The Guardian has an editorial this morning on Keynes and Keynesianism. In it they argue that:
In 1976 it was a British Labour prime minister, James Callaghan, who pronounced Keynesianism dead.
As they then note:
Monetarism, the economic theory that took over, has failed.
They then argue, reflecting a theme that I raised last week, that what we are seeing in response is that:
Many authoritarians are now using state power to lock in the dominance of the rich.
I think this indisputable.
I also think that the editorial missed a killer punch. That was, first of all, because they kept referring to Keynes, and not his motives, and yet it is his motives, and their contrast with those of monetarism that is critical. Keynes was motivated by social concern: monetarism was motivated by the desire for private profit. Keynes was about creating fairer societies, and monetarism was about creating inequality.
It is then appropriate to say, as the Guardian do, that:
Austerity meant the economy was starved of demand when inflation was low. The answer is for governments to spend.
But [the right are] not talking about the state intervening on the side of labour, redistributing wealth or socialising investment. Instead, the right now proposes a Keynesianism without Keynes.
This is correct, and yet it needs contextualisation. We have just seen an election where policies in the shadow of Keynes did not prevail. Whilst nationalisation, social housebuilding, the welfare state and much else that might be associated with Keynesian policy all poll well with focus groups they did not deliver election success for Labour.
Nor, come to that, did the Green New Deal in the way that Labour presented it. And that is because Keynes did not just want these things, as if they in themselves mattered. What he was particularly interested in, I suggest, was what they could deliver for people. In other words, what he wanted to address was not just an economic crisis, but the oppression of people's hopes and aspirations and their replacement by fear. He knew he was fighting fascism, and he played a key role in achieving that goal.
This is the point that I think the Guardian misses. A new dose of Keynesianism is not enough. Nor, most especially, is a bout of non-Keynesian government spending. Keynesian spending is about transforming relationships in society. It is, then, about much more than the spend itself.
I believe that the Green New Deal, when properly done, is exactly that. It is aspirational. Instead of Labour being paranoid about the private sector gaining advantage from it, I would have every hope that a plethora of new businesses will be promoted by Green New Deal activity. Wouldn't that make sense?
And I would hope too that the training programs, which have to be at the absolute core of everything that the Green New Deal does or no progress can be made, will provide skills for life, and not just for retrofitting insulation and triple glazed windows.
The spending that the government is now proposing is all about reinforcing Conservative control, and at its best that is about the maintenance of a power elite. The Green New Deal is all about the diversification of power to people and localities.
Both policies have at their core increased public spending. But one delivers that spending to maintain the status quo. The other spends to change that status quo for the benefit of all in society. Not all, then, is equal in what looks like Keynesian spending. In fact, the opposite is very much the case. And that has to be said, time and again.
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Monetarism is dead, but it seems that Eugenics is alive and well in Britain. That news should chill our blood.
Some time ago, having read some of Dominic Cummings long Blogs, I mused uncertainly about a certain Fisherian quality that suggested to me at least, we were in the foothills of Eugenics. Now Fraser Nelson of the Spectator (Boris Johnson’s old wind-rag) has written an article on Eugenics. Here is the final paragraph: “So some 130 years after Britain gave the world the idea of perfecting humanity, we are once again at the cutting edge of this troubled science. For good or ill, eugenics is back.” This final remark is a great deal more equivocal than the title: ‘The chilling return of eugenics’.
Here is the link: https://www.spectator.co.uk/2016/04/the-chilling-return-of-eugenics/
Sorry to be ‘off-thread’ but I could not let this pass.
It should not be allowed to pass
Note the new Downing Street adviser thinks there is an ‘underclass’
How to create another ‘enemy within’
A class many of whom in England voted for him to destroy what little they still possess, and what little hope they have left.
Re the ex new advisor, my wife said there must be some decent Tories who are worried about the way things are going. Well where are they, when did they last speak up for the “underclass”?
In a nutshell Keynes couldn’t see the benefit of economic policies that allowed the rich to cheat at the expense of the many. He very clearly saw that much of economic ideology stretching back to the start of the Industrial Revolution in 17th century Britain was based on the capital controlling interests of the few.
The Guardian editorial quotes Keynes’ belief, expressed in a letter to George Bernard Shaw, that his General Theory would “revolutionise the way the world thinks about economic problems”.
Unfortunately, though, it is the techniques he devised, not the objectives he espoused or the values on which they were based, that are most remembered, even by supposed ‘Keynesians’.
In the last chapter of the General Theory (1936), Keynes was clear that “the outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of income.” He looked forward to full employment policies leading to the “euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity value of capital.”
And looking further ahead, in his 1930 essay, Economic possibilities for our grandchildren, Keynes anticipated a time when economic growth will not longer be necessary, as “we shall once more value ends above means and prefer the good to the useful.” He regretted that “the time for this is not yet”, but was in no doubt as to what the long term aim should be.
There is a darker side, though. Keynes, like many intellectuals in the inter war years, was a supporter of eugenics, and in the 1920s favoured state control of population. His views on this softened in the 1930s, but didn’t disappear – indeed, he was Director of the Eugenics Society from 1937 to 1944.
So the first response, about Cummings and the return of eugenics, is not totally ‘off-thread’ .
Eugenics is based on a materialist view of Humanity. In their view, consciousness is a product of the brain and has no existence outside of it. Intelligence is biologically determined and therefore, as with farm animals, one should only breed from good stock-good genes.
Science is showing us that the brain is much more plastic than we used to believe and, given the right conditions, is capable of more than we usually expect.
There are serious scientists who are receptive to consciousness existing outside of the brain. Organisation like the Scientific and Medical network in this country and the US Institute of Noetic Sciences.
Human beings are, or can be, more than what eugenics think.
It was mention of Callaghan’s pronouncement of Keynesianism being dead that took me by surprise. I was 30 in 1976 and should have been sufficiently politically aware to have registered it. Presumably, it is false memory that led me to suppose that it was Thatcher falling under the influence of Milton Friedman and the Chicago School that marked the change in UK economic policy. I do note, however, that In speech by Callaghan to the Party Conference (linked to in the article) Callaghan does not explicitly use the phrase “Keynesianism is dead”, nor did he refer to Keynes by name. Now, with the benefit of hindsight, I can see that the demise of Keynesianism is implied in what he said, although he’s not hinting at neoliberalism as the way forward.
Anyway, what would be interesting to know is what was it in Keynesianism that frightened him at that time? He did seem obsessed with mounting debt, printing money, the trade deficit and the UK living beyond its means. Were these fears rational or irrational in the context of Britain in the 1970’s?
Yes
We did not realise that in an era of fiat currency everything had changed