Thursday, 14 August 2014

Was Keynes a Conservative?

Prof. Bill Mitchell (Professor in Economics at the Charles Darwin University, Director of the Centre of Full Employment and Equity, and leading MMT proponent: here) recently pointed out that "Keynes was a conservative" and that
"We used to talk about the 'Keynesian Revolution', in the context of his debunking of the perceived classical thinking at the time (1930s) but it was replacing a flawed theoretical structure with a conservative set of ideas based on reality. Hardly revolutionary." (see here)
To support his claim, Mitchell presented a quote from Bruce Bartlett about Keynes' motivations:
"… two basic motivations … One was to destroy the labor unions and the other was to maintain the free market. Keynes despised the American Keynesians. His whole idea was to have an impotent government that would do nothing but, through tax and spending policies, maintain the equilibrium of the free market. Keynes was the real father of neoconservatism, far more than (economist F.A.) Hayek!"
Predictably, the Defenders of the Truest Faith Martyr's Brigade jumped to the Prophet's defence, ready to do Jihad. They "really don't get where Bartlett gets that idea from at all".

I don't presume to speak for Bartlett, but maybe he got that idea from John Kenneth Galbraith, whom he cites immediately after Drucker's quote:
"John Kenneth Galbraith, whose politics were well to the left of Keynes, not to mention Drucker, agreed with this assessment [i.e. Drucker's]. 'The broad thrust of his efforts, like that of Roosevelt, was conservative; it was to ensure that the system would survive,' he wrote. But, Galbraith added, 'Such conservatism in the English-speaking countries does not appeal to the truly committed conservative'."
Or perhaps from the Prophet Keynes himself:
"As Keynes himself explained, 'the class war will find me on the side of the educated bourgeoisie.' He expressed contempt for the British Labour Party, calling its members, 'sectaries of an outworn creed mumbling moss-grown demi-semi Fabian Marxism.' He also termed it an 'immense destructive force' that responded to 'anti-communist rubbish with anti-capitalist rubbish'."
(The whole article is available from Forbes).

But, wherever Bartlett got that, Professor Lord Skidelsky would seem to agree with him:
"From a distance it is easy to see how many presuppositions they [Hayek and Keynes] shared. (1) They both came to their economics through philosophy. (2) Neither believed that economics was like a natural science. (3) Both emphasised the importance of subjectivism in economic thinking. (4) Both were critical of econometrics. (5) Both subscribed to procedural theories of justice. (6) Both were inegalitarians, believing in the beneficial spillovers from pockets of wealth. (7) Neither was an ardent democrat. (8) When Keynes wrote of the market system in 1936 that it is 'the best safeguard of the variety of life', preserving 'the most secure and successful choices of former generations' it may have been Hayek speaking. (9) Both believed in the overriding power of ideas, and rejected or ignored explanations of events in terms of vested interests and technology. (10) Both men admired Hume and Burke and delighted in the paradoxical wisdom of Mandeville. (Keynes's General Theory is full of 'unintended consequences', eg. the 'paradox of thrift'.) What Hayek would have called Keynes's 'constructivist rationalism' was tempered by prudence and regard for tradition. (11) Hayek called himself an 'Old Whig', and Keynes had a good deal of whiggery in him. (12) Both came to believe that Western civilization was precarious, which they found hard to square with their jointly held conviction that it was an evolutionary success story. (13) In short, both were liberals, and finally understood, that on the great issues of political philosophy and personal freedom, they were in the same camp. It was on the means needed to preserve a free society that they differed." (see here)
I mean, Keynes was a liberal; in fact, as much liberal as Hayek 

Hail Mary full of grace, it seems the heresy is more extended than one would have imagined 


(17-08-2014) To be crystal clear: it is good to see there still remain a few men of courage, like Prof. Mitchell. He may be a post-Keynesian, but unlike the Keynesian mujahideens, he is an honest intellectual, not a cheap ideologue (you guys know who you are).


  1. If there's a difference between Hayek's and Keynes' philosophies, it lies in Keynes' disdain for financial speculators (the "rentiers"). Hayek, as a fairly run-of-the-mill utilitarian, had no problem with financial speculators. Keynes rightly understood that such speculation drove recessions and depressions, and his policy recommendation for the government to be "the investor of last resort" when private credit dried up was aimed at killing financial speculation while leaving the rest of the financial system intact.

    I view all mainstream economic theories as systems of rhetoric intended to hide the source and nature of social power in our society. For his part, Marx tried to explode the system of rhetoric put forth by the classical economists, and I think Post Keynesians like Steve Keen are trying to actually be scientific and describe how economies actually work, but even Steve Keen carries the water of the powers that be.

  2. Tao,

    Sure, there are differences between Hayek and Keynes. But, for me, the differences between them sometimes seem so small as to make the choice look largely meaningless.


    If you haven't read it yet, try Skidelsky's essay. It's interesting, without being really objective or impartial. Sure, he does his best to sound impartial in his Hayek and Keynes comparison, but you can tell that's more for show than anything else.

    Regardless, his account of Keynes and his followers is very telling. He doesn't use the same words, but he describes Keynes in ways that remind Hayek's own description.

    Read Skidelsky's description of Keynes and you'll see a portrait of many of Keynes' current internet fan boys, to the point that I wonder if some of these guys are actually following that description as a kind of a guide, a deliberate choice.

    Like "Keynes believed/liked/disliked/did this, then so will I".

    For me, it was a bit of an epiphany.