John Maynard Keynes for the Higgy

 

(Guest post by Greg Forster)

Last year, when commenter Allen nominated John Maynard Keynes for the highest (dis)honor known to man, the Higgy judges expressed skepticism on grounds that politicians corruptly manipulate the economy with or without the convenient excuses provided by Keynesianism. However, the judges reserved final judgment on Keynes’ Higgyworthiness because a full case had not been made.

I hereby offer a full case, on three grounds:

  1. Corrupt political manipulation of the economy has been greatly increased as a direct result of Keynes’ influence.
  2. Keynes did far, far worse things than simply give politicians a convenient excuse to corruptly manipulate the economy. 
  3. On both the above counts, Keynes not only worsened the world, but also met the more specific Higgy qualification of having “arrogant delusions” that “self-righteous proclamations” improve the world. 

Point One: As Paul Johnson documents in Modern Times, in the first half of the 20th century there was an unprecedented shift in the politics of corrupt collaboration between political and business elites. Previously, such collaboration occurred episodically, when some serious crisis arose and it could be justified as an “emergency measure.” Hence the big expansions of corrupt government manipulation of the economy occur in tandem with wars, depressions, and financial panics. After each crisis passed, however, pressure would mount to roll back these manipulations and restore the natural order. These rollbacks were never 100% successful, of couse, but in most cases far more than 50% or even 75% successful. Consider Coolidge’s rollback of Wilson’s autocratic WWI measures. 

But after WWII, everything is different. We have entered a whole new world. Corrupt government manipulation of the economy is now normalized. It is universally expected that political and business elites will get together in smoke-filled rooms and determine our fate for us. This is simply the way we live now. True, the more extreme wartime measures like rationing were recinded, and without the war as a justification the further growth of political control of the economy was greatly slowed. But, however slowly, that growth did continue. The political ground had permanently moved. The old world of merely episodic corrupt manipulation was gone; a new world of permanent, normalized corrupt manipulation had arrived.

This was almost 100% attributable to Keynes, for reasons that will become clear in Point Two.

Point Two: To understand the significance of Keynes, it is necessary to set aside our immediate policy concerns (fighting over the latest stimulus package or “economic plan”) and appreciate his role as a world-historical figure of the first rank. He revolutionized the entire discipline of economics, and by doing so, had a dramatic impact on the social order as a whole.

From classical Greco-Roman philosophy through the Patristic Era, the Middle Ages, early modernity and the Enlightenment, the study of economic phenomena was a subset of moral philosophy. It was always grounded in moral assumptions about human nature. Plato, Aristotle, Augustine, Aquinas, the Salamanca School, the Reformers, Locke, the Physiocrats and Adam Smith, though they had different moral views in some important respects, were agreed that the purpose of studying economics was to help align economic activity with virtue and right purposes – encouraging productive, thrifty, efficient, flourishing behavior, often with a particular interest in extending opportunity to the poor; and opposing greed, sloth, irresponsibility and (above all) injustice. The professional scholar of economics was par excellence the opponent of corruption and abuse of power. 

Over the course of the 19th century, however, this was changing. Especially in England, prominent economists increasingly expressed a desire to get out of the ethics business and abandon the fight against corruption. They wanted to do something that is impossible, and would be irresponsible if it were possible – to describe the world without evaluating it, to be morally neutral, to refrain from calling injustice unjust without being implicated as its accomplices.

Try as they might, however, these would-be neutral technicians could not find a way to extract themselves from the ethics business. A century of efforts to invent a paradigm of economics not beholden to morality bore no fruit.

And then came John Maynard Keynes, and the Keynesian Revolution.

Where before economists had defined the purpose of their discipline as encouraging the ethical production of wealth and well-being, Keynes taught them their purpose was to help people gratify their immediate desires – whatever those happened to be. Where before economists took self-sufficiency (producing more than you consume) as normative, Keynes taught them “the paradox of thrift” and trained them to despise the old rule that households and nations must live within their means. Where before economists took it for granted that our goal was to leave the world better than we found it, Keynes taught them that “in the long run we’re all dead” so we don’t need to worry what kind of world we leave to our grandchildren.

And where before economists thought their policy recommendations were constrained by the limits of justice, which compelled us to be concerned about the problem of corruption, Keynes taught them to treat human beings as merely irrational animals – bundles of appetites – without a transcendent dignity that needed to be respected.

Point Three: At this point you might be tempted to say Keynes isn’t Higgy material in light of the Sarnoff Codicil, which holds that the Higgy should not go to those who intend to make the world worse and succeed. It should go to those who intend to improve the world and fail – or, more specifically, to those who have “arrogant delusions” that “self-righteous proclamations” improve the world.

But Keynes passes this test with flying colors. He intended to improve the world – he had a detailed and well worked out philosophy of utilitarian materialism, and believed he was replacing the reign of superstition and barbarism with a new era of beautiful technocratic progress. He was a constant, nonstop fount of self-righteous proclamations. And all his asperations failed. The new, post-Keynes economics does not work as empirical science. It does not work as a practical guide to policy, either. And it has created sociological conditions that will, in the long run, destroy it. Keynesianism today is in the same state as Marxism in the Soviet Union in about the 1970s or so; it is a politically convenient god to whom all must still bow, but longstanding suppressed doubts about the god’s power to deliver the goods have hardened into permanent cynicism. The downfall may still be 20 years away, but it is coming.

John Maynard Keynes richly deserves the Higgy.

Image HT

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