The Keynesian Counterrevolution

What is it about capitalism that makes Keynesianism a horizon even would-be revolutionaries have trouble seeing past?

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Marx lived long enough to declare himself “not a Marxist.” Keynes was not so lucky. Followers would make the distinction between “Keynesian economics” and “the economics of Keynes.” But by then the word had well and truly transcended the man. A name does not become an “ism” by genius alone. The work has to catch and ride a historical wave, and much of it never gets picked up, while what does get picked up starts growing new associations. “Keynesianism” has come to stand in for deficit spending, regulation, and the welfare state — three things the General Theory barely mentions, if at all.

Geoff Mann is well aware of the distinctions between Keynes the man, his work, and “Keynesianism.” But his book on Keynesianism, In the Long Run We Are All Dead, is quite deliberately more about the “ism” than the man. For Mann, Keynes is not even the originator of Keynesianism: that would be Hegel — “if not the first Keynesian, then his closest previous incarnation” — and we get several chapters on Hegel before the focus shifts to Keynes himself. Mann’s Keynesianism is a perennial of modernity; Keynes was simply one of its most able articulators, which is why we came to know it by his name. Keynes himself appears in the book as a political philosopher who happened to be an economist, though it is no accident that the great political philosophies of capitalist society would be full of economics.

According to Mann, Keynesianism is a position that has been around since the French revolution. “When an outraged Robespierre asked the bourgeois Convention of 1792, ‘Citizens! Would you have a revolution without revolution?’ Keynesians were those who thought to themselves, ‘Yes, actually. That sounds just right.’” The book is addressed to socialists, but unlike many Marxian takes on Keynes, the objective is not to expose Keynesianism as counterrevolutionary. The point is to understand what it is about capitalism that makes Keynesianism a horizon even would-be revolutionaries — including Mann himself, he admits — have trouble seeing past. It is not so much an ideological block as a strategic one.

Liberalism’s Wayward Offspring

Keynesianism, as Mann sees it, is distinct from liberalism, but an offshoot from the liberal tradition. Like liberalism, it sees modern capitalism as the highest form of civilization. If it is not already a utopia, it holds the potential for utopia in its drive for continual productivity improvement. Keynes’s visions of the future include a fifteen-hour workweek (in “Economic Possibilities for Our Grandchildren”)  and the “euthanasia of the rentier” (in the General Theory) — not by guillotine but by the very success of capital accumulation. Capital will accumulate to the point where it is no longer scarce, so the wealthy can no longer command a return by monopolizing it. The Keynesian utopia will have the good parts of capitalism — the “efficiency of the decentralization of decisions and of individual responsibility” — without the bad, “its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.” The period in which people earn income simply from holding wealth is “a transitional phase which will disappear when it has done its work.” The coming of utopia “will be nothing sudden, merely a gradual but prolonged continuance of what we have seen recently in Great Britain, and will need no revolution.”

But Keynesianism departs from classical liberalism in not seeing liberal society as natural or self-sustaining. If it stays on the rails, it moves towards utopia, but capitalism tends to derail itself. In the General Theory Keynes explores one dimension of this — a tendency for investment to fall below the level needed for full employment — but this is just one instance of a broader theme in Keynes’s work — and in Keynesianism more broadly. The health of capitalism depends upon deliberate political management going well beyond the nightwatchman duties of protecting property. Some of this may be unobtrusive — the central bank’s management of the interest rate — but it may require nothing less than “a somewhat comprehensive socialization of investment.” (Keynes was vague on what he meant by this, and certainly did not mean the seizure of the means of production, but he at the least believed that the amount of investment in a given period should be decided by policymakers.)

Capitalism needs help staying on the tracks, but it is on tracks: it can’t be driven just anywhere. What it needs in the way of management is not up to the managers; it depends on the structure of the economy itself. It needs not only management but expert management, and that has two big implications.

First, it breaks with the classical liberal commitment to laissez-faire. The liberal enthusiasm for individual choice was always, as Mann puts it, “modified by a series of ad hoc qualifications,” but Keynesianism goes further, holding that individual freedom in general depends on not making an absolute of it. Politics must curb some liberties to defend Liberty. Free enterprise left to itself tends to generate poverty, inequality, and unemployment. If these get out of hand, there is a real risk that political rebellion will lead to much worse than red tape.

Second, it is in tension with democracy. Liberal pluralists see the democratic political system as a way of addressing and managing the social conflicts and dissatisfactions that capitalism produces. Interests are channeled into politics, where they are forced into compromise, and problems are sorted out piecemeal. But for Keynes, there is no reason to believe that political representation of interests really would solve the underlying problems. Economic problems are complex, so their solutions will be delicate and call for expert judgment. What makes for a finely-balanced political compromise may have nothing to do with what solving the problem will actually take. The contenders — parties and their constituencies — often badly misunderstand the causes of their woes. Keynes, says Mann, “was definitively not a democrat, because anything approaching popular sovereignty was in his view antithetical to the long-term interests of civilization.”

He sided explicitly with “the bourgeois and the intelligentsia who, with whatever faults, are the quality in life and surely carry the seeds of all human advancement.” In other words, he was with the bourgeoisie not because of their role as capitalists or rentiers, but as a people properly socialized and cultured. It might be possible in the long run to extend their education and privilege more broadly, but giving the masses what they think they want now would jeopardize that future.

Clearly, Keynesianism defined this way is not only a departure from classical liberalism, but has also fed back into modern liberalism. The political center today stretches from positions closer to classical liberalism — with a belief in the basic stability and justice of the market — to a more Keynes-inflected technocratic managerialism. Mann locates the roots of the latter in macroeconomic ideas since Keynes, and specifically the retreat from “full employment” to the “natural rate of unemployment”: “barring a fascist or authoritarian arrangement, capitalism must have unemployment. It must be (in Keynes’s words) sufficiently and consistently impoverishing.”

Liberalism or Barbarism

But Mann reserves “Keynesianism” proper for a stance to the left of center but short of socialism — reformism, more or less. What of Keynesianism’s other, left, flank? Mann is at his sharpest on the attitude of Keynesian-centrism to the Left:

. . . it is a grave mistake for “progressives” or “radicals” to take liberal or capitalist elites’ fear of the masses as somehow, deep down, a fear of “us” or “our ideas” . . . Against anything deserving the name Marxism, liberals believe that a scientific assessment of their power will give them the tools to hold on to it forever. The corollary of this proposition is not that, should they fail, the proletariat or the 99 percent or the multitude will rise . . . but rather that if bourgeois civil society falls, so will everyone and everything else. The entire social order will go with it.

In other words, Keynesians see socialism as foolish rather than frightening. They are not really worried that socialism will succeed, because they don’t think it will work. What they are worried about is “populism.” Populism exploits discontent to undermine the existing order and block rational change. It does not propose coherent solutions to the problems it attacks; at best it obstructs, and at its revolutionary worst, it just wrecks.

Leftism angers Keynesians — at least when it has some popularity — because they see it as misguided and destabilizing. Keynes “did not fear working-class radicals for their egalitarian passion for social justice. In fact, he had a kind of paternalistic soft spot for them. What he feared was the social disorder and demagoguery he believed such politics solicit, the unwitting reactionaries he believed radicals always become.”

The funny thing is that although leftism repels Keynesians, the repulsion is not mutual. Keynesianism pulls in leftists. Mann’s argument here is a long way from the familiar Marxist critique of Keynesianism as a siren of reformism or as a bulwark against revolution. Autonomist Antonio Negri claimed that “the British working class appears in [Keynes’s] writings in all its revolutionary autonomy” insofar as Keynes had devised a remedy to the “inherent antagonism of the working class” that was more subtle and effective than the authoritarian repression of more “immature ruling classes.”

Mann sees this as silly: if there was “inherent antagonism” within twentieth-century capitalism, “a class-conscious proletarian revolution in the struggle for communism in western Europe or North America was one of the more unlikely ways it would realize itself.” What’s more, “anything approaching what Negri means by ‘communism’ would have appeared to Keynes and Hegel as the lesser of several evils.”

In other words, to the extent that Keynesianism saved capitalism, it was from barbarism rather than socialism. And leftists are pulled to Keynesianism because, deep down, they believe that too. Most have lost confidence that there is a viable political path to socialism, while threats from various shades of the Right have followed one after another. For all the antidemocratic tendencies of Keynesianism, socialists today can hardly see themselves articulating the views of the masses either.

What Mann calls “the Marxian wager” always involved very high stakes, and the odds have been getting longer: Marxists know on the one hand that it would take a revolution to cross the canyon between the world as it is and the world as it should be, but on the other hand they know that revolutions can easily fail, become corrupted, bloody, and maybe leave things worse than they had been. Once, Marxists could believe the logic of history was on their side: “the Marxian wager — the salto mortale — was based on the guarantee that however long it might take, unrelenting struggle would eventually be rewarded.” In the long run, in other words. But “for reasons both material and ideological, this guarantee is not possible at present and may never be again. Whatever radical wagers we choose to make in the face of capitalism, liberalism, and their occasional fascist and totalitarian guises, there is a very real possibility that we make them in vain . . . This only seems to make Keynesianism more sensible than ever.”

Mann admits that he set out to write a more traditional denunciation of Keynesianism as the opium of the reformist, but ended up waking “the reluctant, even repressed, Keynesian” in himself. Yet Keynes, he suggests, can be inverted, as Marx inverted Hegel. There is a “radical kernel at the heart of Keynesianism” that socialists could extract. The book leaves unclear what that would mean in practice — and ends on an uncertain note, as if Mann is not sure if he has mellowed into a cowardly reformist: “The Marxist in him or her will suggest he or she must ‘choose,’ and, in Lenin’s words, only the ‘shame-faced’ coward will choose Keynes.”

But what does the other choice entail nowadays anyway? Is the Marxian wager even open to us? Even if we were willing, where exactly would we place the bet? The formulation suggests that if socialists wanted to, we could start a re-run of 1917 — when, realistically, the choice is whether or not to spend weekends trying to sell newspapers at rallies. For a long time, the choice for a socialist has been between impotent micro-sect and impotence within a mainstream party triangulating to the center.

There is at present no obvious base for a revolutionary mass movement with which we could cast our lots. There does seem to be, however, the beginning of a genuine revival of social democracy. Much of the rank and file of the new social democracy is made up of people who think of themselves as further to the left than the positions they are canvassing for — but they have followed their political instincts into the openings revealed by the Sanders and Corbyn surprises. Some have lamented that “socialism” has been defined downwards. Just as Marx once complained that it was up to the German workers to make a liberal revolution because the bourgeoisie wasn’t up to it, it now seems left to the socialists to revive social democracy.

Mann’s book was written too early for Sanders and Corbyn to have registered in it, but it does seem like something of a premonition. The programs of these campaigns are Keynesian in Mann’s sense, but the intuition of the radicals in the ranks is correct: they could, potentially, take us back to a place where the Marxian wager might be made again. Whereas the ordinary Keynesian wants to shore up the system, and expects rational policy to stabilize it and remove its worst defects, the radical Keynesian has learned lessons from the fate of twentieth-century social democracy.

Full employment turns out to be an unstable state for capitalism, since it bolsters the economic power of workers and feeds inflationary tendencies that politicize distribution. Of course, any program of reform that leaves control of the means of production in private hands is vulnerable to the economic and political power of capital. But it is at that point that the Marxian wager really arrives, because there is a real political choice: to push forward to the expropriation of capital, or to retreat.

The first choice would still be an enormous gamble, with much potential for disaster and disillusionment. But it still seems like the best chance we have. The retreat that seemed politically safer the last time around also turned into its own kind of disaster.