Keynes: Vulgar Economist

(Latest update: 01-03-2016) .

"[T]he vulgar economists (…) translate the concepts, motives, etc. of the representatives of the capitalist mode of production (…) into a doctrinaire language, but they do so from the standpoint of the ruling section, i.e. the capitalists, and their treatment is therefore not naïve and objective, but apologetic." (K. Marx. "Theories of Surplus Value". Addenda)

If there is a common denominator behind most of the dominant schools of economic thought throughout history it is the presence of what Karl Marx called "vulgar political economists". Their appearances and discourses change with their changing circumstances, but they all have a few things in common:

1. they understand the economy from the perspective of the dominant class, to which they are beholden and from which they derive their social standing;
2. because of that, they strive to keep society from changing (i.e. they are conservatives);
3. indeed, although for them capitalism is enormously vulnerable (therefore, in need of champions: themselves), it is also, paradoxically, the end of history, in the sense that any deviation from capitalism is inherently detrimental (example);
4. while they assume in public the stance of impartial observers, in reality they act as advocates for those interests they represent.

An obvious contemporary example are the think-tank "experts", but it would be foolish and naïve to assume only they fit the description.

Over the last few years, I've had the opportunity of considering John Maynard Keynes' views and those of his followers with some detail. To my surprise and perhaps some disappointment, I've come to the conclusion that Keynes and many of his followers (albeit, I haste to add, not all of his followers) match the "vulgar economist" profile to a tee.

In this page, as time permits, I will list some of the posts I've written about that.

Rhetoric and Keynes' views on society (updated: Feb 27, 2016).

Keynes' was an adept rhetorician. While his bourgeois opponents reproach him that, some of his Post Modern supporters praise that in him. Confident that he could get away with it, Keynes used rhetoric instead of reason in defense of capitalism and of his own position in the pecking order. My series on Keynes' 1925 essay "A Short View of Russia" (parts I, II, III, IV) analyses in some detail that infamous essay and offers some light on Keynes' real views on society: they were neither new, nor original. More importantly, similar views did not disappear with Keynes and with variations are still found in many quarters.

In this sense, this series complements Corey Robin's 2013 essay "Nietzsche's Marginal Children".

A reading of "A Short View" also evidences Keynes' shameless elitism, the reality of which even his most abject apologists are willing to accept; however, all hell breaks loose if Keynes' equally shameless anti-Semitism (which he also exhibited in "A Short View") is mentioned (here): the paradoxes of political correctness. And it's not like there is no evidence of Keynes' anti-Semitism: even from witnesses who unhealthily worshipped him.

His Jewish disciples were well aware of that (Paul Samuelson, for instance) and some of them (like  Abba Lerner) were target of His Lordship's disdain.

Indeed, Keynes' anti-Semitic legacy survived him and Marx is still a frequent victim: here.

Elitism, anti-Semitism, and English chauvinism are part of a coherent worldview -- in Keynes' mind, as in the mind of the English bourgeois -- "scientifically" founded: he also was an eugenicist. Eugenics was the "scientific" foundation of Keynes' elitism and anti-Semitism.

Replace "English chauvinism" by "pan-Germanic nationalism", and eugenics quickly becomes totalitarian, anti-democratic Nazism.

For all those reasons, while it would be inaccurate to classify Keynes as a Nazi or even a Fascist, the casual dismissal of his affinity to those ideologies is at least equally inaccurate and irresponsible: "Was Keynes anti-Nazi?", "Keynes' National Self-Sufficiency". In fact, this attempt to conjure an absurdly anti-Nazi Keynes seems to be only part of a larger tendency in bourgeois apologetics, about which I've written in a surprisingly popular old post: "Stuttering George and Amnesia".


Further Reading:

Prof. William A. Darity, from Duke University, has also noticed the relationship between Keynes' views on economics and his political philosophy. Although I developed the ideas expressed here independently, in many ways Darity's observations precede mine

Keynes and Hayek: Yin and Yang

Keynes' contradictory economic ideas: (updated: Mar 1, 2016).

Readers may wonder, are elitism, anti-Semitism, and eugenics relevant to judge Keynes' economics? Shouldn't Keynes' work be judged by itself, independently of his personal virtues and flaws?

The short answer is that Keynesian economics is not just economics (if that were possible), it's political economy. Many of his followers, for one, act on this fact, even as they might not acknowledge it: that is evident in their hagiographic efforts. In times when homophobia was mainstream, Keynes' sexuality was taboo for his biographers. As soon as homophobia was rightly confined to the garbage bin of bigotry, his biographers felt it safe to mention it. Isn't that a clear, if implicit, acknowledgment that Keynes' personality is important for Keynesian economists and economics?

The same can be said about Keynes' anti-semitism and the lunatic responses (like this, and this) to any suggestion, however qualified (like Nina Paulovicova's), that Keynes was an anti-Semite (or an eugenicist, or a snob elitist).

For another, other pieces of western thought, like Darwinism, are equally at the centre of intense public controversy. However, one does not see Darwinians (even the most radical, opinionated, and often irritating ones) lionising Darwin, like Keynesians regularly do with Keynes. Why not? There must be a difference between economics and evolutionary biology explaining that, surely?

A third argument. Keynes' own fondness for rhetoric implies his tacit acceptance of this fact: reason is not enough to persuade academics, decision-makers, and the public. Emotion is required. But emotion is not confined to the public and decision-makers; Keynes, among other things, was an academic, too. Is he, alone, immune to that? Isn't his proudly admitted pathological hatred of Marx and of some Marxists an extreme emotion?

At any event, Keynesian political economy presupposes a hierarchically organized society and it's meant to preserve it. In terms mainstream economists employ and understand: Keynesian economics is not merely or even mainly a positive theory, it's a normative theory of economics.

And it's one reflecting Keynes' views on society. Indeed, the idea that there is no alternative to capitalism and, therefore, it must be protected come what may, is deeply ingrained in Keynes' thought, and is behind a common criticism directed against Marxism: Marxism -- the critics argue -- provides no suggestion to preserve capitalism (one such critic is Prof. David Selbourne): well, duh.

To deny the influence of extra-economic factors in Keynes' economic theorizing, full of contradictions as it is, leaves the question: if not elitism, anti-Semitism, and eugenics (ideology, for short), what explains Keynes' contradictions? Plain incompetence?

And those willing to search will find plenty of concrete examples where Keynes' views on society manifest directly in his theorizing and render it contradictory.

I discuss -- hopefully readers shall find it amusing as well as informative -- the Confidence Fairy/Animal Spirits in my series "The Horror of the Confidence Fairy" (B horror movie trailer, parts I, II, III, IV, V, VI, VII, and VIII). It's a fundamental contradiction in Keynesianism, and a textbook illustration of Marx's quote above: the same argument Keynes used to explain depressions -- Animal Spirits -- can and has been used by anti-Keynesians to oppose Keynesian stimulus policies -- the Confidence Fairy (see Further Reading, below).

Now, readers may ask, if this contradiction is so obvious and catastrophic, how come anti-Keynesians don't mention it? That's a good question. In what concerns anti-Keynesian Marxists, the short answer seems to be garden-variety obtuseness. In this, Marxists often share ground with many conservative anti-Keynesian economists (both should follow Bartlett's advice: see below). But a careful reading of the series shall reveal that some prominent Keynesian and Austrian economists are well aware of it (a surprising example is Prof. Brad DeLong: "Summoning the confidence theory via fiscal contraction is not an obviously silly thing to do").

The lesson for Marxists: you cannot be an effective critic of mainstream economics if you don't know what you are criticising.

Further Reading:

Prof. J. Barkley Rosser ("Alternative Keynesian and Post Keynesian Perspectives on Uncertainty and Expectations", Journal of Post Keynesian Economics, Summer 2001, Vol. 23, No. 4, pp. 545-566 paywalled, my own take) asks: if the Confidence Fairy, fundamental uncertainty, and all that are as real as Keynesian literalists claim, prediction should be impossible (a New Keynesian and a Post Keynesian agreed on that). Indeed, how can they predict the effect of the government policies they propose? The literalist Keynesian answer (which Barkley quotes) couldn't be any more alarming:

"His response (Davidson, 1996, p. 506) is to invoke Reinhold Neibuhr's Serenity Prayer: God grant us the grace to accept with serenity the things that cannot be changed (immutable realities), courage to change things that should be changed (mutable realities), and the wisdom to distinguish the one from the other."

Prof. Bill Mitchell ("The Roots of MMT do not lie in Keynes") provides yet another example of Keynes' infamous contradictions (this time, contradicting MMT).

In "Bartlett: Supply-Side Keynes?" I comment on another of Keynes' contradictions, detected by Bruce Bartlett (and acknowledged by Arthur Laffer: "Reaganomics as Keynesianism"). Bartlett's closing words:

"The ironic conclusion of all this may be that to fight back against the new economic planners, conservatives are going to have to revive Keynes. As distasteful as this may be for some, I believe they will find in Keynes much to admire and much they can call their own."

And some may have heard Bartlett's advice. In "UK Elections: Letter of the 100" we see the Confidence Fairy being summoned by the high priests of British capitalism.

Keynes is often perceived as a maverick standing alone against received wisdom, prevalent among the economic establishment of his time. Always the rhetorician, in life Keynes himself successfully promoted that view and Keynesian true-believers sporadically attempt to resurrect it, often with relative success.

To what extent, however, is that perception accurate? Perhaps to a much lesser extent than we have been led to believe, as I chronicle in "Was Keynes … a Post-Keynesian?".

Keynesianism suffers from a serious autoimmune disease.