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From International Socialism (1st series), No. 104, January 1978, pp. 26–27.
Transcribed by Christian Høgsbjerg, with thanks to Sally Kincaid.
Marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
The End of the Keynesian Era
edited by Robert Skidelsky
Macmillan £2.95
The reputation of John Maynard Keynes has fluctuated over the years in line with the growth rates clocked up by the capitalist economy.
In the 1930s his recipe for ending the Great Depression – government intervention to stimulate consumer spending and capital investment – appeared wildly utopian. Far more people believed Marxists like John Strachey, who argued that a series of ever longer and deeper slumps was inevitable. Strachey predicted that Keynes would be forced to become an advocate of savage state repression of the working class in order to prop capitalism up. Commenting on Keynes’ essay Am I a Liberal? he wrote:
‘The next question which Mr Keynes will have to ask himself will be “Am I a fascist?” And the answer will be in the affirmative.’
Instead, the Second World War ushered in the longest and most stable period of growth in the history of capitalism. Keynes and his masterwork – The General Theory of Employment, Interest and Money – received much of the credit. One of his followers, Michael Stewart, could write in a standard text-book, Keynes and After:
‘The basic fact is that with the acceptance of the General Theory, the days of uncontrollable mass unemployment in advanced industrial countries are over. Other economic problems may threaten; this one, at least, has passed into history’.
Unfortunately, ‘the basic fact is’ that ‘uncontrolled mass unemployment’ is still around with a vengeance. There are about 15 million unemployed in the OECD area. Jimmy Carter has packed his Administration with Keynesian economists – with no effect. The world economy continues to stagnate.
Accordingly, Keynes’ reputation has slumped. This collection – subtitled Essays on the disintegration of the Keynesian political economy – is an indication. It is devoted to the connected problems of why the long boom is over and how much this economic crisis can be traced to the inadequacies of Keynes’ theory. The extent to which Keynesianism is in retreat among bourgeois economists can be judged by the inclusion in this collection of essays by two leading British monetarists (i.e. advocates of the idea that the government should limit its intervention in the economy to keeping the growth in the money supply steady) – Peter Lilley and Samuel Brittan.
The collection – despite the fact that the essays first appeared as a series in the Spectator and are edited by the author of a whitewashing biography of Oswald Mosely – include some interesting contributions. Two essays – those by Marcello De Cecco and David P. Calleo – which deal with aspects of the historical context of Keynesianism are especially worth reading. Stuart Holland’s discussion of Keynes’ influence on the British left is also interesting, as much as a snapshot of Holland’s own ideas as anything else.
Despite Holland’s conclusion (‘if there is writing on the wall clear enough to be read for the future, it is no longer in Keynes’ own powerful and idiosyncratic hand’), it is worth noting that Keynesianism’s last stronghold today is on the reformist left. The calls for state direction of investment, reflation, import controls, etc., which come from the Tribune Group and the Communist Party are justified theoretically in terms which are unimpeachably Keynesian There could be no more devastating indictment of British left reformism’s intellectual bankruptcy than that.
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Last updated: 24 March 2015