Question

John Maynard Keynes once suggested that the reason the economy of ancient Egypt prospered was because the government has a systematic project of building pyramids. Explain the logic of Keynes' argument. What are the modern equivalent of pyramids? How would a classical economist respond to Keynes' argument?

Answer 1

John Maynard Keynes, father of modern economics came with Keynesian revolution during the time of Great Depression. Keynes vehemently criticized the entire classical postulates. The Keynesian economics favored government intervention and according to him with the help of fiscal policy the economic problems can be solved The Egyptian pyramids is a classical example of large-scale public-works in the 20th century. According to Keynes, only public sector can build such types of monuments. The free market economy is not capable of making investments in these types of project. Thousands of laborers were working for around thirty years to complete one of greatest structures in human history. The Keynesian logic is that the Pyramid building used huge amount of surplus workers and surplus wealth. Even though some argued that slaves were used for this purpose, but it catered the basic necessities of thousands of workers. To keep these workers working on a pyramid required a surplus of necessities created from the efficiencies of the production capacity in place at the time. Thus productive surplus were used to build a historic monument in Egypt which is a classical example of sustainable use of surplus resources.
The railway networks all over the world, Hydro electric dams can be viewed as similar to Pyramid. The public utility is more in these cases. The common feature is that the role of government in creating such assets for common good. The food preparation, security, and all sorts of jobs in between to keep the entire process as efficient as just impatient as pharaoh might need.  
The classical economist viewed the above mentioned situation as unproductive. The classical school of thought always stood for laissez faire policy where government is least intervened. The productive capacity remains high in private sector. The free market economy will never support the construction of pubic monuments because they are focusing on productive capacity, private ownership and profit motives.