Slaying Dragons

An engraving of St George slaying a dragon graces the cover of James Crotty’s monumental new book Keynes Against Capitalism.³ The dragon is meant to symbolize capitalism, and the dragon slayer represents the great twentieth-century economist John Maynard Keynes. The premise depicted by this imagery will strike many as incongruous with the received understanding of Keynes’s polemical aims. Keynes, the conventional story goes, sought not to dismantle capitalism but to reform it; he recognized that, contrary to the precepts of orthodox neoclassical economics, market forces are not reliable guarantors of full employment and robust growth. Capitalist economies, he argued, routinely deliver suboptimal levels of employment. Slumps that inflict severe distress on the working-class population are normal occurrences. According to the prevailing interpretation, Keynes, an enlightened but loyal member of the British establishment, foresaw that capitalism and the bourgeois values and institutions it underpinned would not be able to withstand another episode of economic turbulence on the scale of the Great Depression. Even smaller-scale downswings, if they occurred often enough and were severe enough, could destabilize the system both politically and economically. His purpose in writing his 1936 masterwork The General Theory of Employment, Interest and Money was to understand why slumps occur, and to identify remedies to contain their destructive force. Once policymakers had gotten the problem of unemployment under control through the application of fiscal and monetary policy, market forces and profit-driven private enterprise could be left to regulate income distribution and to channel resources into their most efficient uses. Capitalism, according to Keynes, needed to be fixed, not abandoned — or so says the standard view of his project. Lawrence Klein, an early champion of Keynesian economics and a future Nobel laureate, put it nicely: “Marx analyzed the reasons why the capitalist system did not and could not function properly, while Keynes analyzed the reasons why the capitalist system did not but could function properly. Keynes wanted to apologize and preserve, while Marx wanted to criticize and destroy.”⁴

In Keynes Against Capitalism, Crotty argues that the conventional view is all wrong. Far from wanting to rehabilitate capitalism, Keynes was building a case to replace it with a form of democratic socialism in which most large-scale capital investment spending would be undertaken by the state or by quasi-public entities. The Keynesian Revolution, in Crotty’s interpretation, was considerably more revolutionary than we have been led to believe. It did not merely entail a recognition that the state must actively manage the level of aggregate demand to keep the economy operating on an even keel: what is needed is direct public control of the economy’s capital expenditures. In a 1939 interview in the New Statesman and Nation, Keynes described the economic order he envisioned as “liberal socialism, by which [he meant] a system where we can act as an organised community for common purposes and to promote social and economic justice, whilst respecting and protecting the individual — his freedom of choice, his faith, his mind and its expression, his enterprise and his property.”⁵ What Keynes had in mind, Crotty contends, was a gradual transition, through a process of trial and error, to a planned economy.

This terrain has been explored before. Rod O’Donnell has already made a persuasive case that Keynes was a socialist in his philosophical outlook, his political orientation, and his economics. A favorite pastime of some libertarian intellectuals is to tar Keynes with the socialist label and then feather him with misleading insinuations that he approved of Stalinism, National Socialism, and Italian Fascism. Keynes’s biographers, Roy Harrod, Robert Skidelsky, and Donald Moggridge, position him as a liberal with progressive sensibilities; Skidelsky in particular is skittish about identifying him as a socialist.⁶

Keynes surely was not a classical liberal in the mold of David Hume, Adam Smith, or John Stuart Mill — but to make that point is a bit like taking a battering ram to a door that is already ajar. Whether Keynes was a socialist, and precisely what sort of socialist he was if he was one, are trickier questions. Keynes had a notoriously restless intellect; he was an extreme case of Isaiah Berlin’s fox who knows many things.⁷ He whipped up more ideas before lunch than most of us have in a lifetime. His writing could be messy and imprecise. He liked to be provocative. Like many of us, he sometimes told people things that were closer to what he thought they wanted to hear than to what he really believed; and what he did believe could change from one day to the next according to the particular light in which he happened to be viewing a problem. He did not always take the trouble to reconcile the views he expressed in one context, while in a particular frame of mind, with the views he expressed in other contexts, while in a rather different mood. He is often characterized as a sort of intellectual magpie who made use of whatever intriguing idea crossed his path or sprang into his mind. I doubt that there is much to be gained by trying to pin a label like “liberal” or “socialist” onto Keynes — he was too exuberant a thinker to be put into a box. And inasmuch as these particular labels can mean vastly different things to different people, the exercise is doubly futile.

The End of the Post War Golden Age

I am prepared to entertain an affirmative answer to the question “Was Keynes a socialist?” But the significance of Crotty’s book lies not so much in his affirmative conclusion as in the arguments that he marshals in support of it. For in developing his case, Crotty shows us how a penetrating, vigorous, and humane intellect tackled questions that have a crucial bearing on debates we are still having about what our socioeconomic institutions ought to do for us and what they ought to look like. The most fundamental of those questions is: How should we configure our economy so that it will foster human flourishing and well-being? A key takeaway from this book is that we need to think about Keynes in a radically different way. He was not mainly preoccupied with taming the business cycle: his ultimate objective was to bring about a radical transformation of our economic system. And, just as important, Keynes wanted to transform how we think about the relationship between the state and the economic organization of society; he believed that polities have the power to make a better world for themselves by shaping the institutions that mediate and organize economic activity. He wanted people to recognize that we don’t have to settle for what the invisible hand bestows upon us, because we have considerably more latitude in guiding and constraining market forces than conventional economic wisdom alleges to be the case.

Keynesian economics was supposed to have put paid to socialism. By giving government a set of tools that could be used to make recessions shorter, less severe, and less frequent, mainstream Keynesianism effectively took socialism off the table. The state would perform a limited set of economic functions: using fiscal and monetary policy to keep employment reasonably high; providing an adequate safety net for those who found themselves in dire straits because of circumstances beyond their control; regulating businesses to ensure that the pursuit of profit is not conducted by methods that put workers, consumers, or the natural environment at undue risk; and providing public goods like education, policing, and national security. Private enterprise could then be left to chug along as it saw fit, generating prosperity far and wide. There was no need to expropriate capital or micromanage the allocation of resources. This approach seemed to work reasonably well for two or three decades after the end of World War II.

The greatest ideological triumph of neoliberalism was convincing the vast majority of ordinary people that the way capitalism worked in the United States in the postwar period is the way it normally works. During that so-called postwar Golden Age, unemployment was low, productivity growth and profitability were high, and real wages grew in step with productivity; business investment was robust, and the economy grew at a healthy clip.

But the Golden Age was an isolated episode. And it was, moreover, the result of massive targeted infusions of demand into the global economy by the government of the United States. The GI Bill enabled returning veterans to buy homes and to get college degrees that enhanced both their earning power and the productivity of the US economy. Military Keynesianism kept industrial demand high, not only in the arms sector, but also in the subsidiary industries that supplied that sector with materials and parts. The Marshall Plan stimulated demand in Europe and Asia, with much of the assistance being used to purchase consumer goods and capital goods produced by US manufacturers. Higher education was a beneficiary of the Cold War, as the US government subsidized students, both undergraduates and graduate students, who specialized in sociology, anthropology, political science, and other disciplines that could be useful for the projection of imperial influence across the globe; federally supported cultural programs were meant to project soft power. NASA, which began as a Cold War program, involved an enormous mobilization of physical and intellectual resources; research related to the space program led to technological innovations, particularly in computing and information science, that generated large spillover benefits in practically every part of the private sector. All the while, organized labor was strong enough to ensure that workers shared in the benefits of growth.

In the early 1970s, the Golden Age (which, let us note, conferred most of its blessings on white males and their families) was subjected to a variety of structural and political pressures that gradually eroded its viability. The manufacturing sectors of Europe and North America now faced competition from industrializing low-wage countries; this led to heightened tensions between labor and capital, undermining the compromise that had kept wage increases in line with productivity growth. The collapse of the Bretton Woods agreement made exchange-rate uncertainty and balance-of-payments crises once again potent sources of economic instability. The decision of OPEC (the Organization of the Petroleum Exporting Countries) to raise oil prices triggered both a deep recession and an inflationary spiral; the extended episode of stagflation put mainstream Keynesianism on the defensive. By the early 1980s, the Golden Age social contract had been displaced by a neoliberal outlook that reified the market. According to this view, the most effective thing the state can do to promote economic well-being is to get out of the way of the great wealth-creating engine of private enterprise. Markets know best, hence anything that interferes with their operation is inimical to economic efficiency. Regulation of all kinds (but especially regulation of financial markets), minimum-wage laws, labor unions, the social safety net, Keynesian demand-management policies — all of these once-routine features of postwar capitalism have been the targets of sustained ideological attack. Not surprisingly, workers and consumers have not fared well over the past four decades; their real incomes have stagnated, and their economic lives have become alarmingly insecure, while capital has seen its share of national income grow and its tax burden decline.

Keynes as a Theorist of Structural Change

Crotty’s book suggests that turning this situation around must begin with the rediscovery of Keynes’s vision — his actual analytical vision, not the parody of it that has been handed down to us by the guardians of orthodoxy. Society, Keynes believed, could and must take “intelligent control of its own affairs,” and this requires a reconfiguration of our economic institutions in the light of capitalism’s structural evolution since the nineteenth century.^{8 /a>} Crotty lays out that vision in rich and comprehensive detail. A number of important themes emerge in the telling. One misconception that Crotty convincingly obliterates is the idea that Keynes was mainly concerned with the short run, a view reflected in the mainstream depiction of his theory of effective demand as an account of, and remedy for, temporary deviations from long-run full-employment equilibrium. Keynes’s often-quoted observation that “in the long run we are all dead” is almost always read out of context to imply that Keynes was entirely focused on the resolution of short-run monetary and macroeconomic glitches.⁹ In fact, Keynes was deeply interested in the long run; not, however, in static long-run equilibrium, but in the long-run secular trajectory of late capitalism.

That is to say, Keynes from the start understood capitalism to be a system that undergoes structural change over time and operates differently in different phases of its history. This is evident in his first important book, The Economic Consequences of the Peace (1919); there Keynes draws a striking contrast between British nineteenth-century capitalism, which witnessed astonishing improvements in living standards, largely through the adoption of transformative technologies such as steam power and rail transport, and the dispiriting mix of industrial distress and financial turbulence that marked the British economy in the aftermath of the Great War. (Keynes glosses over the fact that those improvements in living standards were hard-won through disruptive activism by Chartists, trade unionists, and numerous social reformers.) “England is in a state of transition,” he wrote, “and her economic problems are serious. We may be on the eve of great changes in her social and industrial structure … The most serious problems for England have been brought to a head by the war, but are in their origins more fundamental. The forces of the nineteenth century have run their course and are exhausted” [emphasis added]. ¹⁰

Keynes’s writings are shot through with evidence of his engagement with capitalism as a dynamic, evolving system, one that had, by the early decades of the twentieth century, arrived at an existential crossroad. Britain’s nineteenth-century economy drew its vigor from new inventions and their adaptation to profitable purposes, from population growth, and from the opening of global markets. As the working classes fought for and got higher wages, their rising consumption spending fueled further expansion. Those drivers of progress were largely spent by 1900.¹¹ The market system could no longer be expected to generate broad-based improvements in prosperity.

We may detect, in all of this, tropes that have become part of the discourse on the crisis of capitalism. Joseph Schumpeter argued that epoch-making innovations — steam power, the railroads, the internal combustion engine, electrical power — could spur long booms. Such innovations open up new areas of investment and lay the groundwork for the discovery of additional applications that in turn create yet more opportunities for innovation and investment. The exploitation of these opportunities involves what Schumpeter famously termed “creative destruction” — the wastage of obsolete resources, both human and inanimate, as the economy absorbs and diffuses the innovation and its offshoots. When the investment potential of the original innovation has been fully exploited, the boom peters out, and the economy slides into a long slump that lasts until the discovery of the next epoch-making innovation. More recently, Northwestern University economist Robert J. Gordon has argued that the pace of innovation is slowing and that there are no transformative “Great Inventions” left to be discovered that might sustain robust employment for decades and substantially raise labor productivity, the two essential conditions for permanent across-the-board improvements in living standards.¹² Keynes anticipated these arguments: “there seems at the moment a lull in new inventions,” he observed in 1931.¹³ He didn’t think the problem could be left alone for the market to rectify; for the market will not, as a matter of course, spontaneously generate a cluster of epoch-making innovations that will keep the economy running at a healthy clip for two or more generations. The market is not built to do that.

In the absence of transformative innovations that create new markets and call forth high levels of investment, including infrastructure investment, over long stretches of time, capitalism will lapse into a condition that economists call secular stagnation. The American Keynesian Alvin Hansen is usually credited with originating the idea in the late 1930s; former Clinton administration Treasury secretary Lawrence Summers has resuscitated it to explain the sluggish growth that has plagued the advanced capitalist economies since the financial crisis of 2007–2008.¹⁴ Summers’s argument is that the rate of interest that would generate enough private-sector investment demand to counterbalance saving at a full-employment level of GDP is, at the present historical juncture, negative. Monetary policy, even highly aggressive monetary stimulus, will therefore be powerless to jump-start growth: public investment on a large scale is needed. Crotty demonstrates that Keynes was a secular stagnation theorist avant la lettre. Nearly a decade before the publication of The General Theory, Keynes observed that:

The optimistic Zeitgeist of the nineteenth century has given way to a pessimistic Zeitgeist … We used to think that private ambition and compound interest would between them carry us on to paradise. Our material conditions seemed to be steadily on the upgrade [in the nineteenth century]. Now we are fully content if we can prevent them from deteriorating; which means the working classes no longer have sufficient hopes in the general trend of things to divert their attention from other grievances. We no longer have sufficient confidence in the future to be satisfied with the present.¹⁵

This, of course, will sound familiar to anyone paying attention to political and economic affairs in the Western Hemisphere in 2020.

Keynes’s outlook also anticipates elements of the Social Structures of Accumulation approach, a body of macroeconomic analysis grounded in Marxian theory. According to that framework, capitalism passes through various institutionally distinct phases, roughly a quarter of a century long, in each of which capital accumulation is driven by a particular mechanism.¹⁶ In the earliest stage of capitalism, for example, profits and growth were driven by the expansion of commerce. As the drive for mercantile profits ran up against limits imposed by the productive capabilities of sixteenth- and seventeenth-century economic conditions, tensions — or, in Marxian terminology, contradictions — arose that led to industrialization, with manufacturing now the main source of profits and driver of accumulation. The “contradictions” associated with the industrial phase, in particular the need to find new markets for goods produced by ever more productive methods, and the need to secure access to raw materials, led to the imperialist phase.¹⁷ Keynes, too, saw capitalism as a system that moves through various historical phases. In the early twentieth century, he believed, it had entered a phase in which private enterprise could no longer reliably generate full employment, rising living standards, or socially useful investment.

Keynes was aware of how market-driven structural change can disrupt a community’s social bonds. Because the skills and physical facilities necessary to a particular line of production tend to concentrate in a particular geographical region — a phenomenon that generates substantial efficiency gains for all of the linked enterprises — the contraction of an industry or the closing of a large plant means that a lot of resources become redundant, and those resources are not easily transferable to other lines of productive activity. He noted that “men drop into occupations with no knowledge, by mere accident of circumstances and parentage and locality, often finding themselves in the wrong market, trained for something for which there is no demand, or not trained at all. There is no remedy for that by unregulated private action.”¹⁸ The traumatizing impact of structural change on the people caught up in it could be avoided only through some plan of centralized coordination. Ultimately, Keynes was trying to figure out a humane and fair way to achieve a flexible economic dynamism.

Crotty shows that Keynes saw the economic distress of his time as structural in origin. As aggregate income increases, society tends to save a larger proportion of its income. The gap between the economy’s output and the level of spending on that output by households expands. Higher levels of output can be sustained only if other sources of spending emerge to fill the gap, i.e., to absorb the economy’s higher level of savings. If we want to rely on the private sector to do the job, investment will have to increase. But investment spending depends on business expectations of future consumption demand; if the share of consumption spending in aggregate income is shrinking, private-sector enterprises are unlikely to anticipate levels of future demand adequate to stimulate a sufficiently high level of investment. I detect in this argument a trace of the dialectical method: the logic of the system generates tendencies that undermine its structural scaffolding. We also find in Keynes’s argument faint echoes of an element of Karl Marx’s falling-rate-of-profit hypothesis. The difficulty Keynes describes is the perceived lack of profitable investment opportunities; capitalist enterprise has the capacity to produce an enormous volume of output, but it cannot ensure the volume of demand required to realize the profit potential embedded in that productive capacity. As the economy’s capital stock increases, opportunities for profitable investment become scarcer, and profitability declines.

Keynes was highly antipathetic toward Marx. He characterized Das Kapital as “an obsolete economic textbook which [is] not only scientifically erroneous but without interest or application for the modern world.”¹⁹ To George Bernard Shaw he wrote in 1934: “My feelings about Das Kapital are the same as my feelings about the Koran. I know that it is historically important and I know that many people, not all of whom are idiots, find it a sort of Rock of Ages and containing inspiration. Yet when I look into it, it is to me inexplicable that it can have this effect. Its dreary, out-of-date, academic controversialising seems so extraordinarily unsuitable as material for the purpose.”²⁰ In a 1933 draft of The General Theory, he acknowledged that Marx usefully called attention to the fact that if firms are unable to realize their profits by selling what they have produced, the circuit of production will be interrupted. The acknowledgment is grudging, however: “the subsequent use to which [Marx] put this observation was highly illogical.”²¹ Keynes was never quite willing to give Marx his due on the matter of aggregate demand. His distaste for Marx appears to have been an aesthetic reaction rather than ideological or scientific in nature; I suspect that Keynes was allergic to Marx’s dense Teutonic prose. Be that as it may, Crotty, without explicitly making the point, enables us to see that Keynes was an instinctive dialectician.

Since the effective demand problem was fundamentally structural, Keynes advocated a structural solution: a permanent expansion of the state. The idea was that a mechanism needed to be put in place to provide a permanent stimulus to the economy. Crotty describes at considerable length Keynes’s proposal to expand public control over investment. The central institution Keynes envisioned for this function was a Board of National Investment, an idea he first put forward in the late 1920s when he helped to draft a Liberal Party report on Britain’s Industrial Future. He pushed for such a board again in the early 1930s when he served on the famous Macmillan Committee to formulate a response to the problems confronting the British economy. Crotty describes the proposed role of the board as “very ambitious indeed — to help recreate long-term boom conditions similar in vigor to those of the nineteenth century through public investment planning. This definitely was not a short-term government stimulus program designed to ‘kick-start’ a temporarily sluggish economy and then let free enterprise take over.”²² One significant achievement of Crotty’s book is its demonstration beyond a doubt that Keynes’s overarching objective was to make a case for a program of national economic planning. Crotty marshals all of the available evidence and sets it out in an exceedingly clear way.

Enterprise, Uncertainty, and the Socialization of Investment

Keynes was not himself an expert on economic planning. He outlined the general scheme rather than a precise program. In a famous passage from The General Theory, he affects a cautious stance:

a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment; though this need not exclude all manner of compromises and of devices by which public authority will co-operate with private investment. But beyond this no obvious case is made out for a system of State Socialism which would embrace most of the economic life of the community. It is not the ownership of the instruments of means of production which it is important for the State to assume. If the State is able to determine the aggregate amount of resources devoted to augmenting the instruments and the basic reward of those who own them, it will have accomplished all that is necessary.²³

But a program that proposes to regulate the level of investment on a large scale cannot help but also influence the direction of investment. Keynes was not advocating half measures. It must be acknowledged that he had a lot of confidence in the judgment of technocrats: “It is for the technicians of building, engineering, and transport to tell us in what direction the most fruitful new improvements are awaiting us.”²⁴

Keynes may have contemplated the death of the rentier with equanimity, but he was probably not rooting for the death of the entrepreneur. He had a healthy respect for enterprise, and he appears to have seen risk-taking as a driver of progress. In The General Theory, Keynes famously observed that investment decisions largely

depend on spontaneous optimism rather than on a mathematical expectation … Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits — of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities … Thus if the animal spirits are dimmed and the spontaneous optimism falters … enterprise will fade and die.²⁵

Crotty devotes a good deal of attention to the idea that fundamental uncertainty about the future weakens the motive of private-sector managers to incur the risks associated with expanding their enterprises and with venturing into new spheres of activity. It is precisely because of the devitalizing effect of uncertainty upon investment spending that Keynes looked to public investment as a way to preserve the economy’s dynamism.

A common argument adduced against socialism is that the removal of the profit motive blunts the incentive to take the kinds of risks that lead to innovation and growth. Keynes saw that the profit motive could just as readily suppress risk-taking as encourage it. He saw also that the pursuit of economic gain could fuel financial speculation that has no beneficial effect on employment, socially useful innovation, or real economic growth. On the contrary, such speculation raises the share of debt on the balance sheets of firms and households, creating a system-level situation of financial fragility in which a relatively minor interruption in the flow of credit can trigger a wave of defaults, with disastrous consequences for the real economy.²⁶ The solutions to these dysfunctions, Keynes argued, were financial regulation and large-scale government mobilization of resources for social investment. He was a strong advocate of capital controls to prevent finance capital from fleeing a country in pursuit of higher returns when the monetary authorities push interest rates down. He also believed that the most effective way to ensure a steady flow of socially useful investment sufficient to keep the economy operating at full employment is to assign authority over a good deal of investment spending to the state.

Against the criticism that placing investment spending under the control of the state will cripple an economy’s capacity to innovate, we may call attention to the groundbreaking work of Mariana Mazzucato, which shows that since the end of World War II, government has been a major source of innovation in numerous fields, and, indeed, that without the direct and indirect involvement of the state, many key innovations of the past half century — the internet, personal computers and the software they use, information technology and communications, solar and wind power, countless medical advances — would never have materialized or would have been delayed for decades.²⁷ Keynes, as we have noted, had a great deal of confidence in the ability of technocrats to manage “the socialisation of investment,” but he says little about innovation, or about how it might be fostered through his proposed Board of National Investment. He rightly notes, however, that profit-seeking is not the sole motive of human action, and that many of the dysfunctions of the modern age are the results of a policy framework that not only presumes it to be so, but presumes also that profit-seeking behavior can reliably produce socially beneficial outcomes. Some might think that he was overly optimistic in supposing that the professionalism of the technocratic class, its commitment to public service, and a bureaucratic ethos that fosters creativity and experimentation would do the trick. But those attitudes and conditions are what cause innovation to occur, when it does occur, in the private sector, and, as Mazzucato’s research indicates, there is no reason they cannot produce similar results in other contexts.

Keynes laid out no detailed institutional blueprint for the arrangement he was advocating. He took it for granted that finding the right model would involve a good deal of experimentation. He understood, sensibly, that muddling through is an unavoidable aspect of all human activity. To effect meaningful social change, we need to be open to every thoughtful perspective. His outlook was emphatically anti-authoritarian: “the new economic modes, towards which we are blundering,” he wrote in 1933, “are, in the essence of their nature, experiments. We have no clear idea laid up in our minds beforehand of exactly what we want. We shall discover it as we move along and we shall have to mould our material in accordance with our experience.” Openness to criticism is indispensable, he continues: “for this process bold, free and remorseless criticism is a sine qua non of ultimate success. We need the collaboration of all the bright spirits of the age. Stalin has eliminated every independent, critical mind, even when it is sympathetic in general outlook … Let Stalin be a terrifying example to all who seek to make experiments.”²⁸ In assigning an entrepreneurial role to the state, Keynes also acknowledged the likelihood that “some [public investment] schemes may turn out to be failures” — as, of course, is the case with many, and perhaps most, private investment projects.²⁹

Keynes was, first and foremost, a practical-minded economist: his feet were firmly planted on the ground of reality. He was critical of the sloppy application of orthodox ideas to complex real-world circumstances, but he was no renegade. He rejected Soviet-style central planning; he recognized that markets are useful and that decentralization of control is desirable. “[T]here is,” he noted, “an enormous field of private enterprise which no one but a lunatic would seek to nationalize.”³⁰ He was not opposed to large-scale enterprises — he knew, as any competent economist does, that economies of scale confer benefits on society, and that large enterprises are here to stay; but they need to be intelligently controlled, managed, and regulated. Keynes was averse to class conflict: he was no class warrior; his aim was to diffuse class tensions. The system of planning that he had in mind would not, and indeed must not, hobble “the constructive energy of the individual mind, [or hamper] the liberty and independence of the private person.”³¹

Conclusion

Crotty gives the impression, perhaps inadvertently, that Keynes was an isolated voice. To be sure, Keynes was a uniquely eloquent advocate of a thoroughgoing progressive transformation of the economic landscape, and the most prominent and authoritative proponent of change on such an ambitious scale. But many of his contemporaries were using orthodox neoclassical tools to make the case for economic planning.³² Other less radically minded colleagues understood that regulation and countercyclical fiscal and monetary policy were important tools for improving the operation of the market system.³³ In Germany and Austria, an innovative group of progressive economists were advocating, and to some degree implementing, policies that had much in common with what Keynes was suggesting, policies that were motivated by similarly humane concerns.³⁴

Crotty might have subjected Keynes’s arguments to some critical scrutiny. While Keynes was always a friend to the working class, a staunch supporter of trade unions, he had little to say about the alienating conditions of the wage relation. Crotty, as thorough as he is, doesn’t have much to say on the topic either. Crotty reports, and appears to embrace, Keynes’s case for economic self-sufficiency, a strategy that would entail a serious curtailment of international trade. While unfettered trade undoubtedly inflicts considerable harm on large numbers of workers, protectionism and economic insularity also have undesirable consequences that Crotty ought to have addressed. Managed trade, rather than protectionism, would be a more effective strategy.

Socialism has made a remarkable comeback in the political discourse of North America, the United Kingdom, and Western Europe. Opinion polls indicate rising dissatisfaction with capitalism and growing awareness of its many dysfunctions. Younger people in particular are increasingly likely to view “socialism” as a viable and appealing alternative to the profit-driven market system that dominates our economic, political, and social institutions. Whether the program that Keynes describes properly falls under the heading of socialism is a quibbling matter. His vision of a democratically guided economy that serves the needs of people rather than those of capital is as relevant now as it was in the first half of the last century. “The political problem of mankind,” he wrote, “is to combine three things: efficiency, social justice, and individual liberty.”³⁵ Modern society is deficient in all three respects. The looming dire threat of climate change has prompted calls for a Green New Deal.³⁶ The realization of such a project would require the adoption of an ambitious and optimistic political vision like the one Keynes put forward. By resurrecting that vision, James Crotty has performed a valuable service.