Who was John Maynard Keynes?
Among the few of my fathers books Ive managed to preserve is the first edition of The General Theory of Employment, Interest and Money, by John Maynard Keynes, published in 1936.
Keynes ideas are coming back into fashion, so I thought Id take another look at the book. It makes a remarkably good read, only rarely resorting to (for me) quite impenetrable mathematical equations.
In 1936, the Great Depression was still at its deepest. Unemployment ravaged millions of lives. Fascism was rampant in Italy, Germany and Spain. Stalin was subjugating Russia. Much of the world remained under the colonial yoke, now made heavier by the collapse of the imperial economies. The outlook was bleak indeed world war loomed for the second time in not much more than a generation.
Classical economic orthodoxy at the time still dictated that the only way for a nation to prosper was through the violent, competitive conquest of new markets. In a depression, a rich, old country as Keynes put it had to set itself against the rest. This meant adopting protectionist beggar-thy-neighbour trade policies and tariff barriers. In the event, this made matters worse and hastened the onset of war.
Keynes argued that if nations can learn to provide themselves with full employment by their domestic policy there need be no important economic forces calculated to set the interest of one country against that of its neighbours. International co-operation was not only possible but preferable.
What he was unable to anticipate was the eventual rise of corporate globalization, which aimed to remove the ability of nations to act domestically at all. Corporations simply took over from nations the violent, competitive conquest of global markets, eventually leading to a repeat of the 1930s in the 2000s.
Today, trade liberalization is, in point of fact, nothing of the sort. It is strictly protectionist, only now protecting corporate interests against national or democratic intervention of any kind.
He was also unable to foresee the exhaustion of finite natural resources, the impact this would have on the natural environment, or the deadly race to discover which would be the first put an end to orthodox economic growth.
Its not too fanciful to imagine that Keynes would have been just as unorthodox in modifying his theories accordingly.
But perhaps thats not the point. A sad comment on the present state of economic theory, so much in awe of corporate globalization, and for so long, is that we must look to the past well before Milton Friedman and the monetarists of the 1970s, for any useful insight into our current economic madness in good measure created by people who plainly had no idea what they were doing.
To the astonishment of his friends in Londons exclusive Bloomsbury Group, the reputedly gay Keynes appeared to be quite happily married to the Russian ballerina, Lydia Lopokova. Devoted, at one time or another, to eugenics and the founding of the Arts Council, Keynes died of exhaustion in 1946, having arranged a post-war loan from the US Government to Britain, without which it would probably not have been possible to found the National Health Service.
At the end of his book Keynes wrote what could stand as his own, somewhat ironic, epitaph:
Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas
soon or late, it is ideas, not vested interests, which are dangerous for good or evil.