John Maynard Keynes "National Self-Sufficiency" The Yale Review (1933-06)
«The nineteenth century carried to extravagant lengths the criterion of what one can call for short "the financial results," as a test of the advisability of any course of action sponsored by private or by collective action. The whole conduct of life was made into a sort of parody of an accountant's night-mare. Instead of using their vastly increased material and technical resources to build a wonder city, the men of the nineteenth century built slums; and they thought it right and advisable to build slums because slums, on the test of private enterprise, “paid”, whereas the wonder city would, they thought, have been an act of foolish extravagance, which would, in the imbecile idiom of the financial fashion, have “mortgaged the future” – though how the construction to-day of great and glorious works can impoverish the future, no man can see until his mind is beset by false analogies from an irrelevant accountancy.»
Which also illustrates how "innocent" he was or pretended to be about distributional issues: those who invested in slums and for which those slums "paid" were not the same people who had to live in them and would benefit from a “wonder city” they could not individually afford.
Nice review- I wonder if you ever read Skidelsky's multi-volume biography, and if so, how it compares to this book?
I always regret not reading either during the short period I was a full-blown Keynesian haha. I find that if we read certain works during a period of our life when our minds are most receptive to their influence, it provides an enriching experience that persists even after we part ways with that particular point of view. For example I have fond memories reading Kierkegaard as an angsty teen that I doubt I will be able to reproduce now!
Thanks, interesting to read about the similarities between Keynes and Marx. I think Keynes and Marx’s idea of freedom and liberty (to live whatever life we choose) is much more compelling than the Austrian idea of liberty (to trade, to hire and fire … so what?!).
"For Hayek, economic mechanism of laissez-faire was a value in itself. "
Just to comment about Hayek's belief in freedom being a value in itself. While I do not in any way champion Hayek's economic thought nor the ideas underlying the Path to Serfdom, I also think that Hayek needs to be seen as a creature of his circumstances. In saying as he does in The Path to Serfdom that government welfare and government jobs would render people willing accomplices in government depravity, I would suggest that Hayek was conflating the specific historical circumstances of Germany's experiences leading to Hitler and World War II into a scientific "law" of economic and political behaviour. It is deeply ironic that his personal trauma led to an ideology that itself has given birth to political and economic systems that have impoverished and traumatised so many others. Since I don't know Hayek personally, I cannot say whether he would have cared about the suffering of the "little" people. But we are all of us "imprisoned" by the ideas of our time and our experiences.
"This was made possible thanks to the adoption of his policies in America"?
FDR loathed Keynes personally and did not understand him, nor did America adopt Keynes' policies. American bastardized Keynesian policies by stripping it of its moral core (see Keynes' collaborator, Joan Robinson on this) and embracing the stimulus side of his recommendations, but not the conservative side–with the sad results we see today.
I have not yet delved into it, but I feel that the contemporary country closest to genuine Keynesianism is China, where the core of the economy is moral and the disciplines and restraints he recommended are wholeheartedly embraced.
I highly recommend Skidelski's 'Return of the Master' on the moral issue and on successes and failures of Keynes' policies to date.
Just on the idea that freedom has a value of its own regardless of the consequences, I think Amartya Sen addressed this issue in relation to Robert Norzick (?)’s claim that all that matters is liberty and property rights (“procedural freedoms”). First, if I read Sen correctly, he does accept that procedural freedoms have value of their own, but argues that they are not all that matter. Other things matter too, and they lead to (say) poverty, short lives, poor health, etc, that matters too.
Further, Sen argues (this I am sure of) that it is very difficult to justify purely procedural rights without resorting to outcomes. Say an anarchist comes and say that we have the right to move into your home and live there temporarily (or permanently, and it you object, you are violating my freedoms. How can the Austrians defend one particular set of procedural freedoms over a different set of freedoms without resorting to outcomes? The reality is that even the Austrians will ultimately argue that the inviolability of property rights lead to better outcomes in the long run. Once they make this argument, the door is wide open and we are now talking about outcomes and consequences.
Keynes was a bourgeois elitist. He refused any forms of egalitarian society and his vision was limited to some sort of trickle down economics, in which inequality and class differences would be alleviated to some ‘acceptable’ level. At the end of the day he sided with the bourgeoisie refusing any socialist ideas. Contrasting the Keynes quote with Marx’s quote about communism and suggesting they would mean the same is quite a stretch. The fundamental difference is that Marx talked about society as a whole while Keynes talked about some strata in society who is either lucky, smart or privileged to make the most of economic possibilites, for which he provided some theoratical groundwork. At the end of the day he did not care about equal distribution but clinging to the false belief - just like the Austrian school - that the ‘regulated’ market would povide abundance for all. He and his work - while containing great stuff about trade, bancor and currency to name a few - are a striking example of hopeless efforts to reform capitalism.
Noticed the term flexibility but not the words stimulus, recovery measures nor resusciation were used though they were some of the key value drivers for Keynes in order to reach the abstraction.
«economic activity for Keynes, whether free trade, directed trade, government-controlled or whatever, was not a value in itself»
Some time ago on a blog I found this quite illustrative quote:
https://jmaynardkeynes.ucc.ie/national-self-sufficiency.html
John Maynard Keynes "National Self-Sufficiency" The Yale Review (1933-06)
«The nineteenth century carried to extravagant lengths the criterion of what one can call for short "the financial results," as a test of the advisability of any course of action sponsored by private or by collective action. The whole conduct of life was made into a sort of parody of an accountant's night-mare. Instead of using their vastly increased material and technical resources to build a wonder city, the men of the nineteenth century built slums; and they thought it right and advisable to build slums because slums, on the test of private enterprise, “paid”, whereas the wonder city would, they thought, have been an act of foolish extravagance, which would, in the imbecile idiom of the financial fashion, have “mortgaged the future” – though how the construction to-day of great and glorious works can impoverish the future, no man can see until his mind is beset by false analogies from an irrelevant accountancy.»
Which also illustrates how "innocent" he was or pretended to be about distributional issues: those who invested in slums and for which those slums "paid" were not the same people who had to live in them and would benefit from a “wonder city” they could not individually afford.
this quote is so good
What a gem of a quote, provides very interesting insight into his thinking!
Nice review- I wonder if you ever read Skidelsky's multi-volume biography, and if so, how it compares to this book?
I always regret not reading either during the short period I was a full-blown Keynesian haha. I find that if we read certain works during a period of our life when our minds are most receptive to their influence, it provides an enriching experience that persists even after we part ways with that particular point of view. For example I have fond memories reading Kierkegaard as an angsty teen that I doubt I will be able to reproduce now!
Give me Keynes over the joyless Austrian idiots any day and twice on Sundays ...
Thanks, interesting to read about the similarities between Keynes and Marx. I think Keynes and Marx’s idea of freedom and liberty (to live whatever life we choose) is much more compelling than the Austrian idea of liberty (to trade, to hire and fire … so what?!).
"For Hayek, economic mechanism of laissez-faire was a value in itself. "
Just to comment about Hayek's belief in freedom being a value in itself. While I do not in any way champion Hayek's economic thought nor the ideas underlying the Path to Serfdom, I also think that Hayek needs to be seen as a creature of his circumstances. In saying as he does in The Path to Serfdom that government welfare and government jobs would render people willing accomplices in government depravity, I would suggest that Hayek was conflating the specific historical circumstances of Germany's experiences leading to Hitler and World War II into a scientific "law" of economic and political behaviour. It is deeply ironic that his personal trauma led to an ideology that itself has given birth to political and economic systems that have impoverished and traumatised so many others. Since I don't know Hayek personally, I cannot say whether he would have cared about the suffering of the "little" people. But we are all of us "imprisoned" by the ideas of our time and our experiences.
"This was made possible thanks to the adoption of his policies in America"?
FDR loathed Keynes personally and did not understand him, nor did America adopt Keynes' policies. American bastardized Keynesian policies by stripping it of its moral core (see Keynes' collaborator, Joan Robinson on this) and embracing the stimulus side of his recommendations, but not the conservative side–with the sad results we see today.
I have not yet delved into it, but I feel that the contemporary country closest to genuine Keynesianism is China, where the core of the economy is moral and the disciplines and restraints he recommended are wholeheartedly embraced.
I highly recommend Skidelski's 'Return of the Master' on the moral issue and on successes and failures of Keynes' policies to date.
who's the guy in the picture raising his middle finger?
Just on the idea that freedom has a value of its own regardless of the consequences, I think Amartya Sen addressed this issue in relation to Robert Norzick (?)’s claim that all that matters is liberty and property rights (“procedural freedoms”). First, if I read Sen correctly, he does accept that procedural freedoms have value of their own, but argues that they are not all that matter. Other things matter too, and they lead to (say) poverty, short lives, poor health, etc, that matters too.
Further, Sen argues (this I am sure of) that it is very difficult to justify purely procedural rights without resorting to outcomes. Say an anarchist comes and say that we have the right to move into your home and live there temporarily (or permanently, and it you object, you are violating my freedoms. How can the Austrians defend one particular set of procedural freedoms over a different set of freedoms without resorting to outcomes? The reality is that even the Austrians will ultimately argue that the inviolability of property rights lead to better outcomes in the long run. Once they make this argument, the door is wide open and we are now talking about outcomes and consequences.
Sissy boy
Keynes was a bourgeois elitist. He refused any forms of egalitarian society and his vision was limited to some sort of trickle down economics, in which inequality and class differences would be alleviated to some ‘acceptable’ level. At the end of the day he sided with the bourgeoisie refusing any socialist ideas. Contrasting the Keynes quote with Marx’s quote about communism and suggesting they would mean the same is quite a stretch. The fundamental difference is that Marx talked about society as a whole while Keynes talked about some strata in society who is either lucky, smart or privileged to make the most of economic possibilites, for which he provided some theoratical groundwork. At the end of the day he did not care about equal distribution but clinging to the false belief - just like the Austrian school - that the ‘regulated’ market would povide abundance for all. He and his work - while containing great stuff about trade, bancor and currency to name a few - are a striking example of hopeless efforts to reform capitalism.
Thank you, great essay
Noticed the term flexibility but not the words stimulus, recovery measures nor resusciation were used though they were some of the key value drivers for Keynes in order to reach the abstraction.
Thanks.