Towards a Keynesian Politics? A Review Essay

Global Society, 2018

This article addresses the prospects of a "return to Keynes" in terms of Keynes's own philosophy. It shows that Keynes's moral and political philosophy provide little guide to how Keynesian economics might now be achieved. Keynes's gradualist reformism, derived from both Burke and Moore, leaves a gulf between his economic agenda and the means of its implementation, which is widened in attempts to transpose his proposals onto the global political economy of the 21st century. Keynes's faith in elite intuition and enlightened rule are never securely established and are undermined by his own insights into uncertainty. However, the priority of the short-run and Keynes's depictions of organic unity suggest potential if underdeveloped avenues for alternative social choices and policy redirection .

Law & Liberty, 2019

2023

John Maynard Keynes was certainly the most famous and arguably the greatest political economist of the twentieth century. His seminal publication, The General Theory of Employment Interest and Money, published in 1936, changed economics irrevocably. Unfortunately, Keynes was not well-served by his followers, and much of his bold vision is missing from standard textbook treatments of his work. This essay sets the record straight by having four key objectives. First, as context, it provides a biographical sketch of Keynes achievements and the ‘interesting’ times which he experienced, the single most important event being the Great Inter-War Depression. Second, as further context, it introduces the essentials of the classical orthodoxy, the pre-Keynesian macro-economic theory of how economic society worked, and its conservative policy agenda, from which Keynes departed. Third, the core of the essay, it faithfully explains the key concepts and ideas of his new workable classification in which effective demand was the driving force, and the many-layered policy programme known as the Middle-Way, which he fashioned over time to meet the challenges posed by the Great Depression, World War 2 and the post-war world. Lastly, it sets-out the reasons why Keynes can be described as one of the greats of political economy.

Economia e Sociedade, 2008

The terms in which contracts are made matter. In particular, if money is the goods in terms of which contracts are made, then the prices of goods in terms of money are of special significance. This is not the case if we consider an economy without a past or future… if a serious monetary theory comes to be written, the fact that contracts are made in terms of money will be of considerable importance" (Arrow; Hahn, 1971, p. 356-357, italics added). "In the first place, the fact that contracts are fixed... in terms of money unquestionable plays a large part" (Keynes, 1936, p. 236). "It seems to me that economics is a branch of logic: a way of thinking... One can make some quite worthwhile progress merely by using axioms and maxims. But one cannot get very far except by devising new and improved models. This requires... vigilant observation of the actual working of our system. Progress in economics consists almost entirely in a progressive movement in the choice of models" (Keynes, 1938). In an often quoted 1935 letter to George Bernard Shaw Keynes indicated that he was writing a book that would revolutionize economic theory where liquidity and money contracts play a dominant role in the organization of production and exchange processes. For more than two decades after World War II most mainstream economists believed they were teaching their students Keynes's revolutionary theory and its policy implications. In 1971 even an American President, Richard M. Nixon, announced "now I am a Keynesian". Today however, the teaching of "Keynesianism" is virtually dead, at least in mainstream economic textbooks, the analysis of recent economic Nobel Laureates, and speeches of governmental policy makers whether they be "liberal" or "conservative". Indeed the current sub prime mortgage credit crisis in the U.S. and its global financial implications has not been properly analyzed by politicians and Central Bankers because their mainstream economic advisors do not understand Keynes's analytical framework. This paper attempts to explain the death blow given to this revolutionary analysis developed by the greatest thinker in economics in the 20th century.

The economic origins and sociopolitical impacts of what became known as “Keynesian Economics” have not received substantial attention from economists, political scientists and philosophers about its mode of governance. This study explores the rise and consolidation of Keynesianism as a mode of governance responsible for creating collective forms of power relations in the postwar world, investigating the possible effects of economic ideas once they reach the political arena. Specifically, we apply a “political economy of power” (PEP) framework to understand the emergence of Keynes’s economic theory and its transformation into a policy agenda that had specific consequences in terms of power, governance and regulation of the economy and the population. While Chapters 1 and 2 respectively promote a bibliographical reading of Michel Foucault’s genealogy of power and John Maynard Keynes’s economic, philosophical and political foundations, Chapter 3 introduces a historical investigation based on primary sources and official documents about the absorption and acceptance of the Keynesian economic theory in Postwar’s economic policies. Our Political Economy of Power (PEP) framework developed throughout Chapter 4 deploys a dual-historical approach, combining institutional and genealogical aspects to analyze the transformation of Keynesianism into a policy agenda between the end of the 1930s and beginning of 1970s across Western Europe and the United States. Our conclusions are buttressed by the epistemological and political shift caused by Keynesianism as a political paradigm, or a “governmentality”. The Keynesian mode of governance was successful in bringing economistic principles and economic technicality into life, thus affecting the ways populations are governed. Consequently, technical economic instruments and welfare systems were actually a technical-scientific justification of intervention via a discourse of power that defended stability, economic growth and welfare. Once Keynesianism established itself as a mode of governance we see the rise of a security society in which policies involving full employment, demand management, economic stability and social security point out towards new forms of control and regulation in the shape of a security pact between the state and the population. Parallel to that, we also invite the reader to return to our original intellectuals – Foucault and Keynes – to shed light on the issue of economic activity as a teleological end of human life. By exploring their ethical writings we stress how economics should be reviewed and reconsidered as a means to achieve an ethical end: the good life. Such trajectory, in Foucault’s rationale, becomes a form of self-government in which the individual transforms himself/herself within the economy and understands economic activity as a means of action – rather than an end.

Canadian Dimension, Jul, 2009

A spectre has returned to haunt the left—the spectre of Keynes. The Left kept it at bay in the 1950s and 1960s by pretending that “reformist” and “ineffectual” “Keynesianism” was Keynes. But it was so far removed from Keynes’ profound critique of the doctrine and reality of capitalism that one eminent economist called it “bastard Keynesianism.” After neoliberalism dispatched Keynesianism in the 1970s, the left was relieved of the need to confront Keynes. But as neoliberalism self-destructs in capitalism’s greatest crisis since the Great Depression, neoliberals and “third way” economists conjure up Keynesianism anew in their attempts to salvage it. Yet their new doctrine also misconstrues Keynes, seeing crises—which he held to be systemic—as minor aberrations, exonerating rentiers and speculators he would have indicted, and promoting a “bankers’ recovery” he would have opposed. It is a fatal mistake for the Left, in opposing this “contingent” Keynesianism, to fall once again into the Right’s trap by equating it with Keynes. We therefore take issue with Gonick and Wolff’s recent contributions in Canadian Dimension to try and promote a long-overdue reckoning with the true, hidden, Keynes.

2023

2. Living in the Springtime of Conscious Revolt: Scholarship on the social history of Keynesianism 'There is a vast gulf between how people who do have incomes lose touch with how people who don't have incomes get through on a daily basis […] One of the consequences of losing touch with class is we've also lost touch with economic analysis.'-Humphrey McQueen, "A Class Balancing Act" (1999) This chapter asks, cui bono? As was shown in Chapter One, the principal beneficiaries of the economic change were the capitalists. Using secondary sources, the enquiry now moves to consider other beneficiaries of Keynesianism. What is offered is a collation of scholarship that establishes the existence of a consensus historical perspective, one that has been hidden until now. Based on the literature amassed, historians and scholars generally see Keynesian economics and the Keynesian reconstruction in particular with ambivalence. While Keynesianism was beneficial to a large section of the population, especially blue-collar and white-collar workers, there were important groups of people who did not benefit as much or at all or were in fact disadvantaged. The significance of this is that the scholarship unwittingly coheres with the view of Keynesianism set out in Chapter One-that Keynesianism arose within capitalism-and reveals the extent to which other views are unsubstantiated, even without the introduction of a social history specifically concerned with Keynesianism. The chapter is arranged thematically. Reconstruction is discussed before the war because of its historiographical significance. Then follows a consideration of certain groups: trade unions, women, Indigenous peoples, the elderly, children and postwar migrants. It ends with a geographical juxtaposition between the experiences of the cities and the countryside, between Australia and those within the Empire who were footing the bill. The chapter is by no means Chapter Two-Living in the Springtime of Conscious Revolt 2 exhaustive, as the amount of scholarship touching on Keynesianism-knowingly or unknowingly-is insurmountable. Reconstruction Keynesianism There are only a small number of scholars who have considered the social history of Keynesianism. John Murphy in his article "Work in the Time of Plenty" (2005) uses oral history of men who experienced full employment in the mid-1950s. 1 Tom Sheridan's extensive work on the labour history of the war and postwar is similarly aimed at the economics. 2 Sheridan's Division of Labour (1989) demonstrates how industrial relations quickly deteriorated at the end of the war; something that occurred in part because of limited involvement of unions in postwar reconstruction planning. This contradicts one of the earliest accounts of reconstruction. 3 Sheridan also provides an example in the experiences of workers in the stevedoring industry, with its largely casual workforce pitted against increasingly bullish and experimental corporations. 4 By rectifying the general employment environment, Keynesianism exposed other hardships. Janet McCalman writes of full employment: Now with full employment, the causes of poverty that would endure for the next four decades were brought out in sharp relief: old age, infirmity, the loss of a male breadwinner and low wages with too many dependents. The rôle of the casual labour economy was quickly fading in working-class life. 5

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Conclusion '"If it benefits all the people to confiscate your father's money then ought it not to be confiscated?" "But will it really benefit them?" "He's hopeless!' Billy roared. "Read Keynes, read Lenin, read Marx!"'-Gore Vidal, Washington D.C. (1967) Keynesianism was unpopular among the very people it was supposedly designed to benefit the most. Viewed chronologically, it can be seen that the assumption of popular will for the new economics was itself imposed from above but retrospectively. This thesis shows that Keynesianism was divisive, inflammatory and largely unwanted. Keynesianism was adopted in Australia because it reflected an international realignment of capital as well as a desire to assuage the populace. Capital faced no greater threat in Australia than the revolutionary and reformist spirits of the 1940s, both of which took many years to exorcise. Undeniably, amelioration was beneficial to Australian society. By making employment relatively secure, enabling the expectation that one could live in a home with modern conveniences and raise a family, all while accruing wealth, the objective of improving the living standards of the masses was broadly satisfied. The consensus historical view is, rightly, ambivalent because of the hardship of notable groups within and without Australian society. To celebrate Keynesianism is to overlook, dismiss or conceal the price paid by less powerful peoples. A similar argument can be made with neoliberalism, which vastly expanded the wealth of those born before the 1970s and setup a generational division based on economics and Conclusion 2 reinforced with politics and culture that, so we are led to believe, time will resolve but only after it is too late for those born after 1970 or yet to be born. 1 Keynes was writing in a context in which states, economists and powerful vested interests were receptive to his ideas. However, the crisis of war and the fear among the political right wing of society and capital about what the end of the war would bring, meant the new economics was an obvious alternative to the status quo. The lesson of the previous major war, post-bellum period and depression era had finally been learned. If there were to be conflict-remembering that class conflict is absolutely essential-then it had to be redirected to smaller groups within and larger groups without. For capitalism to survive it had to ameliorate to the minimum level at which the threat of revolutionary unrest was quashed while still preserving profitability. For the left and labour, Keynesian economics represented another attempt to ward off either socialism or a non-capitalist (and non-communist) third way. The latter option, popular among moderates, was an important factor in the "Keynesian revolution" as was the capitulation of the far left in favour of maximising amelioration when it became clear that a radical reconstruction was unachievable. E. P. Thompson famously wrote in the preface of the Making of the English Working Class (1963) that he sought to save the forgotten masses in history from the 'enormous condescension of posterity'. 2 It is easy for historians to cast judgment on unremarkable humans when vested with the morality (and complexity) of the present. As Emma Griffin explains, Thompson was demonstrating the importance of apparently insignificant people. 3 That Keynes was élitist and

The European Journal of the History of Economic Thought, 2014

There was a time, not so long ago, when two economists, both working in England, sought to construct theoretical models of a monetary economy that might enable them not only to understand the workings of a monetary economy but also how one might, to some extent, manage the monetary system. The two economists came from quite different backgrounds: one a Cambridge don, steeped in the British approach to monetary theory, going back to Alfred Marshall, and the other a continental economist, an Austrian driven from his homeland by war. A multitude of people have learned that John Maynard Keynes and Friedrich Hayek were intellectual antagonists, battling tooth and nail against each other for supremacy over what form monetary theory should take. Ironically, this battle also became part of pop culture (at least in Englishspeaking countries), when "Keynes" and "Hayek" teamed up to produce a rap video that went viral on YouTube. I confess that I showed it to my large-lecture principles class. I doubt that many of them had a clue what the intellectual argument was all about. I also confess that I bought into the notion that Keynes and Hayek were intellectual adversaries, fighting tooth and nail to set the course of monetary theory in the twenty-first century. However, like many of my colleagues, I simply failed to understand where the battle lines were drawn: that Keynes and Hayek were at odds over modelling strategies, but that they shared in common a totally different opponent: Walrasian General Equilibrium theory. Though John Maynard Keynes and Friedrich A. Hayek came from very different backgrounds and thought along different theoretical lines, they shared one very important thing in common: both were intimately acquainted with the monetary theories of the Swedish economist Knut Wicksell. Indeed, Tyler Goodspeed's contention in this solidly argued book is that not only did Keynes and Hayek both adhere to the Wicksellian approach, but also that the "Wicksell connection" was, as a result, responsible for a fundamental convergence of their respective theories of money, capital, and the business cycle during the course of the 1930s (p. 33). Goodspeed's concise book begins with an introduction entitled "Rethinking the Keynesian Revolution", and then proceeds through five chapters. The introduction is devoted to clarifying the connections among the various approaches to monetary theory from Wicksell's day down to the present. The author presents a useful schematic diagram of the linkages between different schools and protagonists. The root of the tree is represented by Wicksell. From there, branches reach out to Stockholm, von Mises, and Hayek in one direction, and to inter-war Cambridge

The nature of the "Keynesian revolution" and the relation of Keynes's contribution to those of his contemporaries continues to concern historians of economics (e.g. Mark Blaug, "Second Thoughts on the Keynesian Revolution," HOPE 1991). David Laidler, in Fabricating the Keynesian Revolution (1999) and his chapter in The Cambridge Companion to Keynes (2006), argues that Keynesian macroeconomics did not represent a radical change in economic thinking, but, rather, an extremely selective synthesis of themes that permeated twenty years of interwar monetary economics, much of which was overshadowed in textbook versions of the "Keynesian revolution." This essay evaluates the Laidler thesis and attempts, placing Keynes in the context of his contemporary economics to elucidate the work of synthesis by Keynes and his early interpreters, considering whether the theory of the determination of national income as a whole was a radical change in economic thinking that went beyond synthesis.