The Political and Economic Consequences of Mr. Keynes

Abstract

Abstract: Unlike most economists, among sociologists and the broader political economy community Keynes has tended to get a good press (so to speak). His virtues are identified as the demonstration of a need for activist governments that manage demand, along with some sort of role in the creation of the postwar welfare state. The recent completion of Skidelsky's extraordinary three volume biography provides an occasion and a resource for reconsidering Keynes's contribution. While Keynes can be correctly identified as an advocate of an activist government, we argue that the limits to the activism he preferred are often neglected.. We argue further that it is a mistake to identify him as a father of the welfare state. Our view is that his intellectual legacy is what we call 'intelligent liberalism.' We specify what we mean by that. ********** There is a good deal of truth in the simple statement that sociology is essentially anti-capitalist. Key concepts of the founding fathers -- alienation, anomie, disenchantment -- demonstrate visceral dislike for the disruptions caused by the dynamism of this mode of production. There is also good reason to think that sociologists are intimidated by the technical challenges of modern, often aggressively mathematical, economics. (2) Since the mainstream of economics can reasonably be viewed as a celebration of capitalism it is not surprising to find hostility to both within sociological writings. The current expression of this is a reflexive antipathy to anything that can be classified as 'neoliberal' thought, along with a generalized distrust of globalization. Consequently, it is scarcely surprising -- especially in light of Mrs. Thatcher's famous declaration that there is no such thing as society -- that conferences now abound that seek to 'reinvent' society in the face of the 'new economy.' There is an exception to this generalized antipathy towards economics. Sociologists have joined with many political scientists in admiring John Maynard Keynes. To some substantial degree this seems to rest on the view that the economic and political stability of richer countries from the end of the second war through to the early 1970s was a result of Keynesian policies. In his introduction to a much cited collection of essays Peter Hall (1989) identifies Keynes's contribution as the refutation of Say's law. Supply does not create its own demand and this means that demand management by the government is necessary. By forcing recognition of this, Keynesianism became a component of the class coalitions and political compromises that structured the political economy of the postwar world (p.7; see also Piore and Sabel, 1984: 73, 91, 252; Marchak, 1991:66). (3) Going beyond this, both Block (1990: 2-3) and Hirst and Zeitlin (1997:223) identify Keynesianism with the enlightenment embodied in the welfare st ate. (4) The publication of the third and final volume of Robert Skidelsky's magisterial biography of Keynes (1983, 1992,2000) both occasions and allows an assessment of such perceptions of this great thinker within both sociology and political science. (5) We focus on three broad issues: first, thanks to Skidelsky's biographical discoveries we are better able to identify the relationship between Keynes's economics and his particular variant of liberalism; second, related to his liberalism are his fundamental economic ideas, and the economic policies he thought were implied by those ideas; third, there is the question of how to appraise Keynes, given the experience of the postwar period as a whole. This latter is a consistent theme in Skidelsky's treatment. Economics as a Last Resort Keynes was born into what Noel Annan (1955) has aptly described as late Victorian England's intellectual aristocracy. Both of his parents came from dissenting stock. Both were able to attend Cambridge University as a result of Gladstone's repeal of the Test Acts. …