James Crotty is emeritus professor of economics at the University of Massachusetts Amherst. He did flirt with Fabianism a bit but he could never really commit to socialism. This paragraph is riddled with class-neutral terms. The American Keynesian Alvin Hansen is usually credited with originating the idea in the late 1930s; former Clinton administration Treasury secretary Lawrence Summers has resuscitated it to explain the sluggish growth that has plagued the advanced capitalist economies since the financial crisis of 2007–2008.14 Summers’s argument is that the rate of interest that would generate enough private-sector investment demand to counterbalance saving at a full-employment level of GDP is, at the present historical juncture, negative. By 1929 Keynes’ teachings had became hardened into a full Fabian Socialist doctrine. Higher levels of output can be sustained only if other sources of spending emerge to fill the gap, i.e., to absorb the economy’s higher level of savings. But those attitudes and conditions are what cause innovation to occur, when it does occur, in the private sector, and, as Mazzucato’s research indicates, there is no reason they cannot produce similar results in other contexts. All the while, organized labor was strong enough to ensure that workers shared in the benefits of growth. Along with his colleague Sam Bowles, he is one of the few radical heterodox economists to gain tenure at a leading American university. But the Golden Age was an isolated episode. Lynn Turgeon, the heterodox economist who died in 1999, saw corporatism as a system that was not inherently progressive. He cites Lawrence Klein, an early champion of Keynesian economics and a future Nobel laureate: “Marx analyzed the reasons why the capitalist system did not and could not function properly, while Keynes analyzed the reasons why the capitalist system did not but could function properly. Of course, it can sometimes be difficult to come to such a decision when the data itself is in transition, like Cuba in 1960 or Yugoslavia in Tito’s early years. And then there was Sraffa, great friend and countryman of Gramsci. This is evident in his first important book, The Economic Consequences of the Peace (1919); there Keynes draws a striking contrast between British nineteenth-century capitalism, which witnessed astonishing improvements in living standards, largely through the adoption of transformative technologies such as steam power and rail transport, and the dispiriting mix of industrial distress and financial turbulence that marked the British economy in the aftermath of the Great War. There are few profound schools of economics and Keynesian School of Economics is one of them. TrackBack URI. The exploitation of these opportunities involves what Schumpeter famously termed “creative destruction” — the wastage of obsolete resources, both human and inanimate, as the economy absorbs and diffuses the innovation and its offshoots. That is to say, Keynes from the start understood capitalism to be a system that undergoes structural change over time and operates differently in different phases of its history. Strachey was responsible for writing books that undermined the Christian ethic of the Nineteenth Century and set the tone for the pornographic and depraved literature of today. In a 1939 interview in the New Statesman and Nation, Keynes described the economic order he envisioned as “liberal socialism, by which [he meant] a system where we can act as an organised community for common purposes and to promote social and economic justice, whilst respecting and protecting the individual — his freedom of choice, his faith, his mind and its expression, his enterprise … Nearly a decade before the publication of The General Theory, Keynes observed that: The optimistic Zeitgeist of the nineteenth century has given way to a pessimistic Zeitgeist … We used to think that private ambition and compound interest would between them carry us on to paradise. This paper presents unexplored evidence that shows Keynes was a non-Marxist socialist from 1907 until his death in 1946. What of Keynesianism’s other, left, flank? Keynes became the mastermind behind the economic structure of British and American socialism. While Keynes was always a friend to the working class, a staunch supporter of trade unions, he had little to say about the alienating conditions of the wage relation. In some respects, this may have applied to Keynes, who was certainly aware of the tremendous economic miracle of Adolf Hitler in reducing unemployment from over 30 percent when he took office in 1933 to 1 percent by 1936, the year in which the German edition of the General Theory appeared. But in recent years, politicians have used it even during the expansionary phase. The latest issue of Catalyst, a journal that is published by Bhaskar Sunkara and edited by Vivek Chibber, has an article by economics professor Gary Mongiovi titled “Was Keynes a Socialist?” It is a gushing review of “Keynes Against Capitalism: His Economic Case for Liberal Socialism”, a new book by James Crotty. This, of course, will sound familiar to anyone paying attention to political and economic affairs in the Western Hemisphere in 2020. … And many, of course, suffered for their principles. By resurrecting that vision, James Crotty has performed a valuable service. It must be (in Keynes’s words) sufficiently and consistently impoverishing.” Liberalism or Barbarism. This inter… Keep in mind that admiration for Stalin’s ruthlessness was widespread among the intellectual elite in the 1930s. He characterized Das Kapital as “an obsolete economic textbook which [is] not only scientifically erroneous but without interest or application for the modern world.” To George Bernard Shaw he wrote in 1934: “My feelings about Das Kapital are the same as my feelings about the Koran. Be that as it may, Crotty, without explicitly making the point, enables us to see that Keynes was an instinctive dialectician. This terrain has been explored before. Even smaller-scale downswings, if they occurred often enough and were severe enough, could destabilize the system both politically and economically. Keynes’s outlook also anticipates elements of the Social Structures of Accumulation approach, a body of macroeconomic analysis grounded in Marxian theory. Apparently, Crotty’s book is a corrective to this false characterization. All this salivating over government boards has little to do with the socialism I’ve defended since 1967. The answer comes in the line: “Keynes never believed in the power of ordinary working people to control their own fate.” It’s hard to imagine anybody being a socialist if they don’t come to grips with the principles laid out in a pamphlet like “Their Morals & Ours”. During that so-called postwar Golden Age, unemployment was low, productivity growth and profitability were high, and real wages grew in step with productivity; business investment was robust, and the economy grew at a healthy clip. Social democrats seek to implement an economic strategy shaped by the thoughts of John Maynard Keynes. James Crotty is emeritus professor of economics at the University of Massachusetts Amherst. Whether the program that Keynes describes properly falls under the heading of socialism is a quibbling matter. The collapse of the Bretton Woods agreement made exchange-rate uncertainty and balance-of-payments crises once again potent sources of economic instability. He pushed for such a board again in the early 1930s when he served on the famous Macmillan Committee to formulate a response to the problems confronting the British economy. Socialist Party of Great Britain - Capitalism In Crisis - Keynesianism: Resurrecting a Past Failure. Keynes advocated deficit spending during the contractionary phase of the business cycle. I am prepared to entertain an affirmative answer to the question “Was Keynes a socialist?” But the significance of Crotty’s book lies not so much in his affirmative conclusion as in the arguments that he marshals in support of it. According to Keynes’ biographer, Robert Skidelsky, it would be “an interconnected elite of business managers, bankers, civil servants, economists and scientists, all trained at Oxford and Cambridge and imbued with a public service ethic, would come to run these organs of state, whether private or public, and make them hum to the same tune.”. In Keynes Against Capitalism, PERI researcher James Crotty demonstrates that John Maynard Keynes—the most influential economist of the 20th Century—advanced a coherent program on behalf of 'Liberal Socialism. The Keynesian Revolution, in Crotty’s interpretation, was considerably more revolutionary than we have been led to believe. Instead, it is more important to define socialist in terms of a criterion that can be applied to a state like Cuba or the former Soviet Union. Winter 2020. By implicitly endorsing Keynes’s doctrines that Mongiovi describes in the subheading of his article as “indeed more radical than commonly thought” and of “considerable relevance for the Left today”, they are repositioning themselves as Brooklyn hipster versions of Dissent magazine. Our material conditions seemed to be steadily on the upgrade [in the nineteenth century]. Crotty describes at considerable length Keynes’s proposal to expand public control over investment. He was critical of the sloppy application of orthodox ideas to complex real-world circumstances, but he was no renegade. Probably sent to the press before the pandemic kicked in, it smacks of the Fabian habits of the social democratic left and light-years away from our grim pandemic and economic free-fall realities. This essay argues that Crotty’s interpretation of Keynes has a great deal of merit: Keynes’s economics is indeed more radical than commonly thought, and it has considerable relevance for the Left today. His writing could be messy and imprecise. The most fundamental of those questions is: How should we configure our economy so that it will foster human flourishing and well-being? In an important new book Keynes Against Capitalism: His Economic Case for Liberal Socialism (Routledge, 2019) James Crotty argues that Keynes was a socialist who advocated a much more radical economic agenda than most mainstream economists and political analysts realize. Military Keynesianism kept industrial demand high, not only in the arms sector, but also in the subsidiary industries that supplied that sector with materials and parts. Crotty reports, and appears to embrace, Keynes’s case for economic self-sufficiency, a strategy that would entail a serious curtailment of international trade. What’s entirely missing from Mongiovi’s review, and presumably in Crotty’s book, is any engagement with the class struggle. ( Log Out /  I know that it is historically important and I know that many people, not all of whom are idiots, find it a sort of Rock of Ages and containing inspiration. In the 1930s, the closest anything came to this ideal was the New Deal and Sweden’s social democracy, two of the Sandernista models. He was actively opposed to socialism, Bolshevism, and the Russian Revolution, proudly declaring that, “the class war will find me on the side of the educated bourgeoisie.” By giving government a set of tools that could be used to make recessions shorter, less severe, and less frequent, mainstream Keynesianism effectively took socialism off the table. The difficulty Keynes describes is the perceived lack of profitable investment opportunities; capitalist enterprise has the capacity to produce an enormous volume of output, but it cannot ensure the volume of demand required to realize the profit potential embedded in that productive capacity. We may be on the eve of great changes in her social and industrial structure … The most serious problems for England have been brought to a head by the war, but are in their origins more fundamental. Britain’s nineteenth-century economy drew its vigor from new inventions and their adaptation to profitable purposes, from population growth, and from the opening of global markets. What of Keynesianism’s other, left, flank? Robert Skidelsky portrays Keynes as a liberal who wanted to save capitalism. A few high points will serve to dramatize the depth and extent of Keynes Fabian immersion. The central institution Keynes envisioned for this function was a Board of National Investment, an idea he first put forward in the late 1920s when he helped to draft a Liberal Party report on Britain’s Industrial Future. Keynes argued that investment, which responds to variations in the interest rate and to expectations about the future, is the dynamic factor determining the level of economic activity. Robert Skidelsky writes, “Keynes was a lifelong liberal” and “He was not a socialist” (2009, 135, 157; 1992, 233; 2000, 478).4 Contrary to Skidelsky, important Keynes scholars have aligned him with socialism.5For example, Rod O’Donnell writ… At such places, Hyman Minsky is taken in large doses and a smidgen of Karl Marx is thrown in just to add some spice to the stew. While Milton Friedman described The General Theory as "a great book", he argues that its implicit separation of nominal from real magnitudes is neither possible nor desirable. It is the same problem the DSA elites have today. MARX VERSUS KEYNES. Most socialist governments own the nation's energy, health care, and education services. In the early 1970s, the Golden Age (which, let us note, conferred most of its blessings on white males and their families) was subjected to a variety of structural and political pressures that gradually eroded its viability. Harry had no use for Crotty, at least his economics. To be sure, Keynes was a uniquely eloquent advocate of a thoroughgoing progressive transformation of the economic landscape, and the most prominent and authoritative proponent of change on such an ambitious scale. We have no clear idea laid up in our minds beforehand of exactly what we want. It's John Maynard Keynes. I asked David once how he taught Marx’s labor theory of value. The looming dire threat of climate change has prompted calls for a Green New Deal.36 The realization of such a project would require the adoption of an ambitious and optimistic political vision like the one Keynes put forward. Keynes characterised religion as not only a personal experience of communion, but also as the pursuit of a better world for all people, although he showed some ambivalence about how this better world might come about, ultimately adopting a position similar to that of the nineteenth-century Christian Socialist Movement, to which he was connected through the Cambridge Apostles. Crotty describes the proposed role of the board as “very ambitious indeed — to help recreate long-term boom conditions similar in vigor to those of the nineteenth century through public investment planning. However, this simply isn’t so. Gary Mongiovi is a professor of economics at St John’s University in New York City, specializing in the economics of David Ricardo, Karl Marx, and Piero Sraffa. In the absence of transformative innovations that create new markets and call forth high levels of investment, including infrastructure investment, over long stretches of time, capitalism will lapse into a condition that economists call secular stagnation. Keynes: socialist, liberal or conservative? By the early 1980s, the Golden Age social contract had been displaced by a neoliberal outlook that reified the market. John Maynard Keynes is widely regarded as one of the twentieth century’s outstanding liberals. It is beyond the scope of this article to offer a critique of John Maynard Keynes or James Crotty’s new book. That being said, Keynes never believed in the power of ordinary working people to control their own fate. Keynes seems blithely unaware that a problem of rational economic calculation might exist under socialism. Instead, I want to hone in on Mongiovi’s review as another indication of Sunkara and Chibber’s slow but inexorable retreat from Marxism. This definitely was not a short-term government stimulus program designed to ‘kick-start’ a temporarily sluggish economy and then let free enterprise take over.” One significant achievement of Crotty’s book is its demonstration beyond a doubt that Keynes’s overarching objective was to make a case for a program of national economic planning. By contrast, Rod O’Donnell argues Keynes was a socialist. Crotty marshals all of the available evidence and sets it out in an exceedingly clear way. Keynes desired a return to the “good old days”, in which the capitalist class were “responsible” industrialists who invested for the good of their communities and society as a whole. Many believe that John Maynard Keynes was a communist or a socialist. Only socialism can provide a positive way out of the present crisis. That is the controversial claim made in a new book by the distinguished radical economist James Crotty. He rejected Soviet-style central planning; he recognized that markets are useful and that decentralization of control is desirable. Society, Keynes believed, could and must take “intelligent control of its own affairs,” and this requires a reconfiguration of our economic institutions in the light of capitalism’s structural evolution since the nineteenth century.8 /a> Crotty lays out that vision in rich and comprehensive detail. Interesting that Keynes would confide in Shaw. This makes complete sense because capitalism is inherently monopolistic. “England is in a state of transition,” he wrote, “and her economic problems are serious. In the early twentieth century, he believed, it had entered a phase in which private enterprise could no longer reliably generate full employment, rising living standards, or socially useful investment. Given all the projects I have taken on, it would not be worth my time or that of my readers. But Mann reserves “Keynesianism” proper for a stance to the left of center but short of socialism — reformism, more or less. The idea was that a mechanism needed to be put in place to provide a permanent stimulus to the economy. He did flirt with Fabianism a bit but he could never really commit to socialism. Keynes was no radical, and it is a stretch to claim he was. He bend economic science into a socialist direction, without changing anything fundamental about the discipline. This question had already occupied continental scholars for some time and was the focus of lively discussion at the London School of Economics. Socialist economics. It puts you in the same camp as the staff of the Jerome Levy Institute at Bard College, a school well-known for its housebroken faculty. He liked to be provocative. This is a function of examining who owns what. It did not merely entail a recognition that the state must actively manage the level of aggregate demand to keep the economy operating on an even keel: what is needed is direct public control of the economy’s capital expenditures. Socialist Education Bulletin, Nº 1, July 1973. Based on a very close reading of Keynes’ work, Crotty argues that core Keynesian economic ideas should … Both men's works has fostered respective schools of economic thought ( Marxian economics and Keynesian economics) that have had significant influence … The main problem, however, is that Keynes had no coherent theory of the state, as Mongiovi’s review and presumably Crotty’s book show. See John Maynard Keynes, “A Short View of Russia,” in, This aspect of Keynes’s theoretical framework was developed by Hyman Minsky in, Many of these outstanding German-speaking economists were forced to emigrate when Hitler came to power; they went on to form the backbone of the New School’s University in Exile. Perhaps realizing that the grounds for calling Keynes a socialist are tissue-thin, Mongiovi takes the tack that labels are not that important: I doubt that there is much to be gained by trying to pin a label like “liberal” or “socialist” onto Keynes — he was too exuberant a thinker to be put into a box. Keynes wanted to apologize and preserve, while Marx wanted to criticize and destroy.”4. In other words, Keynes wanted to turn the wheel of history … Capitalist economies, he argued, routinely deliver suboptimal levels of employment. Keynes is one of the most important and influential economists who ever lived. Not surprisingly, workers and consumers have not fared well over the past four decades; their real incomes have stagnated, and their economic lives have become alarmingly insecure, while capital has seen its share of national income grow and its tax burden decline. Keynes had no great affection for the working class either. He understood, sensibly, that muddling through is an unavoidable aspect of all human activity. The system of planning that he had in mind would not, and indeed must not, hobble “the constructive energy of the individual mind, [or hamper] the liberty and independence of the private person.”31, Crotty gives the impression, perhaps inadvertently, that Keynes was an isolated voice. Among these are: It is curious how so many of the 1960s radical economists, like Bowles and Gintis, Crotty, Pollin, and many others, most from upper middle-class or downright rich backgrounds, soon enough lost their radicalism and became left liberals. While unfettered trade undoubtedly inflicts considerable harm on large numbers of workers, protectionism and economic insularity also have undesirable consequences that Crotty ought to have addressed. As the working classes fought for and got higher wages, their rising consumption spending fueled further expansion. It is almost universally believed that Keynes wrote his magnum opus, The General Theory of Employment, Interest and Money,to save capitalism from the socialist, communist, and fascist forces that were rising up during the Great Depression era.This book argues that this was not the case with respect to socialism. He characterized Das Kapital as “an obsolete economic textbook which [is] not only scientifically erroneous but without interest or application for the modern world.”19 To George Bernard Shaw he wrote in 1934: “My feelings about Das Kapital are the same as my feelings about the Koran. John Maynard Keynes, 1st Baron Keynes CB ... and that such policies would lead toward socialism. Crotty shows that Keynes saw the economic distress of his time as structural in origin. An essay of mine comparing James Crotty's newest book, Keynes Against Capitalism with Bhaskar Sunkara's The Socialist Manifesto and applying their lessons to the Democratic Primaries, especially the grappling between the farthest left contenders (Elizabeth Warren and Bernie Sanders), or, perhaps more accurately, their supporters, has just been published by Challenge. I am far more interested in what positions he takes on a particular capitalist state itself. Keynes’ tie-in with Fabian socialism is so extensive that it is difficult to compress the record within the confines of a few pages. He had supplanted his old mentor, Alfred Marshall, as the official economist of Fabian Socialism. Keynes was highly antipathetic toward Marx. Keynes showed that if Capitalism is to be successful, it has to be managed: the “market”, if left to its own devices will breed great depressions and widespread impoverization. Again in February 1918, Keynes admitted to “being a Bolshevik.”6 The famous journalist Clarence W. Barron, founder of Barron’s magazine, met Keynes in 1918 and recorded: “Lady Cunard says Keynes is a kind of socialist and my judgment is that he is a Socialist of the type that does not believe in the family.”7 After making the case that Keynes, like Marx, saw capitalist crisis as rooted in its own contradictions, Mongiovi—speaking for Crotty—refers to the measures Keynes saw as moving toward socialism: Since the effective demand problem was fundamentally structural, Keynes advocated a structural solution: a permanent expansion of the state. Why, if the government is run by the “good people,” it will function efficiently and in society’s best interests. Both Fascist and Keynes were looking for a third way between socialist and the failing free markets and the fascist found one way, right wing populism and nationalism that put industry at the service of the state, but Keynes found another which used the government to stabilize the markets. ( Log Out /  (Read parts one and two) Hayek, credit and the crisis. He was a lifelong member of the British Liberal Party, which held few seats in Parliament after 1920. In a shrewd analysis of Crotty’s book, Michael Roberts identified the elitist bent: As Crotty puts it, Keynes’ central point was that the emerging importance of the system of public and semipublic corporations and associations combined with the evolution of collusive oligopolistic relations in the private sector already provided the foundation for a qualitative increase in state control of the economy. Both of them were members of the Fabian Society, a reformist gathering of intellectuals that was sort of the equivalent of the Jacobin editorial board in the 1930s. Enter your email address to follow this blog and receive notifications of new posts by email. He wanted people to recognize that we don’t have to settle for what the invisible hand bestows upon us, because we have considerably more latitude in guiding and constraining market forces than conventional economic wisdom alleges to be the case. Instead, Keynes “Keynes was building a case to replace it [capitalism] with a form of democratic socialism in which most large-scale capital investment spending would be undertaken by the state or by quasi-public entities.” All this would unfold in a “gradual transition, through a process of trial and error, to a planned economy.” This sounds pretty much like how Jacobin described a Sanders presidency, doesn’t it? Unlike Alvin Hansen, Keynes had no notion of capitalism’s stagnation tendencies. by michael roberts. As the economy’s capital stock increases, opportunities for profitable investment become scarcer, and profitability declines. Comment by Karl Friedrich — May 27, 2020 @ 6:43 pm. Capitalism, according to Keynes, needed to be fixed, not abandoned — or so says the standard view of his project. The "New Economics" and Marxian Socialism. NASA, which began as a Cold War program, involved an enormous mobilization of physical and intellectual resources; research related to the space program led to technological innovations, particularly in computing and information science, that generated large spillover benefits in practically every part of the private sector. The acknowledgment is grudging, however: “the subsequent use to which [Marx] put this observation was highly illogical.”21 Keynes was never quite willing to give Marx his due on the matter of aggregate demand. As aggregate income increases, society tends to save a larger proportion of its income. I doubt that there is much to be gained by trying to pin a label like “liberal” or “socialist” onto Keynes — he was too exuberant a thinker to be put into a box. v. t. e. Marxism and Keynesianism is a method of understanding and comparing the works of influential economists John Maynard Keynes and Karl Marx. And he is nowhere close to Kalecki in terms of radical insight. Since the British Labour Party was an instrument of Fabian socialism the Keynesian theories formed the backbone of the Labour Party’s economic platform. Keynes was not himself an expert on economic planning. His distaste for Marx appears to have been an aesthetic reaction rather than ideological or scientific in nature; I suspect that Keynes was allergic to Marx’s dense Teutonic prose. Instead, what Keynes believed was that there were certain times that the government would need to … One reason I admired Harry Magdoff and Paul Sweezy, and all of the Monthly Review stalwarts I met or read about, like Istvan Meszaros, Annette Rubinstein, Dirk Struik, and many others (often they were from the Global South, like Samir Amin and Che Guevara), is that they were ALWAYS true to a radical vision and to radical values. Sorry, your blog cannot share posts by email. Once policymakers had gotten the problem of unemployment under control through the application of fiscal and monetary policy, market forces and profit-driven private enterprise could be left to regulate income distribution and to channel resources into their most efficient uses. In a famous passage from The General Theory, he affects a cautious stance: a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment; though this need not exclude all manner of compromises and of devices by which public authority will co-operate with private investment. Again in February 1918, Keynes admitted to “being a Bolshevik.”6 The famous journalist Clarence W. Barron, founder of Barron’s magazine, met Keynes in 1918 and recorded: “Lady Cunard says Keynes is a kind of socialist and my judgment is that he is a Socialist … In the postwar Social Structure of Accumulation, the process of capital accumulation was sustained by Keynesian demand-management policies, military Keynesianism, and an accommodation between business and organized labor to keep wages more or less in line with productivity growth. Keynes’s biographers, Roy Harrod, Robert Skidelsky, and Donald Moggridge, position him as a liberal with progressive sensibilities; Skidelsky in particular is skittish about identifying him as a socialist.6. We no longer have sufficient confidence in the future to be satisfied with the present.15. Keynes was aware of how market-driven structural change can disrupt a community’s social bonds. Many believe that John Maynard Keynes was a communist or a socialist. (Keynes glosses over the fact that those improvements in living standards were hard-won through disruptive activism by Chartists, trade unionists, and numerous social reformers.) From 1996 to 2013, he coedited the Review of Political Economy. Marxism portal. He is often characterized as a sort of intellectual magpie who made use of whatever intriguing idea crossed his path or sprang into his mind. According to that framework, capitalism passes through various institutionally distinct phases, roughly a quarter of a century long, in each of which capital accumulation is driven by a particular mechanism.16 In the earliest stage of capitalism, for example, profits and growth were driven by the expansion of commerce. With the collapse of economic liberalism as a policy which promised to ensure a crisis free, harmonious and self-adjusting market, governments are increasingly returning to the economic ideas of Keynes. To his credit, Keynes never fell into this trap. No 4 I know that it is historically important and I know that many people, not all of whom are idiots, find it a sort of Rock of Ages and containing inspiration. “The republic of my imagination lies on the extreme left of celestial space.” — John Maynard Keynes1, “For my part I think that capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself is in many ways extremely objectionable. Economics portal. They weren’t people to compromise. He had a healthy respect for enterprise, and he appears to have seen risk-taking as a driver of progress. Yes, Keynes did not favor socialism, but was worried that an extreme case of capitalism could actually lead to a socialist takeover. Keynes, the conventional story goes, sought not to dismantle capitalism but to reform it; he recognized that, contrary to the precepts of orthodox neoclassical economics, market forces are not reliable guarantors of full employment and robust growth. John Maynard Keynes, 1st Baron Keynes CB FBA (/ k eɪ n z / KAYNZ; 5 June 1883 – 21 April 1946), was a British economist, whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Rod O’Donnell has already made a persuasive case that Keynes was a socialist in his philosophical outlook, his political orientation, and his economics. The sclerotic and stultifying Dissent magazine of the 1960s and 70s being the prime example. He was not mainly preoccupied with taming the business cycle: his ultimate objective was to bring about a radical transformation of our economic system. Socialist Education Bulletin, Nº 1, July 1973. In a 1939 interview in the New Statesman and Nation, Keynes described the economic order he envisioned as “liberal socialism, by which [he meant] a system where we can act as an organised community for common purposes and to promote social and economic justice, whilst respecting and protecting the individual — his freedom of choice, his faith, his mind and its expression, his enterprise and his property.”5 What Keynes had in mind, Crotty contends, was a gradual transition, through a process of trial and error, to a planned economy. In June 1930, at a meeting with those men, Keynes described himself as the “only socialist present.” 33 Beatrice Webb agreed and said, “ [Keynes is] certainly more advanced than MacDonald.” 34. No, he wasn’t. Keynes laid out no detailed institutional blueprint for the arrangement he was advocating. 10. However, this simply isn’t so. Or even "socialist"? We also find in Keynes’s argument faint echoes of an element of Karl Marx’s falling-rate-of-profit hypothesis. O’Donnell makes his case in his provocative chapter ‘Keynes’s Socialism: Conception, Espousal, Strategy’ (1999). Socialism comprises those tendencies, forces, and institutions that blunt, mitigate or adapt market relations to social goals. In Keynes Against Capitalism, James Crotty describes John Maynard Keynes’s powerful case for a form of democratic socialism in which most large-scale investment would be undertaken by the state. Sure, and if wishes were fishes, we’d all cast nets in the sea. A number of important themes emerge in the telling. This definitely was not a short-term government stimulus program designed to ‘kick-start’ a temporarily sluggish economy and then let free enterprise take over.”22 One significant achievement of Crotty’s book is its demonstration beyond a doubt that Keynes’s overarching objective was to make a case for a program of national economic planning. The forces of the nineteenth century have run their course and are exhausted” [emphasis added]. Its dreary, out-of-date, academic controversialising seems so extraordinarily unsuitable as material for the purpose.”20 In a 1933 draft of The General Theory, he acknowledged that Marx usefully called attention to the fact that if firms are unable to realize their profits by selling what they have produced, the circuit of production will be interrupted. The evidence confirms Keynes was a non-Marxist socialist throughout his adult life.6 Although O’Donnell’s work on Keynes’s socialism is noteworthy, there are several problems with his account. Comment by Michael D Yates — May 27, 2020 @ 8:25 pm, RSS feed for comments on this post. Again in February 1918, Keynes admitted to “being a Bolshevik.”6 The famous journalist Clarence W. Barron, founder of Barron’s magazine, met Keynes in 1918 and recorded: “Lady Cunard says Keynes is a kind of socialist and my judgment is that he is a Socialist of the type that does not believe in the family.”7 Our problem is to work out a social organisation which shall be as efficient as possible without offending our notions of a satisfactory way of life.” — John Maynard Keynes2, An engraving of St George slaying a dragon graces the cover of James Crotty’s monumental new book Keynes Against Capitalism.3 The dragon is meant to symbolize capitalism, and the dragon slayer represents the great twentieth-century economist John Maynard Keynes. According to Paul Krugman, “Keynes was no socialist — he came to save capitalism, not to bury it.” When Keynes wrote The General Theory, there was literally mass unemployment, so … Regulation of all kinds (but especially regulation of financial markets), minimum-wage laws, labor unions, the social safety net, Keynesian demand-management policies — all of these once-routine features of postwar capitalism have been the targets of sustained ideological attack. Keynes had a notoriously restless intellect; he was an extreme case of Isaiah Berlin’s fox who knows many things.7 He whipped up more ideas before lunch than most of us have in a lifetime. Don’t be under any illusion that Keynes was a radical supporter of labour or that he sided with the workers or had any sympathy for Marxist or socialist ideas. He was born into a wealthy family in Philadelphia, but once he became a radical, he remained one. For him, Marxism was to be condemned for “exalting the boorish proletariat above the bourgeoisie and the intelligentsia, who are the quality in life and carry the seeds of all human advancement.” President Bush's deficit spending in 2006 and 2007 increased the debt. Joseph Schumpeter argued that epoch-making innovations — steam power, the railroads, the internal combustion engine, electrical power — could spur long booms. Yet when I look into it, it is to me inexplicable that it can have this effect. In an important new book Keynes Against Capitalism: His Economic Case for Liberal Socialism (Routledge, 2019) James Crotty argues that Keynes was a socialist who advocated a much more radical economic agenda than most mainstream economists and political analysts realize. Fascism failed because their policies lead to war which destroyed the national economy they were … After all, you don’t want to go too far with the Marxism stuff in light of Keynes’s take, which is cited by Mongiovi: Keynes was highly antipathetic toward Marx. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. David Houston was treated like a pariah at the University of Pittsburgh, was spat upon for his opposition to the War in Vietnam (unlike any returning veterans! It is reproduced in D. Moggridge, editor, 1972 Collected Writings of John Maynard Keynes, vol. More recently, Northwestern University economist Robert J. Gordon has argued that the pace of innovation is slowing and that there are no transformative “Great Inventions” left to be discovered that might sustain robust employment for decades and substantially raise labor productivity, the two essential conditions for permanent across-the-board improvements in living standards.12 Keynes anticipated these arguments: “there seems at the moment a lull in new inventions,” he observed in 1931.13 He didn’t think the problem could be left alone for the market to rectify; for the market will not, as a matter of course, spontaneously generate a cluster of epoch-making innovations that will keep the economy running at a healthy clip for two or more generations. Higher education was a beneficiary of the Cold War, as the US government subsidized students, both undergraduates and graduate students, who specialized in sociology, anthropology, political science, and other disciplines that could be useful for the projection of imperial influence across the globe; federally supported cultural programs were meant to project soft power. The gap between the economy’s output and the level of spending on that output by households expands. The “contradictions” associated with the industrial phase, in particular the need to find new markets for goods produced by ever more productive methods, and the need to secure access to raw materials, led to the imperialist phase.17 Keynes, too, saw capitalism as a system that moves through various historical phases. This makes complete sense because capitalism is inherently monopolistic. But investment spending depends on business expectations of future consumption demand; if the share of consumption spending in aggregate income is shrinking, private-sector enterprises are unlikely to anticipate levels of future demand adequate to stimulate a sufficiently high level of investment. He devised his theories as an alternative to socialism – a … Keynes’s writings are shot through with evidence of his engagement with capitalism as a dynamic, evolving system, one that had, by the early decades of the twentieth century, arrived at an existential crossroad. Like the rest of the Fabians, he saw socialism as a project to be carried out by a modern version of Plato’s philosopher-kings who would administer a mixed-economy state. Crotty’s main contribution to economics has been to try and synthesise Marx and Keynes. One month after the Revolution, J.M. Change ). The original typescript of the original speech contains a passage on the Labour Party which was omitted in the printed version. Why not figure out how to smash the fucking state that will continue to kill us, if it remains in the hands of the bourgeoisie? 'Crotty's view sharply diverges from mainstream perspectives which have long held that Keynes's overarching project was mild reform of capitalism. See Rod O’Donnell, “Keynes’s Socialism: Conception, Strategy, and Espousal,” in Peter Kriesler & Claudio Sardoni (eds), See Alvin Hansen, “Economic Progress and Declining Population Growth,”. It is precisely because of the devitalizing effect of uncertainty upon investment spending that Keynes looked to public investment as a way to preserve the economy’s dynamism. Based on a very close reading of Keynes’ work, Crotty argues that core Keynesian economic ideas should … His father was a Cambridge economist and he had Alfred Marshall tutor Keynes, who had not studied economics. Since the effective demand problem was fundamentally structural, Keynes advocated a structural solution: a permanent expansion of the state. Crotty, as thorough as he is, doesn’t have much to say on the topic either. He also maintained that deliberate government action could foster full employment. Keynes surely was not a classical liberal in the mold of David Hume, Adam Smith, or John Stuart Mill — but to make that point is a bit like taking a battering ram to a door that is already ajar. It was reprinted in Keynes's 1931 Essays in Persuasion (Ch. The failure of government-controlled capitalism _____ Introduction. Keynes was not advocating half measures. He used to make fun of the URPE Ivy Leaguers talking about their classmates and well-heeled friends, not disparagingly I might add. For in developing his case, Crotty shows us how a penetrating, vigorous, and humane intellect tackled questions that have a crucial bearing on debates we are still having about what our socioeconomic institutions ought to do for us and what they ought to look like. Macroeconomic policy, Friedman argues, can reliably influence only the nominal. Keynes rejected socialism—he did not want government to own or even control industry, but rather he wanted the government to optimize the economy though its "fiscal policies," that is, taxes and spending. Despite being embraced today by the labor movement and the left, Keynes was a devout Liberal. Again in February 1918, Keynes admitted to “being a Bolshevik.”6 The famous journalist Clarence W. Barron, founder of Barron’s magazine, met Keynes in 1918 and recorded: “Lady Cunard says Keynes is a kind of socialist and my judgment is that he is a Socialist … Stalin has eliminated every independent, critical mind, even when it is sympathetic in general outlook … Let Stalin be a terrifying example to all who seek to make experiments.”28 In assigning an entrepreneurial role to the state, Keynes also acknowledged the likelihood that “some [public investment] schemes may turn out to be failures” — as, of course, is the case with many, and perhaps most, private investment projects.29, Keynes was, first and foremost, a practical-minded economist: his feet were firmly planted on the ground of reality. 'Crotty's view sharply diverges from mainstream perspectives which have long held that Keynes's overarching project was mild reform of capitalism. See Gary Mongiovi, “Émigré Economists and American Neoclassical Economics, 1933–45,”. Keynesian economics was supposed to have put paid to socialism. The central institution Keynes envisioned for this function was a Board of National Investment, an idea he first put forward in the late 1920s when he helped to draft a Liberal Party report on Britain’s Industrial Future. Nick Johnson. Crotty devotes a good deal of attention to the idea that fundamental uncertainty about the future weakens the motive of private-sector managers to incur the risks associated with expanding their enterprises and with venturing into new spheres of activity. First, O’Donnell (1999, 149) avoids defining capitalism or socialism, and this leads him to neglect Keynes’s policy views. His vision of a democratically guided economy that serves the needs of people rather than those of capital is as relevant now as it was in the first half of the last century. The idea was that a mechanism needed to be put in place to provide a permanent stimulus to the economy. But beyond this no obvious case is made out for a system of State Socialism which would embrace most of the economic life of the community. It cannot, ever. Instead, Keynes “Keynes was building a case to replace it [capitalism] with a form of democratic socialism in which most large-scale capital investment spending would be undertaken by the state or by quasi-public entities.” All this would unfold in a “gradual transition, through a process of trial and error, to a planned economy.” Private enterprise could then be left to chug along as it saw fit, generating prosperity far and wide. The state is more entwined with capital than ever before, with its agencies and even its parliaments and congresses filled with rich people. They often have to be pushed off the ladder with a rope around their necks. He did not always take the trouble to reconcile the views he expressed in one context, while in a particular frame of mind, with the views he expressed in other contexts, while in a rather different mood. A common argument adduced against socialism is that the removal of the profit motive blunts the incentive to take the kinds of risks that lead to innovation and growth. In his special introduction to the German edition, Keynes recognized how “thirsty” the Germans must be for his “general theory,” which would also apply to “national socialism.”, (From “Bastard Keynesianism: The Evolution of Economic Thinking and Policymaking Since WWII”). But once it is determined that market capitalism needs to be well managed, the questions of how and for whom it is to be … There is no remedy for that by unregulated private action.”18 The traumatizing impact of structural change on the people caught up in it could be avoided only through some plan of centralized coordination. He boldly claims, ‘Keynes envisaged and espoused a particular form of socialism’ and ‘it is clear, explicit and unambiguous; he used the term socialism to characterise his own views’ (1999, pp. This earned him much support from leftists throughout the world, especially from other opportunists who often call themselves socialist. To effect meaningful social change, we need to be open to every thoughtful perspective. ( Log Out /  Keynes as a Theorist of Structural Change, Enterprise, Uncertainty, and the Socialization of Investment, John Maynard Keynes, “Liberalism and Labour,” in, John Maynard Keynes, “The End of Laissez-Faire,” in. While Keynes did believe that government interference in the economy was necessary, he did not believe that the government should own the means of production. MARX VERSUS KEYNES. The material in this bulletin has been taken, with minor changes, from articles which originally appeared in the Socialist Standard during the past five years. While Keynes did believe that government interference in the economy was necessary, he did not believe that the government should own the means of production. Yet when I look into it, it is to me inexplicable that it can have this effect. Markets know best, hence anything that interferes with their operation is inimical to economic efficiency. Keynes did not wish to merely save capitalism ‘from itself’ but to replace it with ‘Liberal Socialism’. Again in February 1918, Keynes admitted to “being a Bolshevik.”6 The famous journalist Clarence W. Barron, founder of Barron’s magazine, met Keynes in 1918 and recorded: “Lady Cunard says Keynes is a kind of socialist and my judgment is that he is a Socialist … Because the skills and physical facilities necessary to a particular line of production tend to concentrate in a particular geographical region — a phenomenon that generates substantial efficiency gains for all of the linked enterprises — the contraction of an industry or the closing of a large plant means that a lot of resources become redundant, and those resources are not easily transferable to other lines of productive activity. He rightly notes, however, that profit-seeking is not the sole motive of human action, and that many of the dysfunctions of the modern age are the results of a policy framework that not only presumes it to be so, but presumes also that profit-seeking behavior can reliably produce socially beneficial outcomes. Change ), You are commenting using your Facebook account. Keynes showed that if Capitalism is to be successful, it has to be managed: the “market”, if left to its own devices will breed great depressions and widespread impoverization. In an important new book Keynes Against Capitalism: His Economic Case for Liberal Socialism (Routledge, 2019) James Crotty argues that Keynes was a socialist who advocated a much more radical economic agenda than most mainstream economists and political analysts realize. Managed trade, rather than protectionism, would be a more effective strategy. Influenced by Paul Sweezey and a frequent contributor to MR, he argued that FDR’s Keynesianism and Nazi economics had something in common, namely strong state intervention, especially using a military build-up to offset the Great Depression: Some wag has defined an economist as someone who has seen something work in practice and then proceeds to make it work in theory. His purpose in writing his 1936 masterwork The General Theory of Employment, Interest and Money was to understand why slumps occur, and to identify remedies to contain their destructive force. These heroes of mine are so unlike the the DSA dreck in New York City today. “Keynes’ book, End of Laissez-Faire, was his most pronounced and clearcut advocacy of socialism.” [Keynes at Harvard] In this book, “Keynes boldly declares: In fact, we already have in these cases many of the faults as well as the advantages of State Socialism. Despite their disavowal of revolutionary politics, they absolutely doted on Joseph Stalin, whose show trials and mass executions Shaw defended: But the top of the ladder is a very trying place for old revolutionists who have had no administrative experience, who have had no financial experience, who have been trained as penniless hunted fugitives with Karl Marx on the brain and not as statesmen. There’s a cognitive dissonance in the latest Catalyst. Crotty marshals all of the available evidence and sets it out in an exceedingly clear way. Without hesitation, he said, “as the truth”!. And, just as important, Keynes wanted to transform how we think about the relationship between the state and the economic organization of society; he believed that polities have the power to make a better world for themselves by shaping the institutions that mediate and organize economic activity. Some, like Michael Zweig stayed true to a radical vision. The market is not built to do that. Whether Keynes was a socialist, and precisely what sort of socialist he was if he was one, are trickier questions. And inasmuch as these particular labels can mean vastly different things to different people, the exercise is doubly futile. Keynes rejected socialism—he did not want government to own or even control industry, but rather he wanted the government to optimize the economy though its "fiscal policies," that is, taxes and spending. A good capitalist wants to own all of the means of production so they can maximize profits. But Mann reserves “Keynesianism” proper for a stance to the left of center but short of socialism — reformism, more or less. Slumps that inflict severe distress on the working-class population are normal occurrences. Yes, Keynes did not favor socialism, but was worried that an extreme case of capitalism could actually lead to a socialist takeover. I detect in this argument a trace of the dialectical method: the logic of the system generates tendencies that undermine its structural scaffolding. Crotty’s book suggests that turning this situation around must begin with the rediscovery of Keynes’s vision — his actual analytical vision, not the parody of it that has been handed down to us by the guardians of orthodoxy. On Biden’s website, there is this: Biden believes the Green New Deal is a crucial framework for meeting the climate challenges we face. How can such a state be made a tribune of the people? Change ), You are commenting using your Twitter account. Among the left professorate, post-Keynesianism is a way of being on the left but not too far left. Even a thousand page book would not exhaust Keynes’ Fabian trail. The failure of government-controlled capitalism _____ Introduction. Nevertheless his economics have profound implications for Socialists. The man generally credited with having “saved capitalism” is the English economist John Maynard Keynes whose main work appeared in i936, Writing in the middle of the great slump of that period, he could see that Say’s Law, as the dogma that total market demand would always be equal to existing productive capacity, was wrong. If we want to rely on the private sector to do the job, investment will have to increase. One misconception that Crotty convincingly obliterates is the idea that Keynes was mainly concerned with the short run, a view reflected in the mainstream depiction of his theory of effective demand as an account of, and remedy for, temporary deviations from long-run full-employment equilibrium. In stark contrast to concepts such as class consciousness, historical materialism and the dialectic, Keynesian economics is associated with the moderate strand of socialist thought. Is it possible that beneath the rah-rah attitude of the Democratic Party left toward a Green New Deal, there’s not much beyond the kind of formulas encapsulated in Mongiovi’s paragraph above? Socialism comprises those tendencies, forces, and institutions that blunt, mitigate or adapt market relations to social goals. Now we are fully content if we can prevent them from deteriorating; which means the working classes no longer have sufficient hopes in the general trend of things to divert their attention from other grievances. He was a lifelong member of the British Liberal Party, which held few seats in Parliament after 1920. Keynes categorically rejected all general rules, but how does this relate to his political vision? Keynes lived during a time when communism and socialism were considered real, viable alternatives to capitalism. It must be acknowledged that he had a lot of confidence in the judgment of technocrats: “It is for the technicians of building, engineering, and transport to tell us in what direction the most fruitful new improvements are awaiting us.”24, Keynes may have contemplated the death of the rentier with equanimity, but he was probably not rooting for the death of the entrepreneur. Opinion polls indicate rising dissatisfaction with capitalism and growing awareness of its many dysfunctions. I always remember my mentor and friend, David Houston, a URPE founder. For them Marx is more than someone to be read in a graduate seminar, and radical scholarship is more than something to pad out a CV. He outlined the general scheme rather than a precise program. According to the prevailing interpretation, Keynes, an enlightened but loyal member of the British establishment, foresaw that capitalism and the bourgeois values and institutions it underpinned would not be able to withstand another episode of economic turbulence on the scale of the Great Depression. He called Stalin “terrifying” and guilty of eliminating every critical mind in the USSR. Vol 3 Keynes lived during a time when communism and socialism were considered real, viable alternatives to capitalism. Mixed his name with Milton Friedman — a (very) different economist," she said. For Mongiovi and Crotty, Keynes was on the left. Keynes was an English economist, who came to prominence for his writings on the turbulent inter-war period. 5 June 2019 — Michael Roberts. He also believed that the most effective way to ensure a steady flow of socially useful investment sufficient to keep the economy operating at full employment is to assign authority over a good deal of investment spending to the state. Social democrats seek to implement an economic strategy shaped by the thoughts of John Maynard Keynes. But Liberal Socialism, as Crotty sees it, may remain a little idealistic. Keynes wanted to apologize and preserve, while Marx wanted to criticize and destroy.”. In The General Theory, Keynes famously observed that investment decisions largely, depend on spontaneous optimism rather than on a mathematical expectation … Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits — of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities … Thus if the animal spirits are dimmed and the spontaneous optimism falters … enterprise will fade and die.25. “He was not mainly preoccupied with taming the business cycle: his ultimate objective was to bring about a radical transformation of our economic system.” So, what does such a radical transformation entail? ... “Fascism entirely agrees with Mr. Maynard Keynes… He took it for granted that finding the right model would involve a good deal of experimentation. Keynes saw that the profit motive could just as readily suppress risk-taking as encourage it. Cheap Motels and a Hotplate (Michael Yates), Ken McLeod: Early Days of a Better Nation. It must be (in Keynes’s words) sufficiently and consistently impoverishing.” Liberalism or Barbarism. Indeed, Michael Roberts pointedly refers to Crotty’s admission that “Keynes was unabashedly corporatist.”. “[T]here is,” he noted, “an enormous field of private enterprise which no one but a lunatic would seek to nationalize.”30 He was not opposed to large-scale enterprises — he knew, as any competent economist does, that economies of scale confer benefits on society, and that large enterprises are here to stay; but they need to be intelligently controlled, managed, and regulated. 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