BEN Bernanke believes that the economic crisis will be over in just a few months, a claim that if nothing else displays remarkable confidence on the part a man who is a leading academic expert on the slump of the 1930s. But then again, ‘managing expectations’ - to slip into central banker-speak - is part of the job description for the chairman of the Fed.

With the socialist left currently unable to present a systemic challenge to capitalism, we have to hope that the en masse Damascene conversion of the world’s central bankers to all-out Keynesianism will do the trick, and that such expedients as extensive bank nationalisation, printing money and an aggressive fiscal policy will avert a rerun of the decade in which Helicopter Ben is so evidently steeped.

But at the theoretical level, our critique has to go deeper. After all, if Keynesianism was an instant quick fix, Marxism would be out of business. The question is, how efficacious can such methods in managing a modern capitalist economy? There is a test case to hand, namely the experience of Japan., a country that has now endured almost two decades of persistent stagnation, interspersed with only the briefest periods of positive growth.

Throughout the post-war long boom, Japan saw sustained growth comparable to that seen by China since Deng Xiaoping’s turn to capitalism. From 1950 to 1973, GDP rose at an average rate of 7.4% per annum. Even after the oil shock of the mid-1970s, growth still hit a respectable 4% a year.

All that was to change in the early 1990s. From 1992 to 2002, average annual growth came in at less than 1%. While not on a par with the Great Depression, total output is now over 30% smaller than it would be if the performance of the previous period had been maintained. Moreover, since 1995, Japan has even had to contend with deflation, a phenomenon not previously experienced in any OECD country.

Policy makers have tried everything in the Keynesian playbook, including the reduction of nominal interest rates to zero, and an increase in the ratio of government debt to GDP from 13% in 1991 to 90% in 2006. Although this did lead to signs of a modest upturn in recent years, the worldwide recession will surely put paid to that. There are now no demand management rabbits left to pull out of the hat.

The mainstream explanation is that Japan became the victim of a so-called ‘liquidity trap’, a situation in which the rate of interest is so low that nobody wants to hold interest-bearing assets. That being the case, expansion of the money supply can have no impact on aggregate demand and does not stimulate investment. With British interest rates at just 0.5%, that is a scenario Mervyn King would do well to ponder.

In short, Keynesianism may achieve enough to avert slump, but not enough to overcome the contradictions of capitalism, particularly the tendency for the rate of profit to fall. Yet such secular stagnation on Japanese lines may be the best Europe and the US can expect in the coming period.