In the ruins of the 2007–2008 financial crisis, self-proclaimed progressives the world over clamoured to resurrect the economic theory of John Maynard Keynes. The crisis seemed to expose the disaster of small-state, free-market liberalization and deregulation. Keynesian political economy, in contrast, could put the state back at the heart of the economy and arm it with the knowledge needed to rescue us. But what it was supposed to rescue us from was not so clear. Was it the end of capitalism or the end of the world? For Keynesianism, the answer is both. Keynesians are not and never have been out to save capitalism, but rather to save civilization from itself. In the Long Run We Are All Dead appears on our Economics Student Reading List and is available for 50% off as part of our Back to University Sale, along with every title on all of our Student Reading Lists.
Here we present an except from the third chapter.
A General Theory of Civilization
In Keynes’s own time, it was his radical critics who took most seriously his assertion that his theory “revolutionized” economics, if not in the manner he intended. To them, The General Theory was indeed a manifesto, but of the counterrevolutionary variety. Capitalism, with its post-1929 political economic integrity in tatters and shadowed by a viable Bolshevik alternative, had emboldened its own false messiah. Book in hand, Keynes had come to bring salvation.
Radicals generally have never abandoned this critique of Keynes, and over time it has become axiomatic for some—so obvious it requires no explanation. It has also been widely endorsed beyond the Left. As Albert O. Hirschman once put it, “after Keynes, any theory purporting to show that, short of revolution, there was no way out . . . was bound to have a hard time.” Outside the world of Tea Party bloggers, the Daily Telegraph, and the Hoover Institute— where the idea that Keynes was a “socialist” is idiotic common sense—this historical interpretation is noncontroversial. Today, in venues as different as the Economist and the International Socialist Review, it is assumed that Keynes developed his ideas in an effort to “save capitalism.” In stark contrast to his suspicious Treasury School detractors in the late 1920s and 1930s, post-subprime mainstream consensus has it that Keynes’s plan was not to abandon laissez-faire in the interests of collectivist meddling or utopian wishful thinking, but to bring the state to capital’s rescue.
This much is taken for granted, even by some of the most orthodox of contemporary anti-Keynesians. Heated debate continues, certainly, but not over what he was trying to do. The questions today concern how he meant to do it, whether his arguments were politically acceptable, theoretically sound, and realizable. “New Keynesians” like Krugman take him to have been proposing an essentially universal technical solution to chronically sub-optimal capitalist markets. Many progressives see Keynesianism as simply the “social-liberal” acknowledgment that capitalism requires kinder, gentler, and more intelligent management. Others read The General Theory as the epitome of pragmatic “realism.”
In fact, the story is considerably more complicated. There was, and is, much more at stake in The General Theory and the “varieties of Keynesianism” than the mere fate of a historical mode of production. It is not true that Keynes aimed to “save capitalism” or not true enough. Keynes became a Keynesian not to save capitalism or liberalism per se, but to save the “thin and precarious crust” of civilization itself. He was, to be sure, a capitalist, and he believed that something like capitalism—although in a more or less radically different form—would be a central pillar in the construction of more robust, peaceful, and secure social formation. But to read his commitment to capitalism as his priority is to misunderstand his politics and that of many elites of his time. He understood capitalism to be intimately interwoven with but not identical to civilization. His work, especially but not only The General Theory, is an attempt to do via “economics” what, since the French Revolution, others had tried to do through other modes of analysis—philosophical, political, even literary: to understand the ways in which modernity puts civilization at risk and to uncover the means by which we might rescue civilization from modernity’s self-destructive tendencies.
That Keynes could imagine no better mode of production than capitalism by which to advance civilization should in no way suggest that he thought classical liberal capitalism anything less than fatal or even of special merit in its own right. He was committed to rewriting capitalism because he could not conceive a better method for salvaging what he took for granted as the best of modernity: the social order of “the bourgeois and the intelligentsia who, with whatever faults, are the quality in life and surely carry the seeds of all human advancement.”
The Keynesian question, therefore, is not what Keynes “really” said on this or that technicality or which concepts or policies should count as “truly” Keynesian, but rather why, and from what perils, civilization might need saving. This is a question of the underexamined political bases of Keynesian thought, of which we should think of Keynes as neither the only practitioner nor even the first. He is, rather, one prominent contributor to a well-established historical tradition. I want to propose an interpretation of Keynes’s politics and Keynesian political economy that situates them in the fascinating and much longer line of thought to which they have contributed so significantly. This can help us understand not only what Keynes was trying to save, why he came to save it, and what he came to save it from, but also the origins of his efforts and why and how they continue to matter enormously. In effect, it can help us understand what made Keynes a Keynesian, while also, I think, helping us under- stand why so many rediscover the Keynesian in themselves each time capitalism threatens to fall apart.
This is why those who say Keynes came to “save capitalism” only understand part of why he is so important and why he retains such intuitive appeal to so many. It is not an accident that he did not write “capitalism is a thin and precarious crust.” He would never have written that, because he knew it was not true. Capitalism’s problem was not its fragility, but its mindless irrationalism. In its laissez-faire liberal variation—the one many of his “fellow” economists and policy-makers favored—it was so unthinking, so unreasonable and inflexible, that it would not even slow down as it steamed toward the precipice, taking the rest of civilization with it.
This is why, unlike many of his “fellows” then and now, he did not participate in the chorus of simplistic denunciations of socialism and communism. He disagreed strongly with the radical Left and was particularly wary of the Soviet experiment (for aesthetic as much as political economic reasons). But in contrast to much of the rhetoric one hears from the curates of contemporary neoliberal liturgy, he knew there was nothing innately eternal or natural about capitalism. He sympathized with what he thought capitalism’s critics were after, the “emptiness,” selfishness, and arbitrary inequalities against which they struggled. Like them, he too took these as endemic to modern capitalism.
Consequently, and contrary to what many critics wrongly assume, his diagnosis of liberal capitalism’s ills and prognosis for its future cannot be reduced to a bold rescue of the status quo. Keynes was definitively not committed to capitalism at all costs. His most passionate political commitment was his antifascism, but he never fooled himself into thinking fascism was or could ever be noncapitalist. On the contrary, it was for him the “capitalist branch of the totalitarian faith.” His critique of communism was almost kindly in comparison: it was the “confused stirrings of a great religion”; fascists, on the other hand, were “enemies of the human race.”
What Keynes constructed to address these concerns is a reluctantly radical, immanent critique of liberalism, a critique with a long history. The main obstacle to grasping what is at stake in this critique, consequently, is the ideological hegemony of liberalism itself. The Keynesian critique cannot adequately be grasped on the terrain of orthodox liberalism’s fundamental axioms. Together, these axioms—that there is an inescapable contradiction between liberty and equality; that the individual is the privileged political subject (and thus equality is subordinate to liberty); and, finally, that history is the result of ahistorical and aspatial linear developmentalism—suggest a priori the necessary interdependent unfolding of freedom and modern capitalism. Indeed, they are often taken to prove that freedom and capitalism are the same thing.
Keynes rejected these articles of faith. For him, if liberals naïvely endorsed this stance it was only evidence of how deep they had stuck their heads in the sand. “Economic” liberalism, especially in its classical variety, was for him a quasi-mythical Utopia, one he expected would never be realized. His explicitly “political” variety of liberalism could only be reached through “economically” illiberal means, that is, granting substantial control to the state and “technicians” like himself: “the achievement of economic reform would make the defense of political liberty much easier.” If “central controls” on the economy were effective and everything worked out—an eventuality upon which we could never plan, things being as radically uncertain as they always are—then someday it might just be possible to enable classical liberalism to finally “come into its own.” But only after a lot of careful illiberal political economy and economic policy had laid the foundations.
What attractions Keynes found in liberalism are primarily due to its historical links to bourgeois order, with which he enthusiastically announced his sympathies: “the Class war will find me on the side of the educated bourgeoisie.” It is not the capitalist but the bourgeois in him that made him dismiss a Left political alternative. The bourgeois in him was convinced that the working class was structurally incapable of anything so positive or constructive as self-organization, social reconstruction, or governance on any basis whatsoever—communist, anarchist, or otherwise. He did not fear working class radicals for their egalitarian passion for social justice. In fact, he had a kind of paternalistic soft spot for them. What he feared was the social disorder and demagoguery he believed such politics solicit, the unwitting reactionaries he believed radicals always eventually become. Without proper elite direction—in the full sense of Gramsci’s direzione (direction qua organization and leadership)—he was certain that all the working class could accomplish on its own was destruction, with the results not only unlikely to represent proletarian “class interest,” but, more important, disastrous for everyone.
Consequently, if “left-Keynesians” from John Galbraith in the 1960s to James Galbraith today have commonly recruited Keynes to the cause of social democracy, it is not because he was a “left” thinker. Contrary to his own occasional claims in the 1910s and 1920s, he was not. Rather, he can be mobilized in the service of social democracy only because at its roots it is and always has been as much an elite civilizing project as a “Left” political program. Given the option, Keynes would never have endorsed social democracy, and it is baseless to imagine he was more “radical” than he let on, as if he kept his true politics a secret. He was definitively not a democrat, because anything approaching popular sovereignty was in his view antithetical to the long-term interests of civilization.
On these grounds, capitalism was a crucial, but ultimately derivative, concern, and today’s liberal faith that capitalism and democracy are necessary complements—despite substantial historical evidence to the contrary—was for him a historical relic, an irrational nineteenth-century piety. In the days of high liberalism, perhaps, one might imagine good reasons that the “standard system” of economic thought only “bred two families—those who thought it true and inevitable, and those who thought it true and intolerable.” But such narrowness of vision no longer made sense:
There was no third school of thought in the 19th century. Nevertheless, there is a third possibility—that [the standard system] is not true . . . It is this third alterative which will allow us to escape.
The standard system is based on an intellectual error . . . Our pressing task is the elaboration of a new standard system which will justify economists in taking their seat beside other scientists . . . Thus, for one reason or another, Time and the Joint Stock Company and the Civil Service have silently brought the salaried class into power. Not yet a proletariat. But a salariat, assuredly. And it makes a great difference . . . There is no massive resistance to a new direction. The risk is of a contrary kind—lest society plunge about in its perplexity and dissatisfaction into something worse. Revolution, as Wells says, is out of date.
Revolution is out of date. Once upon a time, certainly, there was revolutionary work to be done. But those days are long gone, Keynes tells us, and The General Theory is the theoretical substitute for revolution and a “solution” to the economic problem and a looming “something worse.” These are the stakes as he understood them. They are truly existential. Indeed, he argued the book lays the conceptual groundwork for “the only practicable means of avoiding the destruction of existing economic forms in their entirety.” As José Ortega y Gasset, who helped organize The General Theory’s Spanish translation, put it in 1930:
Civilization is not simply here, it is not self-sustaining. It is artificial, and demands an artist or artisan. If you want to enjoy the advantages of civilization, but are not concerned with sustaining civilization—well, you are done. In the blink of an eye you find yourself without civilization. Just a slip, and when you look around everything has vanished into thin air!
Keynes is not the first one to trouble himself with maintaining civilization. His analysis of its dynamics and the resulting diagnosis are not new, but in fact represent a specific kind of response to liberalism, elements of which we can trace back as far as Hobbes, but which really are consolidated after the French Revolution. The origins of that analysis are to be found first and foremost in the complex politics of the Revolution itself and in the liberal “reaction” which followed. Keynesianism is in itself synonymous with neither of these revolutionary dynamics, but is rather a distinctive response to them both. It is an immanent critique of both revolutionary radicalism and the “classical” liberalism that was emerging at the end of the eighteenth century, and held sway in Europe until World War I. It is thus a specifically post-revolutionary politics, both historically and theoretically. Historically, it arose after Napoleon’s coup d’état definitively ended the Revolution and the reaction in 1799. Theoretically, it represents a mode of political and economic analysis that was and is only possible after revolution; in other words, it only makes sense, and could only have been fully formulated, after the historical experience of revolution, because the shadow of revolution—revolutionary terror in particular—animates it, gives it momentum, and constantly reinvigorates it.