Keynesians now face the final curtain

For those too young to remember, the mid-1970s witnessed the first demise of Keynesian economics as the much-worshipped Phillips Curve turned positive in depicting the relationship between the rate of unemployment and the rate of price inflation, and as economic growth collapsed in response to government spending. As the spectre of stagflation stalked the land, political leader after political leader thrice denied his Saviour and turned to other economic deities for ultimate salvation. In the United Kingdom, Labour prime minister James Callaghan summarised the new consensus in a candid 1976 denunciation: