Keynes the Enigma.

Left or right?

I never thought of John Maynard Keynes as particularly right-wing. He was, after all, one of the most prominent voices calling for MORE government action during the Great Depression, not less.

But given his general support of free trade and a more market-based exchange rate system (he called the Gold Standard a ‘barbarous relic’), as well as his criticism of Russian Communism, I never saw him as particularly left wing either.

However, I did more recently stumble upon one of his papers ("National Self-Sufficiency", June 1933) that, in my opinion, does push him dramatically to the left. While he does not abandon his free-market sympathies, and does clearly qualify his opposition to unfettered globalisation, he does appear to be advocating government support to the extent of (though not in name) a universal basic income/ government services.

And in this transition, he appears more like Adam Smith – less so an economist and more so a philosopher.

The whole paper is worth a read. But here is one section in particular. It’s a fairly long read, but an interesting insight into the man’s enigmatic perspectives.

“The decadent international but individualistic capitalism, in the hands of which we found ourselves after the war, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous – and it doesn't deliver the goods. In short, we dislike it, and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed.

…

There is one … explanation, I think, of the re-orientation of our minds. 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 nightmare. 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 today 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. Even today I spend my time – half vainly, but also, I must admit, half successfully – in trying to persuade my countrymen that the nation as a whole will assuredly be richer if unemployed men and machines are used to build much needed houses than if they are supported in idleness. For the minds of this generation are still so beclouded by bogus calculations that they distrust conclusions which should be obvious, out of a reliance on a system of financial accounting which casts doubt on whether such an operation will "pay". We have to remain poor because it does not "pay" to be rich. We have to live in hovels, not because we cannot build palaces but because we cannot "afford" them.

The same rule of self-destructive financial calculation governs every walk of life. We destroy the beauty of the countryside because the unappropriated splendours of nature have no economic value. We are capable of shutting off the sun and the stars because they do not pay a dividend. London is one of the richest cities in the history of civilization, but it cannot "afford" the highest standards of achievement of which its own living citizens are capable, because they do not "pay."

If I had the power today, I should most deliberately set out to endow our capital cities with all the appurtenances of art and civilization on the highest standards of which the citizens of each were individually capable, convinced that what I could create, I could afford – and believing that money thus spent not only would be better than any dole but would make unnecessary any dole. For with what we have spent on the dole in England since the war we could have made our cities the greatest works of man in the world.

...

Today we suffer disillusion, not because we are poorer than we were--on the contrary, even today we enjoy, in Great Britain at least, a higher standard of life than at any previous period – but because other values seem to have been sacrificed and because they seem to have been sacrificed unnecessarily, inasmuch as our economic system is not, in fact, enabling us to exploit to the utmost the possibilities for economic wealth afforded by the progress of our technique, but falls far short of this, leading us to feel that we might as well have used up the margin in more satisfying ways.

But once we allow ourselves to be disobedient to the test of an accountant's profit, we have begun to change our civilization.

…

I bring my criticisms to bear, as one whose heart is friendly and sympathetic to the desperate experiments of the contemporary world, who wishes them well and would like them to succeed, who has his own experiments in view, and who in the last resort prefers anything on earth to what the financial reports are wont to call "the best opinion in Wall Street." ”

Is it excessively leftist? Or does it simply reinforce the nature of economics as the pursuit of value beyond mere financial gains, to include culture, society and environment. Otherwise, what is economics good for?