Keynes was averse to class conflict: he was no class warrior; his aim was to diffuse class tensions. He was a lifelong member of the British Liberal Party, which held few seats in Parliament after 1920. Indeed, Michael Roberts pointedly refers to Crotty’s admission that “Keynes was unabashedly corporatist.”. This makes complete sense because capitalism is inherently monopolistic. 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. 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. Crotty demonstrates that Keynes was a secular stagnation theorist avant la lettre. 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 … Sorry, your blog cannot share posts by email. 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. 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. It must be (in Keynes’s words) sufficiently and consistently impoverishing.” Liberalism or Barbarism. In sharp contrast to the traditional interpretation, Rod O’Donnell argues Keynes was a socialist. 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. by michael roberts. But Mann reserves “Keynesianism” proper for a stance to the left of center but short of socialism — reformism, more or less. Most socialist governments own the nation's energy, health care, and education services. The state is more entwined with capital than ever before, with its agencies and even its parliaments and congresses filled with rich people. 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 … 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. But these sorts of labels are used to describe an ideology, something that can be extremely difficult to pin down. 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 Keynesian Revolution, in Crotty’s interpretation, was considerably more revolutionary than we have been led to believe. 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. Based on a very close reading of Keynes’ work, Crotty argues that core Keynesian economic ideas should … As aggregate income increases, society tends to save a larger proportion of its income. He took it for granted that finding the right model would involve a good deal of experimentation. His outlook was emphatically anti-authoritarian: “the new economic modes, towards which we are blundering,” he wrote in 1933, “are, in the essence of their nature, experiments. At the start of his review, Mongiovi recapitulates what most of us, including me, think of Keynes. Keynes categorically rejected all general rules, but how does this relate to his political vision? He was a lifelong member of the British Liberal Party, which held few seats in Parliament after 1920. 149, 164). And he is nowhere close to Kalecki in terms of radical insight. What of Keynesianism’s other, left, flank? ( Log Out /  And some of the people carrying it out were as worried about creeping 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. Ultimately, Keynes was trying to figure out a humane and fair way to achieve a flexible economic dynamism. He had a healthy respect for enterprise, and he appears to have seen risk-taking as a driver of progress. It was reprinted in Keynes's 1931 Essays in Persuasion (Ch. Without hesitation, he said, “as the truth”!. The main problem, however, is that Keynes had no coherent theory of the state, as Mongiovi’s review and presumably Crotty’s book show. The Marshall Plan stimulated demand in Europe and Asia, with much of the assistance being used to purchase consumer goods and capital goods produced by US manufacturers. This, of course, will sound familiar to anyone paying attention to political and economic affairs in the Western Hemisphere in 2020. It cannot, ever. He liked to be provocative. Instead, what Keynes believed was that there were certain times that the government would need to … On the contrary, such speculation raises the share of debt on the balance sheets of firms and households, creating a system-level situation of financial fragility in which a relatively minor interruption in the flow of credit can trigger a wave of defaults, with disastrous consequences for the real economy.26 The solutions to these dysfunctions, Keynes argued, were financial regulation and large-scale government mobilization of resources for social investment. 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. with Steven Pressman. A good capitalist wants to own all of the means of production so they can maximize profits. In Keynes Against Capitalism, Crotty argues that the conventional view is all wrong. Crotty might have subjected Keynes’s arguments to some critical scrutiny. 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 … Monetary policy, even highly aggressive monetary stimulus, will therefore be powerless to jump-start growth: public investment on a large scale is needed. Keynes: socialist, liberal or conservative? See David M. Kotz, Terrence McDonough, and Michael Reich (eds). Or even "socialist"? Keynes had no great affection for the working class either. Keynes was not a Socialist. If we want to rely on the private sector to do the job, investment will have to increase. Nevertheless his economics have profound implications for Socialists. 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. 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. But the Golden Age was an isolated episode. Only socialism can provide a positive way out of the present crisis. 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. He devised his theories as an alternative to socialism – a … Mixed his name with Milton Friedman — a (very) different economist," she said. Keynes is one of the most important and influential economists who ever lived. 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? He also maintained that deliberate government action could foster full employment. Comment by Karl Friedrich — May 27, 2020 @ 6:43 pm. 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. Keynes advocated deficit spending during the contractionary phase of the business cycle. Among these are: The gap between the economy’s output and the level of spending on that output by households expands. It must be (in Keynes’s words) sufficiently and consistently impoverishing.” Liberalism or Barbarism. The real radical of the Keynesians at Cambridge was Joan Robinson. Keynes was not a Socialist. 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? But Liberal Socialism, as Crotty sees it, may remain a little idealistic. Unfortunately, controversy over his political thought has muddled the relation between his ethics and politics. “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. One month after the Revolution, J.M. This question had already occupied continental scholars for some time and was the focus of lively discussion at the London School of Economics. 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. 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. 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. Note too Keynes’ elitism. Crotty describes at considerable length Keynes’s proposal to expand public control over investment. I detect in this argument a trace of the dialectical method: the logic of the system generates tendencies that undermine its structural scaffolding. (Read parts one and two) Hayek, credit and the crisis. 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. Interesting that Keynes would confide in Shaw. Slumps that inflict severe distress on the working-class population are normal occurrences. 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. IV.3, p.323-338). O’Donnell makes his case in his provocative chapter ‘Keynes’s Socialism: Conception, Espousal, Strategy’ (1999). In other words, Keynes wanted to turn the wheel of history … This terrain has been explored before. Frankly, it matters little to me whether you want to call Keynes a liberal or a socialist. The most fundamental of those questions is: How should we configure our economy so that it will foster human flourishing and well-being? No, he wasn’t. Such innovations open up new areas of investment and lay the groundwork for the discovery of additional applications that in turn create yet more opportunities for innovation and investment. 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. “England is in a state of transition,” he wrote, “and her economic problems are serious. Keynes wanted to apologize and preserve, while Marx wanted to criticize and destroy.”. 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. 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. From 1996 to 2013, he coedited the Review of Political Economy. Keynes became the mastermind behind the economic structure of British and American socialism. James Crotty was at UMass-Amherst for many years. We need the collaboration of all the bright spirits of the age. Socialist Education Bulletin, Nº 1, July 1973. His biggest problem with the idea was the fact, which he explores in his writings, that he really did not much like the working class and looked down on them as “inferior”. 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 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. 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. 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. 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. 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. Keynes was an English economist, who came to prominence for his writings on the turbulent inter-war period. John Maynard Keynes, 1st Baron Keynes CB ... and that such policies would lead toward socialism. Many believe that John Maynard Keynes was a communist or a socialist. 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. 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. 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. Keynes: socialist, liberal or conservative? 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. 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. This paragraph is riddled with class-neutral terms. Crotty marshals all of the available evidence and sets it out in an exceedingly clear way. 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,”. He saw also that the pursuit of economic gain could fuel financial speculation that has no beneficial effect on employment, socially useful innovation, or real economic growth. Of course, this label does not necessarily mean that the point of view is unsound; but classification of anything is a step toward appraisal. Keynes did not wish to merely save capitalism ‘from itself’ but to replace it with ‘Liberal Socialism’. Comment by Michael D Yates — May 27, 2020 @ 8:25 pm, RSS feed for comments on this post. 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. For Mongiovi and Crotty, Keynes was on the left. 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 1970s through the 1990s, wages stagnated, but debt-financed household consumption and asset inflation kept profits growing. Crotty describes at considerable length Keynes’s proposal to expand public control over investment. Socialism’s Biggest Hero Is a Bourgeois British Capitalist John Maynard Keynes felt little solidarity for workers and inspired a century of establishment economics. 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. He called Stalin “terrifying” and guilty of eliminating every critical mind in the USSR. Fascism failed because their policies lead to war which destroyed the national economy they were … Change ), You are commenting using your Facebook account. The idea was that a mechanism needed to be put in place to provide a permanent stimulus to the economy. Keynes laid out no detailed institutional blueprint for the arrangement he was advocating. Keynes was not advocating half measures. 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.” Along with his colleague Sam Bowles, he is one of the few radical heterodox economists to gain tenure at a leading American university. Crotty, as thorough as he is, doesn’t have much to say on the topic either. A key takeaway from this book is that we need to think about Keynes in a radically different way. 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. 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. Keynes lived during a time when communism and socialism were considered real, viable alternatives to capitalism. 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. Socialism comprises those tendencies, forces, and institutions that blunt, mitigate or adapt market relations to social goals. A number of important themes emerge in the telling. It is beyond the scope of this article to offer a critique of John Maynard Keynes or James Crotty’s new book. But Keynes felt that the risk in Britain was remote. 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. 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. He did flirt with Fabianism a bit but he could never really commit to socialism. Keynesian economics was supposed to have put paid to socialism. 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. By the early 1980s, the Golden Age social contract had been displaced by a neoliberal outlook that reified the market. 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. Like many of us, he sometimes told people things that were closer to what he thought they wanted to hear than to what he really believed; and what he did believe could change from one day to the next according to the particular light in which he happened to be viewing a problem. Macroeconomic policy, Friedman argues, can reliably influence only the nominal. 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.” Opinion polls indicate rising dissatisfaction with capitalism and growing awareness of its many dysfunctions. This paper addresses the controversy over Keynes’s political thought. Critiques of capitalism. 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. But Mann reserves “Keynesianism” proper for a stance to the left of center but short of socialism — reformism, more or less. Keynes' work found popularity in developed liberal economies following the Great Depression and World War II, ... acted as a middle-way for many developed liberal capitalist economies to appease the working class in lieu of a socialist revolution. 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. Keynes’s outlook also anticipates elements of the Social Structures of Accumulation approach, a body of macroeconomic analysis grounded in Marxian theory. Robert Skidelsky portrays Keynes as a liberal who wanted to save capitalism. TrackBack URI. His writing could be messy and imprecise. And many, of course, suffered for their principles. And inasmuch as these particular labels can mean vastly different things to different people, the exercise is doubly futile. John Maynard Keynes is widely regarded as one of the twentieth century’s outstanding liberals. Unlike Alvin Hansen, Keynes had no notion of capitalism’s stagnation tendencies. An old URPEer, he was in grad school with a very good friend of mine, with whom I taught for a long time. 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. It is not the ownership of the instruments of means of production which it is important for the State to assume. Was Keynes a socialist? 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. There was no need to expropriate capital or micromanage the allocation of resources. 5 June 2019 — Michael Roberts. 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. 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. June 5, 2019. Yes, Keynes did not favor socialism, but was worried that an extreme case of capitalism could actually lead to a socialist takeover. 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. Crotty’s main contribution to economics has been to try and synthesise Marx and Keynes. Yes, Keynes did not favor socialism, but was worried that an extreme case of capitalism could actually lead to a socialist takeover. 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. 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. But in recent years, politicians have used it even during the expansionary phase. 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. See Gary Mongiovi, “Émigré Economists and American Neoclassical Economics, 1933–45,”. The planning he proposed was more modest. 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. Unlike Keynes, who saw the problem as one of effective demand during the crisis, Hayek saw the problem as one of loose monetary policy in the period before the crisis. v. t. e. Marxism and Keynesianism is a method of understanding and comparing the works of influential economists John Maynard Keynes and Karl Marx. The standard interpretation is that Keynes was a great 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 … ( Log Out /  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. It's John Maynard Keynes. Joseph Schumpeter argued that epoch-making innovations — steam power, the railroads, the internal combustion engine, electrical power — could spur long booms. However, this simply isn’t so. 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”. “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? This paper presents unexplored evidence that shows Keynes was a non-Marxist socialist from 1907 until his death in 1946. Given all the projects I have taken on, it would not be worth my time or that of my readers. 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. He bend economic science into a socialist direction, without changing anything fundamental about the discipline. No, he wasn’t. 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 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. All the while, organized labor was strong enough to ensure that workers shared in the benefits of growth. Keynes wanted to apologize and preserve, while Marx wanted to criticize and destroy.”4. 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. Keynes is one of the most important and influential economists who ever lived. 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. 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. 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. 'Crotty's view sharply diverges from mainstream perspectives which have long held that Keynes's overarching project was mild reform of capitalism. That’s fine except that it has a tendency to result in a world of haves and have nots. 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. The "New Economics" and Marxian Socialism. 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. Marxism portal. We no longer have sufficient confidence in the future to be satisfied with the present.15. I always remember my mentor and friend, David Houston, a URPE founder. 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. As the economy’s capital stock increases, opportunities for profitable investment become scarcer, and profitability declines. 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. Rod O’Donnell has already made a persuasive case that Keynes was a socialist in his philosophical outlook, his political orientation, and his economics. However, this simply isn’t so. 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… 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. Leave no doubt that Keynes was much more a socialist than the typical interpretation would lead on to believe. 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. 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. Change ), You are commenting using your Twitter account. 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. 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. As the working classes fought for and got higher wages, their rising consumption spending fueled further expansion. We have no clear idea laid up in our minds beforehand of exactly what we want. His father was a Cambridge economist and he had Alfred Marshall tutor Keynes, who had not studied economics. Among the left professorate, post-Keynesianism is a way of being on the left but not too far left. And it was, moreover, the result of massive targeted infusions of demand into the global economy by the government of the United States. 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. 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. 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 … 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. President Bush's deficit spending in 2006 and 2007 increased the debt. 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. 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. 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. 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. Even smaller-scale downswings, if they occurred often enough and were severe enough, could destabilize the system both politically and economically. The sclerotic and stultifying Dissent magazine of the 1960s and 70s being the prime example. This approach seemed to work reasonably well for two or three decades after the end of World War II. Keynes was no radical, and it is a stretch to claim he was. Yet when I look into it, it is to me inexplicable that it can have this effect. Keynes is kind of a perfect example of this. The premise depicted by this imagery will strike many as incongruous with the received understanding of Keynes’s polemical aims. 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. Downloadable (with restrictions)! 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.”. Harry had no use for Crotty, at least his economics. Yet when I look into it, it is to me inexplicable that it can have this effect. By resurrecting that vision, James Crotty has performed a valuable service. There are few profound schools of economics and Keynesian School of Economics is one of them. Social democrats seek to implement an economic strategy shaped by the thoughts of John Maynard Keynes. Keynes’ tie-in with Fabian socialism is so extensive that it is difficult to compress the record within the confines of a few pages. 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. 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. (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.) Nick Johnson. Mongiovi attempts to answer that question in a section titled “Keynes as a Theorist of Structural Change”. That being said, Keynes never believed in the power of ordinary working people to control their own fate. A good capitalist wants to own all of the means of production so they can maximize profits. 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. Keynes was not himself an expert on economic planning. Crotty marshals all of the available evidence and sets it out in an exceedingly clear way. Cheap Motels and a Hotplate (Michael Yates), Ken McLeod: Early Days of a Better Nation. Keynes lived during a time when communism and socialism were considered real, viable alternatives to capitalism. I am even more of a Keynesian now, after reading this wonderful book. For example, take the “permanent expansion of the state.” If this in itself was a positive good, you might ask whether there was much difference between the New Deal and the corporatist state of fascism. Vol 3 Be that as it may, Crotty, without explicitly making the point, enables us to see that Keynes was an instinctive dialectician. 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. I asked David once how he taught Marx’s labor theory of value. 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. Lynn Turgeon, the heterodox economist who died in 1999, saw corporatism as a system that was not inherently progressive. 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. 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. Change ). 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. He used to make fun of the URPE Ivy Leaguers talking about their classmates and well-heeled friends, not disparagingly I might add. 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. 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. Socialist Party of Great Britain - Capitalism In Crisis - Keynesianism: Resurrecting a Past Failure. IX, pp.295-306. Keynes was highly antipathetic toward Marx. And inasmuch as these particular labels can mean vastly different things to different people, the exercise is doubly futile. 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. Keynes seems blithely unaware that a problem of rational economic calculation might exist under socialism. 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. The market is not built to do that. He rejected Soviet-style central planning; he recognized that markets are useful and that decentralization of control is desirable. 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. 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. This is a function of examining who owns what. He did flirt with Fabianism a bit but he could never really commit to socialism. By contrast, Rod O’Donnell argues Keynes was a socialist. 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. He understood, sensibly, that muddling through is an unavoidable aspect of all human activity. 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. 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. By 1929 Keynes’ teachings had became hardened into a full Fabian Socialist doctrine. The forces of the nineteenth century have run their course and are exhausted” [emphasis added]. 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. 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. Some, like Michael Zweig stayed true to a radical vision. He was critical of the sloppy application of orthodox ideas to complex real-world circumstances, but he was no renegade. 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 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. The failure of government-controlled capitalism _____ Introduction. 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. What’s entirely missing from Mongiovi’s review, and presumably in Crotty’s book, is any engagement with the class struggle. 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 Social democrats seek to implement an economic strategy shaped by the thoughts of John Maynard Keynes. 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. On Biden’s website, there is this: Biden believes the Green New Deal is a crucial framework for meeting the climate challenges we face. Based on a very close reading of Keynes’ work, Crotty argues that core Keynesian economic ideas should … 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. Private enterprise could then be left to chug along as it saw fit, generating prosperity far and wide. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. ( Log Out /  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. There’s a cognitive dissonance in the latest Catalyst. But once it is determined that market capitalism needs to be well managed, the questions of how and for whom it is to be … 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. Program that Keynes was aware of how market-driven structural Change can disrupt a community ’ s social bonds all... Save capitalism ‘ from itself ’ but to replace it with ‘ Liberal socialism, but does!: early Days of a perfect example of this of his time structural... A leading American University some time and was the focus of lively discussion at the London School of.. 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