The Independent Review has made my article on this topic available here.
Source link: http://archive.mises.org/8503/was-keynes-a-liberal/
Was Keynes a Liberal?
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He was definitely not a liberal, in the classical sense, and the liberals of his time knew that and pointed it out; Étienne de Mantoux, for instance, evens asks rhetorically if Keynes is a socialist in his review of “The General Theory”:
http://classiques.uqac.ca/classiques/mantoux_etienne/theorie_generale_keynes/theorie_generale_keynes_texte.html
As much as I love free market capitalism, if one is objective, you have to admit that it has one fatal flaw. That is as markets contract in a business cycle they become a self perpetuating downward spiral. Business gets bad, so the owners lay off workers, which causes the market to get worse, and so on. Government is the only third entity that can stop the downward spiral. So, government intervention is an essential element in sustaining free markets, which is neither liberal nor conservative. Keynes was just giving it to us straight.
Only if you accept the Keynesian business cycle theory. Austrians do not.
Tim Reynard, you obviously do not understand “F-R-E-E” in the free market economy.
“if one is objective, you have to admit that it has one fatal flaw”
If one is objective, you have to admit that it is the manipulation of money and credit by a government-created bank cartel is, by definition, not a charactistic of a real free market.
If one is objective, then he/she would recognize that the government steals from private citizens or just prints more money as a remedy to this “flaw”.
What is missing here, as in many other commentaries, is any discussion of Keynes’s part in rhetorically squelching the developments of classical economics that would have addressed the very things he wanted to address his way. In particular, Pigou showed how sound money working through Real Balance Effects would make a free economy find an optimal equilibrium without state intervention, and he also showed that distorted markets could have externalities that would lead to sub-optimality (in the Depression, that would have included sub-optimal employment). Unfortunately, in the days before Coase, the only measures Pigou could propose to address this was for the state to offset bias by intervening with taxes or subsidies (to give him his due, starting from a position of state involvement as we are and he was, these are the fastest acting measures and should be understood as steps in winding it back rather than as additional intervention). But Keynes sidelined Pigou.
I was going to bring out the formal meaning of liberal, as understood in that time and place, but Raico brings it out early on only to dismiss it. Nevertheless, we should be aware that this exercise is one of testing people and events of other times and places against our own projected criteria. Intrinsically, there can never be a good fit.
Unfortunately, we cannot trust Raico’s quotations, in a way that relates to this point. From internal evidence, he has been willing to Americanise spelling, e.g. “the duty and purpose, the honor and glory [sic] of the State.” If he is willing to edit for such small reasons, we cannot be sure what he might have done by way of elision or paraphrase for greater reasons. As the saying is, “he who is faithful in little will also be faithful in much”. So, we may be getting a recast view of Keynes’s position.
Keynes probably considered himself a liberal in the sense of being progressive. Keynes considered himself avant-garde and to him experimentation in socialism was also avant-garde. Now you can see the connection to what is contemporarily considered ‘liberal.’ By this definition he was a liberal.
He was the quintessential ego-driven interventionist.
The opposite of this perverted persona is the true definition of classical liberalism. Keynes was not a liberal in this ‘original’ sense because he perpetuated fallacies in an attempt to bring himself (ego-driven) notoriety. He even did it presumably knowing that it was contrary to sound economics. His ego was so all-consuming that it corrupted him enough to disregard basic economic laws such as scarcity.
Was Keynes a liberal? Yes in the hijacked use of the term, as is socialism and counterfeiting.
Was Keynes a liberal? No! He is a fraud in this regard and in many others, for example, he was a fraud in the context of being an economist!
Bruce:
Of course we can’t rule out the possibility that Keynes was a complete intellectual fraud, but it seems more likely that his errors were simply errors. His ego may have blinded him to some mistakes, but it probably did not lead him to disregard those he recognized.
Many educated people still believe much of Keynes’ theory, even the parts we now know to be overstated at best. Is it so unlikely that Keynes could have been duped himself?
P.M. Lawrence
I agree that this looks like a heavily reprocessed version of Keynes’ views. His “neomercantilism” is substantiated only by secondary sources. Raico directs the reader to Ch. 23 of the General Theory but fails to quote from it to substantiate this point.
Still, Raico’s overall thesis seems correct. If we define a “liberal” as “more liberal than the status quo of his era,” Keynes would not have been a liberal (at least in the Western world).
I find little similarity between Keynes and the so called keynesians such as Hicks, Hansen, Samuelson ..and so on.
Actual followers of Keynes are to my understanding as rare as hens teeth. Therefore much criticism of Keynes is unwarranted wrt methodology and theory he neither advocated or proposed.
Agree with Mr Lawrence though wrt Pigou / Keynes. From memory Keynes also was rather mean towards Dennis Robertson – something very non-liberal.
Was Keynes a Liberal ?
He thought so – nobody else would surely?
Keynes was certainly “liberal” enough to recommend himself to the Nazi government of Germany. See the preface to the first German edition of “General Theory”. (If you can’t get hold of it – or if you don’t read German – the most revealing part of it was quoted by Hazlitt in “The Failure of the ‘New Economics’”.)
Per-Olof Samuelsson, you probably mean the foreword, not the preface. The memory hole has an English translation of it. You are overstating matters; Keynes was recommending himself to Germans generally, not specifically to its Nazi government.
See also this note in the wikipedia article on Keynes’s Magnum Opus.
OK, OK. “Vorwort” in German.
Here is the horror part of the quote:
“The theory of aggregated production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state [eines totalen Staates] than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire.”
What does it matter whether he addresses this to the German government or the German people? The point is that Keynes himself knew the totalitarian implications of his ideas.
But then, why not write the same words in the *English* foreword or preface or introduction or whatever you wish to call it? Why save it for an edition that was to be published in a totalitarian state?
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