In 1937 the English economist Joan Robinson proposed that “when capitalism is rightly understood, the rate of interest will be set at zero and the major evils of capitalism will disappear”. John Maynard Keynes, who had taught Robinson, suggested something similar a year earlier in slightly more qualified and technical terms, arguing that this would be “the most sensible way of gradually getting rid of many of the objectionable features of capitalism”.
Robinson and Keynes were writing during the great depression, when spending and investment were moribund and interest rates seemed like a stranglehold on the economy. Unlike the sort of temporary measure we saw from 2009-21 when rates were close to zero, they believed interest rates should be set at zero permanently as a way to purge capitalism of its most objectionable and destabilising features.
