The debate over austerity as the appropriate economic policy response to the euro crisis continues. Recent warnings by the IMF regarding extremely large negative multipliers on government spending cuts came on top of increasing political resistance to austerity measures throughout the European periphery and European economic data that continue to disappoint. Austerity advocates cite successes in the Baltic states, but close examination reveals them to have been less than successful. In the face of such evidence, why does the policy continue to, as Keynes put it eighty years ago, “dominate the minds of the governing classes of this generation”? With his look at the intellectual history of austerity as an economic idea as reflected in the writings of Locke, Hume, Smith, Ricardo, Mill, Schumpeter, and Keynes as well as in ordoliberalism, monetarism, public choice theory and other recent approaches Mark Blyth will enable us to answer Keynes’s question.