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. ... “Fascism entirely agrees with Mr. Maynard Keynes… 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. Without hesitation, he said, “as the truth”!. But Mann reserves “Keynesianism” proper for a stance to the left of center but short of socialism — reformism, more or less. Keynes saw that the profit motive could just as readily suppress risk-taking as encourage it. 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. Markets know best, hence anything that interferes with their operation is inimical to economic efficiency. The GI Bill enabled returning veterans to buy homes and to get college degrees that enhanced both their earning power and the productivity of the US economy. Keynes lived during a time when communism and socialism were considered real, viable alternatives to capitalism. 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. No, he wasn’t. Cheap Motels and a Hotplate (Michael Yates), Ken McLeod: Early Days of a Better Nation. 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. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. He was born into a wealthy family in Philadelphia, but once he became a radical, he remained one. 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. 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. Unfortunately, controversy over his political thought has muddled the relation between his ethics and politics. 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. with Steven Pressman. The Keynesian Revolution, in Crotty’s interpretation, was considerably more revolutionary than we have been led to believe. Opinion polls indicate rising dissatisfaction with capitalism and growing awareness of its many dysfunctions. And many, of course, suffered for their principles. This paragraph is riddled with class-neutral terms. Against the criticism that placing investment spending under the control of the state will cripple an economy’s capacity to innovate, we may call attention to the groundbreaking work of Mariana Mazzucato, which shows that since the end of World War II, government has been a major source of innovation in numerous fields, and, indeed, that without the direct and indirect involvement of the state, many key innovations of the past half century — the internet, personal computers and the software they use, information technology and communications, solar and wind power, countless medical advances — would never have materialized or would have been delayed for decades.27 Keynes, as we have noted, had a great deal of confidence in the ability of technocrats to manage “the socialisation of investment,” but he says little about innovation, or about how it might be fostered through his proposed Board of National Investment. A number of important themes emerge in the telling. 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? 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. It's John Maynard Keynes. 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 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. 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. Keynes Was Not a Socialist. The idea was that a mechanism needed to be put in place to provide a permanent stimulus to the economy. Keynes wanted to apologize and preserve, while Marx wanted to criticize and destroy.”4. 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. 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? The collapse of the Bretton Woods agreement made exchange-rate uncertainty and balance-of-payments crises once again potent sources of economic instability. 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”. 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. IV.3, p This earned him much support from leftists throughout the world, especially from other opportunists who often call themselves socialist. Whether Keynes was a socialist, and precisely what sort of socialist he was if he was one, are trickier questions. We need the collaboration of all the bright spirits of the age. The "New Economics" and Marxian Socialism. Comment by Michael D Yates — May 27, 2020 @ 8:25 pm, RSS feed for comments on this post. According to this view, the most effective thing the state can do to promote economic well-being is to get out of the way of the great wealth-creating engine of private enterprise. He is friendly with Bob Pollin, he of the typical social democratic views about a growth-oriented GND and how capitalism can decouple growth and energy use. The sclerotic and stultifying Dissent magazine of the 1960s and 70s being the prime example. 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. That being said, Keynes never believed in the power of ordinary working people to control their own fate. 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. Keynes was not advocating half measures. Capitalism, according to Keynes, needed to be fixed, not abandoned — or so says the standard view of his project. The most fundamental of those questions is: How should we configure our economy so that it will foster human flourishing and well-being? Even a thousand page book would not exhaust Keynes’ Fabian trail. How can such a state be made a tribune of the people? Yet when I look into it, it is to me inexplicable that it can have this effect. And it was, moreover, the result of massive targeted infusions of demand into the global economy by the government of the United States. If the State is able to determine the aggregate amount of resources devoted to augmenting the instruments and the basic reward of those who own them, it will have accomplished all that is necessary.23, But a program that proposes to regulate the level of investment on a large scale cannot help but also influence the direction of investment. No 4 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. Slumps that inflict severe distress on the working-class population are normal occurrences. He understood, sensibly, that muddling through is an unavoidable aspect of all human activity. Indeed, Keynes viewed himself as a more radical socialist than MacDonald and Hugh Dalton, another 1917 Club member. 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. 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! 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. At the start of his review, Mongiovi recapitulates what most of us, including me, think of Keynes. 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”). Frankly, it matters little to me whether you want to call Keynes a liberal or a socialist. And he is nowhere close to Kalecki in terms of radical insight. Crotty concludes “Keynes was unabashedly corporatist.”  Indeed – I would add that his concept of corporatism was not dissimilar to that actually being implemented in fascist Germany and Italy at the time. 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. 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 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. ( Log Out /  “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. 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. Socialism’s Biggest Hero Is a Bourgeois British Capitalist John Maynard Keynes felt little solidarity for workers and inspired a century of establishment economics. was first given as an address given by J.M. (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.) An old URPEer, he was in grad school with a very good friend of mine, with whom I taught for a long time. 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. Keynes is one of the most important and influential economists who ever lived. This inte… Change ), You are commenting using your Facebook account. Keynes is kind of a perfect example of this. He liked to be provocative. The greatest ideological triumph of neoliberalism was convincing the vast majority of ordinary people that the way capitalism worked in the United States in the postwar period is the way it normally works. Crotty marshals all of the available evidence and sets it out in an exceedingly clear way. President Bush's deficit spending in 2006 and 2007 increased the debt. 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). 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. In other words, Keynes wanted to turn the wheel of history … And who was to run this corporate capitalist/socialist state? Many believe that John Maynard Keynes was a communist or a socialist. Change ), You are commenting using your Twitter account. Crotty might have subjected Keynes’s arguments to some critical scrutiny. 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. Or even "socialist"? ( Log Out /  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. 'Crotty's view sharply diverges from mainstream perspectives which have long held that Keynes's overarching project was mild reform of capitalism. As the economy’s capital stock increases, opportunities for profitable investment become scarcer, and profitability declines. 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. 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. 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. Ultimately, Keynes was trying to figure out a humane and fair way to achieve a flexible economic dynamism. 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. Lynn Turgeon, the heterodox economist who died in 1999, saw corporatism as a system that was not inherently progressive. 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. As aggregate income increases, society tends to save a larger proportion of its income. 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. Crotty shows that Keynes saw the economic distress of his time as structural in origin. 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. 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. 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. “[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. We may detect, in all of this, tropes that have become part of the discourse on the crisis of capitalism. In sharp contrast to the traditional interpretation, Rod O’Donnell argues Keynes was a socialist. But the Golden Age was an isolated episode. There was no need to expropriate capital or micromanage the allocation of resources. ( Log Out /  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. This, of course, will sound familiar to anyone paying attention to political and economic affairs in the Western Hemisphere in 2020. He had a healthy respect for enterprise, and he appears to have seen risk-taking as a driver of progress. Instead, I want to hone in on Mongiovi’s review as another indication of Sunkara and Chibber’s slow but inexorable retreat from Marxism. The standard interpretation is that Keynes was a great liberal. He was not mainly preoccupied with taming the business cycle: his ultimate objective was to bring about a radical transformation of our economic system. 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. 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. I am far more interested in what positions he takes on a particular capitalist state itself. These heroes of mine are so unlike the the DSA dreck in New York City today. 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. The premise depicted by this imagery will strike many as incongruous with the received understanding of Keynes’s polemical aims. Comment by Karl Friedrich — May 27, 2020 @ 6:43 pm. We also find in Keynes’s argument faint echoes of an element of Karl Marx’s falling-rate-of-profit hypothesis. I asked David once how he taught Marx’s labor theory of value. Keynes was not himself an expert on economic planning. This approach seemed to work reasonably well for two or three decades after the end of World War II. 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. 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”). 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. 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. Crotty, a 79-year old economics professor emeritus, is a post-Keynesian just like Mongiovi. Keynes was highly antipathetic toward Marx. 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 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. Mixed his name with Milton Friedman — a (very) different economist," she said. 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. Among the left professorate, post-Keynesianism is a way of being on the left but not too far left. 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. 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. 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. Rod O’Donnell has already made a persuasive case that Keynes was a socialist in his philosophical outlook, his political orientation, and his economics. Crotty demonstrates that Keynes was a secular stagnation theorist avant la lettre. Instead, what Keynes believed was that there were certain times that the government would need to … 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. Keynes to the Liberal Summer School which met at Cambridge in August 1925. 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. 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. From the foregoing, one may see that Keynesianism has several points in common with Marxian socialism. 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 … At the risk of sounding like an anarchist, isn’t it time to stop dwelling on how the state can be expanded into a beneficent agent of economic and ecological change? 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. As the working classes fought for and got higher wages, their rising consumption spending fueled further expansion. The … It must be (in Keynes’s words) sufficiently and consistently impoverishing.” Liberalism or Barbarism. The market is not built to do that. And inasmuch as these particular labels can mean vastly different things to different people, the exercise is doubly futile. By the early 1980s, the Golden Age social contract had been displaced by a neoliberal outlook that reified the market. He also maintained that deliberate government action could foster full employment. 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. But Liberal Socialism, as Crotty sees it, may remain a little idealistic. Keynes was averse to class conflict: he was no class warrior; his aim was to diffuse class tensions. 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. 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. 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. His father was a Cambridge economist and he had Alfred Marshall tutor Keynes, who had not studied economics. That blunt, mitigate or adapt market relations to social goals DSA elites have today a of. Capitalism, according to Keynes, who had not studied economics us to that! 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