovery on the home front. That was never to come to pass. The so-called "Roosevelt depression" bit deep in 1936, and showed the economic improvement up to then to have been due to inventory accumu¬lation in anticipation of higher prices. Washington had little interest in or knowledge of the world economy.

It would be three years before the administration felt responsibility for the operation of the international economic system."

"The upturn from the depth of the depression began in 1933, but it was neither widespread nor rapid. In particular, the world economy lost its cohesion. The gold bloc sank further into depression. Germany and Italy of the Axis pursued independent economic paths, cut off from the world economy by a system of controls. On the other side of the world, Japan was recovering with speed and verve. The British Commonwealth, together with a number of other countries linked to sterling, turned inward along its own recovery path. The world capital market was moribund. Default spread in less developed countries. In 1935 the movement slowed to barely perceptible gains." Internationally, it was rearmament of the Axis powers and Japan that was the most dynamic factor. Then as now, the one source of budgetary deficits acceptable to most governments was rearmament. [In Germany] "unemployment was attacked through conscription (March 1935), the development of parastatal bodies, such as the storm troopers and the SA, and especially in spending on public works and armaments.

"Hjalmar Schacht fought hard to prevent deficit financing from rising above a dangerous level until 1938, when he resigned. But spending for public works, including autobahns, was undertaken through special paper discounted by banks. The effect was rapidly, to reduce unemployment from 6 million in October 1933 to 1.2 million in February, 1937.

German clearing arrangements with Latin America succeeded in bringing back trade almost to the 1920 levels. With Western Europe, the Commonwealth, and North America it remained at a low level."

"In short, world recovery in 1934 and 1935 was limited and fragmented. It excluded the gold bloc."

The parallel with the state of the world economy between the thirties and that today, is chilling. Basic to all this is the shattering of the world economy into currency blocs with only, limited, asthmatic intercommunication.

Today anything that smacks of Keynes's teachings, real or imagined, is blocked or buried. Constitutions are revised to ensure that he stay demurely under his tombstone. The personality of the man accounts for his spell as much as his doctrines. For in sheer analytical powers, there were others who got to the core of things a bit sooner, and a bit deeper. But Keynes was the man bred at the very heart of orthodoxy who could scoff at the pious in their own tongue to challenge the suicidal greed of capitalists. He charted a way of manicuring its claws, of rendering it house-broken. He ridiculed the very philosophy that drove all its futile bustle, and endorsed the views of his bohemian Bloomsbury friends about the ultimate ends of living. And while doing all this he showed a more commanding familiarity, with the workings of the system than its choirboys.

The difficulty, in exorcising Keynes appeared with dramatic force in the events that led up to the collapse of the Soviet Union, and its sorry sequel in setting up the succession regimes. There were enough parallel failures and achievements between the two arch-rivals to warrant serious studies. But these have been in short supply. One such neglected work is Charles Maier's, Dissolution, the Crisis of Communism and the End of East Germany.5

"The German Democratic Republic (GDR) ran up 40 years of an actual existing socialism, not in Russia or the Third World, but in a region that conformed to Marx's predictions." Maier disposes of the view that the GDR carried forward ideas introduced by Hitler. There were some common traits-full employment, negative or low real interest rates. These were applied by Hitler in the Autobahn project and vast military programs.

On the other hand the Allied control authorities wiped out anything that could be associated with Hitler or Keynes, as did the Federal Republic of Germany (FRG) in the GDR after the unification of the two Germanys in 1991. Keynesian counter-cyclical public spending was adopted in the FRG to deal with a serious recession, but the Bundesbank remained in the saddle, and typically kept interest rates 3% higher than those in the US.

The allure of the great absentee Keynes proved irresistible. Chancellor Kohl of the FGR recognized that the East Germans had paid reparations on behalf of the entire German people - to the Soviet Union - whereas the Western Allies had exacted no reparations from the FRG, On the contrary the FRG benefited from Marshall Plan aid. Kohl's perceptive policy turned out rewarding to the FRG even more than to East