John Maynard Keynes's biographer, Lord Skidelsky, attempts to referee the argument between Keynesian and neoclassical economists by suggesting that they may each be right for different moments. Writing in the Financial Times, he says, "Keynes's view was that we need different economic models at different times."
This rings both true and false. Sure, governments will want to adjust their policies based on the overall situation. It makes sense that the government might want to, say, increase defense spending in wartime but reduce it in peacetime, for example. But to the extent that economics is supposed to be a science that explains the workings of the world, the idea that it may operate differently at different times may seem strange. The laws of physics, or of astronomy, operate the same way regardless of whether the economy is expanding or contracting.
And there is a cost to participants in the economy that goes along with the uncertainty created by wondering which economic model the government is going to act upon at a certain time. This is especially true because we have a legal model – the rule of law – that, as Richard Epstein points out in this talk, frowns on ad hoc decisionmaking, preferring consistent, announced, and predictable rules. "Different economic models at different times" can be an elegant way of describing what may seem to others like arbitrary vacillation between socialism and capitalism that has the consequence of leaving property rights insecure and the value of property thereby diminished.
