He and Alexis Fitzgerald (Costello's son-in-law) had persuaded Costello to adopt a Keynesian approach to the country's economic policy in 1948, the first major change to Irish economic policy for "a generation", as Murphy phrased it, and one which was achieved despite opposition from both the Department of Finance and the Central Bank.
Lynch's viewpoint on the relationship between the state, the people and the economy is evidenced in a speech he wrote for Costello in 1949:"the government must budget primarily to allocate a certain part of the nation's finances to public purposes, but must also ensure that the resources of the nation are utilised in the way which can best advance the interests of the community ...[A]s long ago as 1936, the late Lord Keynes declared that the duty of ordering the current volume of investment cannot safely be left in private hands.
He developed the Whitaker-Lynch rule[clarification needed] that encouraged borrowing in fiscal planning, whereby government budget deficits were incurred to fund capital investment projects.
[11] This was at least in part due to the persuasions of Professor George O'Brien, the man credited with introducing the theories of Keynes to Ireland.
[12][13] He was elected a Fellow Commoner of Peterhouse, Cambridge for 1955–56, where he formed a friendship with John Vaizey, and then returned to UCD.
In 1954, he was appointed chairman of that business and of Aer Rianta, the "ground side" operation which looked after airport facilities.
[19] Lynch had written favourably of an early Irish socialist, William Thompson of Cork, in a 1946 article[20] for The Bell.
He was a member of the Capital Investment Advisory Committee during the 1950s, the body that established the use of the tax system as the principal mechanism for developing the Irish economy.
They did not think it wise to publicly announce this at the time, although it was as a consequence of this, and the OECD report itself, that Lynch set up the Science Policy Research Unit at UCD, referred to above.
[16] Johnston has called the report "somewhat scathing" of the then Irish policy but also believes that, although the outcome was the establishment of the National Science Council in 1969, that body was fundamentally flawed as a consequence of its membership being state appointees.