The "New Economics" and Marxian Socialism. He was a lifelong member of the British Liberal Party, which held few seats in Parliament after 1920. But Liberal Socialism, as Crotty sees it, may remain a little idealistic. 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. 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. 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. 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. 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 was not a Socialist. By implicitly endorsing Keynes’s doctrines that Mongiovi describes in the subheading of his article as “indeed more radical than commonly thought” and of “considerable relevance for the Left today”, they are repositioning themselves as Brooklyn hipster versions of Dissent magazine. Was Keynes a socialist? One misconception that Crotty convincingly obliterates is the idea that Keynes was mainly concerned with the short run, a view reflected in the mainstream depiction of his theory of effective demand as an account of, and remedy for, temporary deviations from long-run full-employment equilibrium. And inasmuch as these particular labels can mean vastly different things to different people, the exercise is doubly futile. 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. Slumps that inflict severe distress on the working-class population are normal occurrences. 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. Socialist economics. Most socialist governments own the nation's energy, health care, and education services. 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. 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. Critiques of capitalism. All the while, organized labor was strong enough to ensure that workers shared in the benefits of growth. 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. Keynes did not wish to merely save capitalism ‘from itself’ but to replace it with ‘Liberal Socialism’. 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 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. 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. 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. 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. Based on a very close reading of Keynes’ work, Crotty argues that core Keynesian economic ideas should … He was born into a wealthy family in Philadelphia, but once he became a radical, he remained one. 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 was averse to class conflict: he was no class warrior; his aim was to diffuse class tensions. In The General Theory, Keynes famously observed that investment decisions largely, depend on spontaneous optimism rather than on a mathematical expectation … Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits — of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities … Thus if the animal spirits are dimmed and the spontaneous optimism falters … enterprise will fade and die.25. 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. The evidence confirms Keynes was a non-Marxist socialist throughout his adult life.6 Although O’Donnell’s work on Keynes’s socialism is noteworthy, there are several problems with his account. No, he wasn’t. Why, if the government is run by the “good people,” it will function efficiently and in society’s best interests. Change ), You are commenting using your Twitter account. 10. IV.3, p.323-338). The most fundamental of those questions is: How should we configure our economy so that it will foster human flourishing and well-being? That’s fine except that it has a tendency to result in a world of haves and have nots. 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. This definitely was not a short-term government stimulus program designed to ‘kick-start’ a temporarily sluggish economy and then let free enterprise take over.”22 One significant achievement of Crotty’s book is its demonstration beyond a doubt that Keynes’s overarching objective was to make a case for a program of national economic planning. His writing could be messy and imprecise. He is often characterized as a sort of intellectual magpie who made use of whatever intriguing idea crossed his path or sprang into his mind. 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. Enter your email address to follow this blog and receive notifications of new posts by email. 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,”. Keynes categorically rejected all general rules, but how does this relate to his political vision? ( Log Out /  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 … 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. 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. Instead, I want to hone in on Mongiovi’s review as another indication of Sunkara and Chibber’s slow but inexorable retreat from Marxism. Keynes surely was not a classical liberal in the mold of David Hume, Adam Smith, or John Stuart Mill — but to make that point is a bit like taking a battering ram to a door that is already ajar. Without hesitation, he said, “as the truth”!. Be that as it may, Crotty, without explicitly making the point, enables us to see that Keynes was an instinctive dialectician. v. t. e. Marxism and Keynesianism is a method of understanding and comparing the works of influential economists John Maynard Keynes and Karl Marx. We may detect, in all of this, tropes that have become part of the discourse on the crisis of capitalism. In the 1970s through the 1990s, wages stagnated, but debt-financed household consumption and asset inflation kept profits growing. The original typescript of the original speech contains a passage on the Labour Party which was omitted in the printed version. He rejected Soviet-style central planning; he recognized that markets are useful and that decentralization of control is desirable. Indeed, Michael Roberts pointedly refers to Crotty’s admission that “Keynes was unabashedly corporatist.”. 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. The difficulty Keynes describes is the perceived lack of profitable investment opportunities; capitalist enterprise has the capacity to produce an enormous volume of output, but it cannot ensure the volume of demand required to realize the profit potential embedded in that productive capacity. 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. 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. This makes complete sense because capitalism is inherently monopolistic. This terrain has been explored before. It is beyond the scope of this article to offer a critique of John Maynard Keynes or James Crotty’s new book. They weren’t people to compromise. Nick Johnson. An old URPEer, he was in grad school with a very good friend of mine, with whom I taught for a long time. By contrast, Rod O’Donnell argues Keynes was a socialist. But in recent years, politicians have used it even during the expansionary phase. The forces of the nineteenth century have run their course and are exhausted” [emphasis added]. The planning he proposed was more modest. 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. 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. ), and had his salary frozen for years. 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. But the Golden Age was an isolated episode. We need the collaboration of all the bright spirits of the age. 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. However, this simply isn’t so. Our problem is to work out a social organisation which shall be as efficient as possible without offending our notions of a satisfactory way of life.” — John Maynard Keynes2, An engraving of St George slaying a dragon graces the cover of James Crotty’s monumental new book Keynes Against Capitalism.3 The dragon is meant to symbolize capitalism, and the dragon slayer represents the great twentieth-century economist John Maynard Keynes. He boldly claims, ‘Keynes envisaged and espoused a particular form of socialism’ and ‘it is clear, explicit and unambiguous; he used the term socialism to characterise his own views’ (1999, pp. Keynes lived during a time when communism and socialism were considered real, viable alternatives to capitalism. When the investment potential of the original innovation has been fully exploited, the boom peters out, and the economy slides into a long slump that lasts until the discovery of the next epoch-making innovation. He was a lifelong member of the British Liberal Party, which held few seats in Parliament after 1920. James Crotty was at UMass-Amherst for many years. Keynes was not advocating half measures. Keynes is kind of a perfect example of this. Socialist Education Bulletin, Nº 1, July 1973. Lynn Turgeon, the heterodox economist who died in 1999, saw corporatism as a system that was not inherently progressive. He understood, sensibly, that muddling through is an unavoidable aspect of all human activity. The collapse of the Bretton Woods agreement made exchange-rate uncertainty and balance-of-payments crises once again potent sources of economic instability. The market is not built to do that. Crotty marshals all of the available evidence and sets it out in an exceedingly clear way. 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. Keynes had no great affection for the working class either. 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. (Read parts one and two) Hayek, credit and the crisis. 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. 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. At such places, Hyman Minsky is taken in large doses and a smidgen of Karl Marx is thrown in just to add some spice to the stew. 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. 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. Along with his colleague Sam Bowles, he is one of the few radical heterodox economists to gain tenure at a leading American university. 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. I asked David once how he taught Marx’s labor theory of value. 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. 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. 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.” 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. TrackBack URI. To effect meaningful social change, we need to be open to every thoughtful perspective. Leave no doubt that Keynes was much more a socialist than the typical interpretation would lead on to believe. 5 June 2019 — Michael Roberts. 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. Whether Keynes was a socialist, and precisely what sort of socialist he was if he was one, are trickier questions. O’Donnell makes his case in his provocative chapter ‘Keynes’s Socialism: Conception, Espousal, Strategy’ (1999). 'Crotty's view sharply diverges from mainstream perspectives which have long held that Keynes's overarching project was mild reform of capitalism. Fascism failed because their policies lead to war which destroyed the national economy they were … Many believe that John Maynard Keynes was a communist or a socialist. 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.