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 wr… A favorite pastime of some libertarian intellectuals is to tar Keynes with the socialist label and then feather him with misleading insinuations that he approved of Stalinism, National Socialism, and Italian Fascism. All this salivating over government boards has little to do with the socialism I’ve defended since 1967. That is the controversial claim made in a new book by the distinguished radical economist James Crotty. Change ). ( Log Out / He understood, sensibly, that muddling through is an unavoidable aspect of all human activity. 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. 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. 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. This earned him much support from leftists throughout the world, especially from other opportunists who often call themselves socialist. But many of his contemporaries were using orthodox neoclassical tools to make the case for economic planning.32 Other less radically minded colleagues understood that regulation and countercyclical fiscal and monetary policy were important tools for improving the operation of the market system.33 In Germany and Austria, an innovative group of progressive economists were advocating, and to some degree implementing, policies that had much in common with what Keynes was suggesting, policies that were motivated by similarly humane concerns.34. 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. Keynesian economics was supposed to have put paid to socialism. 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. Crotty marshals all of the available evidence and sets it out in an exceedingly clear way. But Liberal Socialism, as Crotty sees it, may remain a little idealistic. 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. 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. And many, of course, suffered for their principles. Lawrence Klein, an early champion of Keynesian economics and a future Nobel laureate, put it nicely: “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. He was not mainly preoccupied with taming the business cycle: his ultimate objective was to bring about a radical transformation of our economic system. 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 … The idea was that a mechanism needed to be put in place to provide a permanent stimulus to the economy. Those drivers of progress were largely spent by 1900.11 The market system could no longer be expected to generate broad-based improvements in prosperity. 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. 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. 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. 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. The idea was that a mechanism needed to be put in place to provide a permanent stimulus to the economy. Crotty might have subjected Keynes’s arguments to some critical scrutiny. Keynes’s outlook also anticipates elements of the Social Structures of Accumulation approach, a body of macroeconomic analysis grounded in Marxian theory. 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. Interesting that Keynes would confide in Shaw. 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. 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 political problem of mankind,” he wrote, “is to combine three things: efficiency, social justice, and individual liberty.”35 Modern society is deficient in all three respects. 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. It is the same problem the DSA elites have today. 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. James Crotty was at UMass-Amherst for many years. The decision of OPEC (the Organization of the Petroleum Exporting Countries) to raise oil prices triggered both a deep recession and an inflationary spiral; the extended episode of stagflation put mainstream Keynesianism on the defensive. Indeed, Michael Roberts pointedly refers to Crotty’s admission that “Keynes was unabashedly corporatist.”. It cannot, ever. 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. Crotty reports, and appears to embrace, Keynes’s case for economic self-sufficiency, a strategy that would entail a serious curtailment of international trade. To effect meaningful social change, we need to be open to every thoughtful perspective. 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. Our material conditions seemed to be steadily on the upgrade [in the nineteenth century]. 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. 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. Even a thousand page book would not exhaust Keynes’ Fabian trail. 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. It would be a shame if Sunkara and Chibber continue traveling down this road but we can compensate for this by getting our shit together as we used to put it in the 1960s. TrackBack URI. The premise depicted by this imagery will strike many as incongruous with the received understanding of Keynes’s polemical aims. 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 … 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. 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. 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. Opinion polls indicate rising dissatisfaction with capitalism and growing awareness of its many dysfunctions. Socialism’s Biggest Hero Is a Bourgeois British Capitalist John Maynard Keynes felt little solidarity for workers and inspired a century of establishment economics. 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. President Bush's deficit spending in 2006 and 2007 increased the debt. Some, like Michael Zweig stayed true to a radical vision. 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. Keynes’s often-quoted observation that “in the long run we are all dead” is almost always read out of context to imply that Keynes was entirely focused on the resolution of short-run monetary and macroeconomic glitches.9 In fact, Keynes was deeply interested in the long run; not, however, in static long-run equilibrium, but in the long-run secular trajectory of late capitalism. 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. Keynes was no radical, and it is a stretch to claim he was. In the 1970s through the 1990s, wages stagnated, but debt-financed household consumption and asset inflation kept profits growing. He took it for granted that finding the right model would involve a good deal of experimentation. Yes, Keynes did not favor socialism, but was worried that an extreme case of capitalism could actually lead to a socialist takeover. 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. 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? Note too Keynes’ elitism. Lynn Turgeon, the heterodox economist who died in 1999, saw corporatism as a system that was not inherently progressive. In America some conservative ’economists are still fighting a rearguard action on behalf of laissez-faire against Keynes’ theories which they see as state capitalism (to them “socialism”). 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. 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. He was a lifelong member of the British Liberal Party, which held few seats in … And then there was Sraffa, great friend and countryman of Gramsci. 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. John Maynard Keynes, 1st Baron Keynes CB FBA (/ k eɪ n z / KAYNZ; 5 June 1883 – 21 April 1946), was an English economist, whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. We have no clear idea laid up in our minds beforehand of exactly what we want. This terrain has been explored before. It was then published as two articles in the Nation & Athenaeum in 1925 - Part I on August 8 (pp.563-564), Part II on August15 (pp.587-588). 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. The standard interpretation is that Keynes was a great liberal. It powerfully captures two basic truths, which are at the core of his plan: (1) the United States urgently needs to embrace greater ambition on an epic scale to meet the scope of this challenge, and (2) our environment and our economy are completely and totally connected. 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. 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. Crotty, a 79-year old economics professor emeritus, is a post-Keynesian just like Mongiovi. 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. Crotty, as thorough as he is, doesn’t have much to say on the topic either. To his credit, Keynes never fell into this trap. He noted that “men drop into occupations with no knowledge, by mere accident of circumstances and parentage and locality, often finding themselves in the wrong market, trained for something for which there is no demand, or not trained at all. John Maynard Keynes is widely regarded as one of the twentieth century’s outstanding liberals. Mongiovi attempts to answer that question in a section titled “Keynes as a Theorist of Structural Change”. The manufacturing sectors of Europe and North America now faced competition from industrializing low-wage countries; this led to heightened tensions between labor and capital, undermining the compromise that had kept wage increases in line with productivity growth. Crotty describes at considerable length Keynes’s proposal to expand public control over investment. Sure, and if wishes were fishes, we’d all cast nets in the sea. If we want to rely on the private sector to do the job, investment will have to increase. We no longer have sufficient confidence in the future to be satisfied with the present.15. 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. The market is not built to do that. Post was not sent - check your email addresses! At the start of his review, Mongiovi recapitulates what most of us, including me, think of Keynes. Keynes is one of the most important and influential economists who ever lived. Among these are: Some might think that he was overly optimistic in supposing that the professionalism of the technocratic class, its commitment to public service, and a bureaucratic ethos that fosters creativity and experimentation would do the trick. Keep in mind that admiration for Stalin’s ruthlessness was widespread among the intellectual elite in the 1930s. Younger people in particular are increasingly likely to view “socialism” as a viable and appealing alternative to the profit-driven market system that dominates our economic, political, and social institutions. For Mongiovi and Crotty, Keynes was on the left. 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