Wednesday, 20 January 2016

Keynes' "National Self-Sufficiency".

After decades advocating "free trade not only as an economic doctrine which a rational and instructed person could not doubt, but almost as a part of the moral law", in June 1933, writing for the selected readership of The Yale Review, John Maynard Keynes suddenly discovered that protectionism (aka economic nationalism, national self-sufficiency) was an experiment well-worth trying.

Keynes was following the trend. At the time, there were many experimentalists and they were politically successful. Free trade was so yesterday, no longer a defensible cause. Protectionism was all the rage.

Keynes himself explicitly mentions four experiments.

In his opinion, the first one was irredeemably flawed: "Russia to-day exhibits the worst example which the world, perhaps, has ever seen, of administrative incompetence and of the sacrifice of almost everything that makes life worth living to wooden heads." The Russians, after all, were throwing the capitalism baby (or so they claimed), together with the bath water of its problems. You cannot do that, for Keynes.

Another experiment wasn't a lost cause -- yet -- but its prospects were dubious: the "Irish Free State … is discussing plans which might, if they were carried out, be ruinous". Not good, but better than Russia: failure was not quite a certainty.

With a few worrying signs, Keynes apparently saw better prospects in the German experiment. Hitler was yet to gain Keynes' full approval: "Germany is at the mercy of unchained irresponsibles -- though it is too soon to judge her."[*] You cannot condemn Nazi Germany yet: you must give her a chance. It may still prove to be a Keynesian miracle.

Fascist Italy, however, seemed more promising: "Mussolini, perhaps, is acquiring wisdom teeth." Coming from the Master, that's no mean encomium.

(Keynes did not mention Japan's Hideki Tojo. For Keynesians, that's probably conclusive proof Keynes strongly disapproved of Imperial Japan.)

As these cases reveal, although convinced of the need to experiment to save capitalism (because "[T]he decadent international but individualistic capitalism … is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous -- and it doesn't deliver the goods. In short, we dislike it, and we are beginning to despise it."), Keynes was conscious experiments were not exempt of risks:
"I see three outstanding dangers in economic nationalism and in the movements towards national self-sufficiency, imperiling their success.
"The first is silliness -- the silliness of the doctrinaire. It is nothing strange to discover this in movements which have passed somewhat suddenly from the phase of midnight high-flown talk into the field of action. We do not distinguish, at first, between the color of the rhetoric with which we have won a people's assent and the dull substance of the truth of our message. There is nothing insincere in the transition. Words ought to be a little wild--for they are the assault of thoughts upon the unthinking. But when the seats of power and authority have been attained, there should be no more poetic license."
From the highest-flown talk (or "poetic license", "rhetoric") like liberté, égalité, fraternité, democracy, justice, peace, to the more prosaic "national self-sufficiency" (or full employment, living wage, labour rights, social security, public health), "wild words" are only useful to herd the "unthinking", to win their "assent"; but for Keynes to take them seriously is "silliness" proper of the "doctrinaire" (one cannot help but think of Russia). Keynes (proudly self-described as the Immoralist), was not a "doctrinaire", he modestly placed himself on the side of intelligence, not "silliness" or "poetic license". 

Once "the seats of power and authority have been attained, there should be no more poetic license".

"There is nothing insincere in the transition."


Keynes' whole essay "National Self-Sufficiency" (The Yale Review, 22(4), June 1933, pp. 755-769) is freely available. I urge you to read it in its entirety.


I will not tell readers what to think. For one, it is useless; for another, it is not my place.

I can, however, tell you what I think. The nouns demagoguery, manipulation, dishonesty, psychopathy/narcissism, arrogance, condescension, sleaze, come to my mind. The words ideologue, indecent, hypocrite, liar, charlatan, criminal, despicable also pop up.

None of them are directed exclusively to the author of that article.

So, readers, choose your own words. Be the judge.

23-02-2016. Interestingly, Lord Robert Skidelsky also quotes those words, well, sort of:
"Keynes understood this from the start. ‘Germany is at the mercy of unchained irresponsibles,’ he wrote on 15 July 1933." (Skidelsky 1992: 486)
For Skidelsky, those words are proof of Keynes' early opposition to Nazism. Apparently, Lord Skidelsky did not think the entire quote ("Germany is at the mercy of unchained irresponsibles -- though it is too soon to judge her.") was relevant to judge that.

Skidelsky, R. J. A. 1992. John Maynard Keynes: The Economist as Saviour 1920–1937, Macmillan, London.

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