Keynes' Gesellist Infection.

William A. Darity (Samuel DuBois Cook Professor of Public Policy, Sanford School of Public Policy, Duke University) argues "that in substantial portions of The General Theory, J.M. Keynes was a mere Gesellist, particularly but not uniquely, in his expressions of political philosophy vis-a-vis the relationship between state and economy".

Keynes' debt to the German Silvio Gesell (one of his beloved monetary "cranks" and "heretics") is no secret, although the technical details are often forgotten. In a nutshell, Keynes adopted Gesell's idea of precautionary money demand as explanation for economic slumps. As financial assets are not produced by labour, this demand invalidates Say's Law.

Less well-known is that Gesell's political philosophy may have recommended him to the illustrious Britisher, as much as his political economy. Gesell was rabidly anti-Marxist, advocating a peculiar anti-Marxist "socialism", which could be summarized thus: make capitalists richer to build socialism. Also in a nutshell: the wealthier capitalists become, the less profitable capital, supposedly leading to the situation Keynes called the "euthanasia of the rentier".

Darity provides a fascinating account of both economic and political influences in "Keynes' Political Philosophy: The Gesell Connection" (Eastern Economic Journal, Vol. 21, No. 1 Winter 1995, pp. 27-41).

From Darity's paper:

"But Keynes' animosity toward communism, or at least toward the British advocates of communism, bent more softly than Gesell's. While his public pronouncements consistently were negative toward both the Soviet experiment and Karl Marx, Keynes stayed close to the younger generation of Apostles, the secret Cambridge University society, although many of them were open enthusiasts for communism and several eventually served as Soviet agents. These included Anthony Blunt, Guy Burgess, and Michael Straight. Keynes was an unabashed enthusiast for 'the young amateur Communists' but not 'the professional Communists'."

Apparently, young amateur "Communists", of the Oxbridge variety -- close to Keynes in class, if not ideology -- did not share the beastly nature of proletarian, professional Communists, particularly those of Russian/Jewish extraction. From Keynes' 1925 essay "A Short View of Russia":

"The mood of oppression [in "Leninist Russia"] could not be better conveyed. […] In part, perhaps, it is the fruit of some beastliness in the Russian nature -- or in the Russian and Jewish natures when, as now, they are allied together."

Which makes one wonder, what was it that Keynes really objected in Marxism? Its "oppression", or its lowly, working-class/Jewish proponents? (Perhaps Marxists should replace Marx with Maurice Dobb: that may be more socially acceptable to Keynesians)

Darity offers an answer to that:

"Nevertheless, the true limits to Keynes' consideration of the communist alternative may not have been set primarily by his philosophical liberalism. Keynes' intrinsic elitism had to have been disturbed, in principle, by the levelling effects of communism. Keynes could not contemplate the benefits of a world where, again in principle, the working class was empowered".

Regular readers may find that my own series A Short View of a Short View contains remarkably coincident observations.

Darity adds a quote from Keynes's biography (Robert Skidelsky, John Maynard Keynes: the Economist as Saviour 1920-1937. London: Macmillan 1992, pp. 232-3):

"…[I]t is easy to imagine Keynes [the Liberal] at home, or as at home as he would ever be, in the Conservative Party of Macmillan and Butler -- both of whom became close personal friends, unlike any Labour leaders. He admired Conservatism's elitism: 'the inner ring of the party can almost dictate the details and technique of policy', he remarked admiringly. It was only to stupid elitism he objected. Keynes believed that ability was innate."

Elitism, anti-Semitism, anti-Marxism, xenophobia, and eugenics wrapped up, put next to economic theory, dismissing -- on top -- the myth of Keynes' liberalism.