Socialism has made a remarkable comeback in the political discourse of North America, the United Kingdom, and Western Europe. But the Golden Age was an isolated episode. 'Crotty's view sharply diverges from mainstream perspectives which have long held that Keynes's overarching project was mild reform of capitalism. By 1929 Keynes’ teachings had became hardened into a full Fabian Socialist doctrine. 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! 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? 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 … 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.”. And who was to run this corporate capitalist/socialist state? In the absence of transformative innovations that create new markets and call forth high levels of investment, including infrastructure investment, over long stretches of time, capitalism will lapse into a condition that economists call secular stagnation. Keynes’ deviate socialist circle was almost completely pro-bolshevik. All this salivating over government boards has little to do with the socialism I’ve defended since 1967. TrackBack URI. Keynes saw that the profit motive could just as readily suppress risk-taking as encourage it. He rejected Soviet-style central planning; he recognized that markets are useful and that decentralization of control is desirable. 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. Keynes was no radical, and it is a stretch to claim he was. 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. 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. Change ), You are commenting using your Twitter account. Crotty’s main contribution to economics has been to try and synthesise Marx and Keynes. The planning he proposed was more modest. Managed trade, rather than protectionism, would be a more effective strategy. I am even more of a Keynesian now, after reading this wonderful book. 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,”. Socialist Education Bulletin, Nº 1, July 1973. MARX VERSUS KEYNES. ( Log Out /  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. He had a healthy respect for enterprise, and he appears to have seen risk-taking as a driver of progress. 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 … Socialism comprises those tendencies, forces, and institutions that blunt, mitigate or adapt market relations to social goals. Joseph Schumpeter argued that epoch-making innovations — steam power, the railroads, the internal combustion engine, electrical power — could spur long booms. Keynes wanted to apologize and preserve, while Marx wanted to criticize and destroy.”. Socialist economics. 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. ... “Fascism entirely agrees with Mr. Maynard Keynes… 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? Crotty, as thorough as he is, doesn’t have much to say on the topic either. Change ), You are commenting using your Facebook account. 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. 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. And it was, moreover, the result of massive targeted infusions of demand into the global economy by the government of the United States. The gap between the economy’s output and the level of spending on that output by households expands. (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.) A few high points will serve to dramatize the depth and extent of Keynes Fabian immersion. From the foregoing, one may see that Keynesianism has several points in common with Marxian socialism. This paper addresses the controversy over Keynes’s political thought. He called Stalin “terrifying” and guilty of eliminating every critical mind in the USSR. We have no clear idea laid up in our minds beforehand of exactly what we want. “England is in a state of transition,” he wrote, “and her economic problems are serious. 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. Why, if the government is run by the “good people,” it will function efficiently and in society’s best interests. 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. Far from wanting to rehabilitate capitalism, Keynes was building a case to replace it 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. 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. (Read parts one and two) Hayek, credit and the crisis. 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. Frankly, it matters little to me whether you want to call Keynes a liberal or a socialist. But these sorts of labels are used to describe an ideology, something that can be extremely difficult to pin down. 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. Keynes seems blithely unaware that a problem of rational economic calculation might exist under socialism. “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? And some of the people carrying it out were as worried about creeping socialism … We may be on the eve of great changes in her social and industrial structure … The most serious problems for England have been brought to a head by the war, but are in their origins more fundamental. 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. He used to make fun of the URPE Ivy Leaguers talking about their classmates and well-heeled friends, not disparagingly I might add. 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”. 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. Keynes was not advocating half measures. MARX VERSUS KEYNES. They weren’t people to compromise. Instead, I want to hone in on Mongiovi’s review as another indication of Sunkara and Chibber’s slow but inexorable retreat from Marxism. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. 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 reproduced in D. Moggridge, editor, 1972 Collected Writings of John Maynard Keynes, vol. In some respects, this may have applied to Keynes, who was certainly aware of the tremendous economic miracle of Adolf Hitler in reducing unemployment from over 30 percent when he took office in 1933 to 1 percent by 1936, the year in which the German edition of the General Theory appeared. But 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. 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. No, he wasn’t. What of Keynesianism’s other, left, flank? This approach seemed to work reasonably well for two or three decades after the end of World War II. 10. He bend economic science into a socialist direction, without changing anything fundamental about the discipline. 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. Unfortunately, controversy over his political thought has muddled the relation between his ethics and politics. 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. The main problem, however, is that Keynes had no coherent theory of the state, as Mongiovi’s review and presumably Crotty’s book show. 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. 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. Keynes is kind of a perfect example of this. The idea was that a mechanism needed to be put in place to provide a permanent stimulus to the economy. 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. His father was a Cambridge economist and he had Alfred Marshall tutor Keynes, who had not studied economics. Of course, this label does not necessarily mean that the point of view is unsound; but classification of anything is a step toward appraisal. Robert Skidelsky portrays Keynes as a liberal who wanted to save capitalism. And inasmuch as these particular labels can mean vastly different things to different people, the exercise is doubly futile. The original typescript of the original speech contains a passage on the Labour Party which was omitted in the printed version. James Crotty is emeritus professor of economics at the University of Massachusetts Amherst. Crotty shows that Keynes saw the economic distress of his time as structural in origin. Keynes: socialist, liberal or conservative? It cannot, ever. But Keynes felt that the risk in Britain was remote. 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? The state would perform a limited set of economic functions: using fiscal and monetary policy to keep employment reasonably high; providing an adequate safety net for those who found themselves in dire straits because of circumstances beyond their control; regulating businesses to ensure that the pursuit of profit is not conducted by methods that put workers, consumers, or the natural environment at undue risk; and providing public goods like education, policing, and national security. He did flirt with Fabianism a bit but he could never really commit to socialism. 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. Opinion polls indicate rising dissatisfaction with capitalism and growing awareness of its many dysfunctions. 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. Keynes was an English economist, who came to prominence for his writings on the turbulent inter-war period. He did flirt with Fabianism a bit but he could never really commit to socialism. Be that as it may, Crotty, without explicitly making the point, enables us to see that Keynes was an instinctive dialectician. Harry had no use for Crotty, at least his economics. And then there was Sraffa, great friend and countryman of Gramsci. Among the left professorate, post-Keynesianism is a way of being on the left but not too far left. Keynes lived during a time when communism and socialism were considered real, viable alternatives to capitalism. I detect in this argument a trace of the dialectical method: the logic of the system generates tendencies that undermine its structural scaffolding. 149, 164). Given all the projects I have taken on, it would not be worth my time or that of my readers. Sorry, your blog cannot share posts by email. 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, 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. One month after the Revolution, J.M. He rightly notes, however, that profit-seeking is not the sole motive of human action, and that many of the dysfunctions of the modern age are the results of a policy framework that not only presumes it to be so, but presumes also that profit-seeking behavior can reliably produce socially beneficial outcomes. He liked to be provocative. Keynes was averse to class conflict: he was no class warrior; his aim was to diffuse class tensions. Mixed his name with Milton Friedman — a (very) different economist," she said. The premise depicted by this imagery will strike many as incongruous with the received understanding of Keynes’s polemical aims. 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. Keynes was not a Socialist. 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. Nick Johnson. He was critical of the sloppy application of orthodox ideas to complex real-world circumstances, but he was no renegade. 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. A key takeaway from this book is that we need to think about Keynes in a radically different way. Socialist Education Bulletin, Nº 1, July 1973. There are few profound schools of economics and Keynesian School of Economics is one of them. The real radical of the Keynesians at Cambridge was Joan Robinson. Keynes lived during a time when communism and socialism were considered real, viable alternatives to capitalism. 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. In sharp contrast to the traditional interpretation, Rod O’Donnell argues Keynes was a socialist. Vol 3 ), and had his salary frozen for years. And he is nowhere close to Kalecki in terms of radical insight. 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. Keynes became the mastermind behind the economic structure of British and American socialism. Nevertheless his economics have profound implications for Socialists. Keynes lived during a time when communism and socialism were considered real, viable alternatives to capitalism. Winter 2020. This question had already occupied continental scholars for some time and was the focus of lively discussion at the London School of Economics. 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. 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. 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. 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. 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. And inasmuch as these particular labels can mean vastly different things to different people, the exercise is doubly futile. Apparently, Crotty’s book is a corrective to this false characterization. However, this simply isn’t so. Keynes: socialist, liberal or conservative? 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. 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. 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”. 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. This terrain has been explored before. But in recent years, politicians have used it even during the expansionary phase. That is the controversial claim made in a new book by the distinguished radical economist James Crotty. A good capitalist wants to own all of the means of production so they can maximize profits. This paper presents unexplored evidence that shows Keynes was a non-Marxist socialist from 1907 until his death in 1946. The collapse of the Bretton Woods agreement made exchange-rate uncertainty and balance-of-payments crises once again potent sources of economic instability. Macroeconomic policy, Friedman argues, can reliably influence only the nominal. Capitalism, according to Keynes, needed to be fixed, not abandoned — or so says the standard view of his project. Higher education was a beneficiary of the Cold War, as the US government subsidized students, both undergraduates and graduate students, who specialized in sociology, anthropology, political science, and other disciplines that could be useful for the projection of imperial influence across the globe; federally supported cultural programs were meant to project soft power. The failure of government-controlled capitalism _____ Introduction. 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. It was reprinted in Keynes's 1931 Essays in Persuasion (Ch. 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. 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. 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. James Crotty was at UMass-Amherst for many years. Social democrats seek to implement an economic strategy shaped by the thoughts of John Maynard Keynes. For Mongiovi and Crotty, Keynes was on the left. 'Crotty's view sharply diverges from mainstream perspectives which have long held that Keynes's overarching project was mild reform of capitalism. The forces of the nineteenth century have run their course and are exhausted” [emphasis added]. 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. He was a lifelong member of the British Liberal Party, which held few seats in Parliament after 1920. In other words, Keynes wanted to turn the wheel of history … As the drive for mercantile profits ran up against limits imposed by the productive capabilities of sixteenth- and seventeenth-century economic conditions, tensions — or, in Marxian terminology, contradictions — arose that led to industrialization, with manufacturing now the main source of profits and driver of accumulation. 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. O’Donnell makes his case in his provocative chapter ‘Keynes’s Socialism: Conception, Espousal, Strategy’ (1999). 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. The Keynesian Revolution, in Crotty’s interpretation, was considerably more revolutionary than we have been led to believe. 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 … Social democrats seek to implement an economic strategy shaped by the thoughts of John Maynard Keynes. 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 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. 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… It is not the ownership of the instruments of means of production which it is important for the State to assume. 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. 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. 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. 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. Based on a very close reading of Keynes’ work, Crotty argues that core Keynesian economic ideas should … 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. Downloadable (with restrictions)! Fascism failed because their policies lead to war which destroyed the national economy they were … A number of important themes emerge in the telling. We also find in Keynes’s argument faint echoes of an element of Karl Marx’s falling-rate-of-profit hypothesis. For him, Marxism was to be condemned for “exalting the boorish proletariat above the bourgeoisie and the intelligentsia, who are the quality in life and carry the seeds of all human advancement.” He was a lifelong member of the British Liberal Party, which held few seats in Parliament after 1920. Without hesitation, he said, “as the truth”!. Regulation of all kinds (but especially regulation of financial markets), minimum-wage laws, labor unions, the social safety net, Keynesian demand-management policies — all of these once-routine features of postwar capitalism have been the targets of sustained ideological attack. 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. 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. It must be (in Keynes’s words) sufficiently and consistently impoverishing.” Liberalism or Barbarism. I am far more interested in what positions he takes on a particular capitalist state itself. See David M. Kotz, Terrence McDonough, and Michael Reich (eds). 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. The market is not built to do that. 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. He was born into a wealthy family in Philadelphia, but once he became a radical, he remained one. 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. No 4 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 … 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. Crotty reports, and appears to embrace, Keynes’s case for economic self-sufficiency, a strategy that would entail a serious curtailment of international trade. 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 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. Even smaller-scale downswings, if they occurred often enough and were severe enough, could destabilize the system both politically and economically. He also believed that the most effective way to ensure a steady flow of socially useful investment sufficient to keep the economy operating at full employment is to assign authority over a good deal of investment spending to the state. Keynes was aware of how market-driven structural change can disrupt a community’s social bonds. Keynes is one of the most important and influential economists who ever lived. 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. 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. We may detect, in all of this, tropes that have become part of the discourse on the crisis of capitalism. No, he wasn’t. Or even "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. We no longer have sufficient confidence in the future to be satisfied with the present.15. Even a thousand page book would not exhaust Keynes’ Fabian trail. 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. Change ), You are commenting using your Google account. “The political problem of mankind,” he wrote, “is to combine three things: efficiency, social justice, and individual liberty.”35 Modern society is deficient in all three respects. Private enterprise could then be left to chug along as it saw fit, generating prosperity far and wide. Keynes categorically rejected all general rules, but how does this relate to his political vision? 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. How can such a state be made a tribune of the people? Along with his colleague Sam Bowles, he is one of the few radical heterodox economists to gain tenure at a leading American university. Yes, Keynes did not favor socialism, but was worried that an extreme case of capitalism could actually lead to a socialist takeover. We need the collaboration of all the bright spirits of the age. 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. Capitalist economies, he argued, routinely deliver suboptimal levels of employment. Our material conditions seemed to be steadily on the upgrade [in the nineteenth century]. Its dreary, out-of-date, academic controversialising seems so extraordinarily unsuitable as material for the purpose.”. Was Keynes a socialist? 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. See Gary Mongiovi, “Émigré Economists and American Neoclassical Economics, 1933–45,”. 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. 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. According to that framework, capitalism passes through various institutionally distinct phases, roughly a quarter of a century long, in each of which capital accumulation is driven by a particular mechanism.16 In the earliest stage of capitalism, for example, profits and growth were driven by the expansion of commerce. By the early 1980s, the Golden Age social contract had been displaced by a neoliberal outlook that reified the market. 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. We shall discover it as we move along and we shall have to mould our material in accordance with our experience.” Openness to criticism is indispensable, he continues: “for this process bold, free and remorseless criticism is a sine qua non of ultimate success. Most socialist governments own the nation's energy, health care, and education services. Monetary policy, even highly aggressive monetary stimulus, will therefore be powerless to jump-start growth: public investment on a large scale is needed. Only socialism can provide a positive way out of the present crisis. Keynes advocated deficit spending during the contractionary phase of the business cycle. A good capitalist wants to own all of the means of production so they can maximize profits. He devised his theories as an alternative to socialism – a … Yet when I look into it, it is to me inexplicable that it can have this effect. This definitely was not a short-term government stimulus program designed to ‘kick-start’ a temporarily sluggish economy and then let free enterprise take over.” One significant achievement of Crotty’s book is its demonstration beyond a doubt that Keynes’s overarching objective was to make a case for a program of national economic planning. But Liberal Socialism, as Crotty sees it, may remain a little idealistic. Along with his colleague Sam Bowles, he is one of the few radical heterodox economists to gain tenure at a leading American university. by michael roberts. Some, like Michael Zweig stayed true to a radical vision. John Maynard Keynes is widely regarded as one of the twentieth century’s outstanding liberals. ( Log Out /  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. 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. On Biden’s website, there is this: Biden believes the Green New Deal is a crucial framework for meeting the climate challenges we face. 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. 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. Crotty describes at considerable length Keynes’s proposal to expand public control over investment. 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. Crotty, a 79-year old economics professor emeritus, is a post-Keynesian just like Mongiovi. 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. Ultimately, Keynes was trying to figure out a humane and fair way to achieve a flexible economic dynamism. IV.3, p.323-338). Note too Keynes’ elitism. The failure of government-controlled capitalism _____ Introduction. Socialism comprises those tendencies, forces, and institutions that blunt, mitigate or adapt market relations to social goals. I always remember my mentor and friend, David Houston, a URPE founder. That being said, Keynes never believed in the power of ordinary working people to control their own fate. This, of course, will sound familiar to anyone paying attention to political and economic affairs in the Western Hemisphere in 2020. 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. Whether Keynes was a socialist, and precisely what sort of socialist he was if he was one, are trickier questions. 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. 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”). Many believe that John Maynard Keynes was a communist or a socialist. This makes complete sense because capitalism is inherently monopolistic. 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. Since the British Labour Party was an instrument of Fabian socialism the Keynesian theories formed the backbone of the Labour Party’s economic platform. He also maintained that deliberate government action could foster full employment. Cheap Motels and a Hotplate (Michael Yates), Ken McLeod: Early Days of a Better Nation. 5 June 2019 — Michael Roberts. ( Log Out /  He was a strong advocate of capital controls to prevent finance capital from fleeing a country in pursuit of higher returns when the monetary authorities push interest rates down. 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. Based on a very close reading of Keynes’ work, Crotty argues that core Keynesian economic ideas should … 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. It powerfully captures two basic truths, which are at the core of his plan: (1) the United States urgently needs to embrace greater ambition on an epic scale to meet the scope of this challenge, and (2) our environment and our economy are completely and totally connected. Crotty’s book suggests that turning this situation around must begin with the rediscovery of Keynes’s vision — his actual analytical vision, not the parody of it that has been handed down to us by the guardians of orthodoxy. Crotty marshals all of the available evidence and sets it out in an exceedingly clear way. Economics portal. Nevertheless his economics have profound implications for Socialists. Since the effective demand problem was fundamentally structural, Keynes advocated a structural solution: a permanent expansion of the state. Both men's works has fostered respective schools of economic thought ( Marxian economics and Keynesian economics) that have had significant influence …