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In the 10 years since the global financial crisis of 2007-08, few economists have been summoned figuratively from the dead as often as John Maynard Keynes. Indeed, in their ideas and political proposals many of today’s radicals sound much like the liberal economist himself or his acolytes from the 1960s. So why is Keynesianism considered radical today? Can Keynesianism be radical at all? It is precisely these questions that Geoff Mann’s In the Long Run We Are All Dead (Verso Books, January 2017) can help to answer.
Mann argues we shouldn’t be surprised by Keynes’s return: the spectre of spiralling crisis is a constant fixture of liberal capitalism, and Keynesianism is the standard liberal response to crisis. His book, ostensibly on Keynes, is in fact a 200-year history of ideas that sees Keynesianism as a strand of thought that both predates and has outlived its progenitor, adopted even by those who would not identify with him. For Mann, Keynes is the most consummate friendly critic of liberal capitalism—the true believer criticizing from within—whose aim was to ultimately bolster the legitimacy of the system to stave off something worse.
Mann admits he started out writing what he thought would be a withering critique of Keynesianism, but finished the book only to find his own inner Keynesian. That person was not of the post-crisis “we are all Keynesians now” variety. He was not the caricatured Keynes of aggressive fiscal policy. Instead, Mann says he found a fearful Keynesian, one motivated by the desire to avoid the collapse of civilization itself.
What follows is not quite a review. Rather than concentrate on whether Mann’s Keynes is truly reflective of the original, I want to explore what he can tell us about where we are a decade out from the most severe crisis since the Great Depression.
A good portion of In the Long Run… traces Keynesianism as an “immanent critique” of liberalism. Mann’s Keynes is the most truthful variety of liberal, one who accepts capitalism, warts and all. Keynes is the “shrewd bourgeois.” He acknowledges the tragedy of poverty alongside plenty, but sees the poor only making things worse if their grievances are given full hearing and acted upon.
Mann draws parallels between Keynes and Hegel. In fact, he dedicates four chapters to making the case for Hegel as a Keynesian before Keynes. On Mann's reading, the early 19th century philosopher and the early 20th century economist were equally perturbed by the tension between the abstract equality of market society and the concrete inequality of material life. Both understood poverty under capitalism to be systemic, not merely incidental. But both also saw the capacity of revolutionary changes to produce terror—Hegel writing after the French Revolution and Terror, Keynes after the First World War and during the rise of fascism.
Mann’s fascinating, if idiosyncratic, account of Keynesianism is punctuated by long forays into the history of philosophy, the history of the French Revolution and the history of economic thought. The book is broad in scope and imaginative. And the co-existence of poverty and plenty is just one of several overarching tensions animating the account.
Mann also identifies a conflict between abstract rules of morality and ethics rooted in living communities that roughly approximates Kant’s and Hegel’s approaches to moral philosophy. For Mann, the difference between free-market and Keynesian economics is that the first relies on abstractions about perfect markets to ram through its vision for a capitalist economy, whereas the second is ready to admit the structural imperfections, especially expectations about a fundamentally uncertain future, that have to be permanently managed by the state to enable the system to survive and even thrive.
Then there is the tension between the realms of necessity and freedom. Mann frequently references “the rabble,” which in past iterations included the sans-culottes of the French Revolution or Marx’s lumpenproletariat. Because capitalism inevitably creates poverty amidst plenty, there will always be people mired in the world of necessity, those whose simple quest for survival can obliterate the rules of the community. When deprived of any aspiration of exiting their situation, the rabble stand ready to rebel. The question—which Mann picks up from Robespierre—is whether an “honourable poverty” without rebellion is possible.
Finally, there is perennial conflict between politics and economics—the practice of governing the economy and the theory of how it should operate. The (oddly enough, dialectical) resolution of the two is a political economy that, when it “comes face-to-face with necessity, ‘goes Keynesian’…turns away from the long run to the immediacy of the moment.” After Keynes, Mann argues, a clean separation between the realms of politics and economics is impossible and political economy eventually returns whenever crisis strikes.
All of these tensions exist under the surface of capitalism, which is naturally prone to crises when they boil over, on their own or in combination. An economic hiccup becomes a crisis under capitalism when the system’s legitimacy is questioned. Mann identifies the task of enforcing and restoring legitimacy as central to the Keynesian program. It is not particular economic policies that underpin Keynes’s economics, but an attitude toward economic governance. Keynesianism is a political economy whose main concern is granting legitimacy to liberal capitalism above all else—not for its own sake but out of that fear for civilization itself.
In the end, Mann's Keynes is neither first a committed capitalist nor a committed democrat. He is, above all, a committed bourgeois—fearful of revolution, and loyal to an imagined civilizing role. He both presages and is already a member of a new technocratic class, one that abets capitalism, all the while fighting its worst instabilities and excesses.
Mann is right here to identify uncertainty and an enforced scarcity of capital as lynchpins of Keynes’s economic thinking. Capital is kept scarce to produce a yield that elicits entrepreneurial investment, meanwhile the fundamental uncertainty about the future creates conditions where yield habitually becomes too low relative to the interest rate on money. Scarcity of capital produces its opposite—unemployment, or the overabundance of labour. This scarcity is necessary but it creates crisis. For Keynesians, writes Mann, “the highest policy priority in a monetary economy is to manage the link between the future and the present, so as to render it as stable as possible.” Otherwise, the good entrepreneur becomes the bad rentier. Or, to use the language of Thomas Piketty, whom Mann identifies as the best example of a contemporary Keynesian, r (the net rate of return to capital) overtakes g (the growth rate of output).
Keynesianism understands the internal contradictions of the system—the “economic problem” of poverty alongside plenty, and the potential for systemic depression beyond a mere lack of goods—but wants to save it from the inside. Its tool is not revolution, which will only make things worse (especially for the poor, by whom and in whose name it is carried out), but mechanisms internal to the system. For Mann, Keynes wants a "revolution without revolutionaries," whose end is preserving civilization, something broader than just liberal capitalism.
"Keynes...does not believe the poor deserve their fate," he writes, but this fate is still better than the revolutionary alternative. To this end, rentiers can and need to be sacrificed for a common good that is bound up with capitalism. Keynesianism is thus not the set of abstract, rote policy proposals invariant to time and place often conjured up under the heading, but a political economy—one at war with the workings of laissez faire as much as with those who would undo the whole edifice. Not out of unbridled belief in the system but out of fear for what would come after it.
What the tensions have produced
Postwar social democrats in the Global North became this class of Keynesian non-revolutionaries: professionalized, well-meaning, dedicated to betterment but through technocratic incrementalism rather than revolution. However, as the political and economic conditions sustaining social democracy have waned (e.g., a strong labour movement and postwar reconstruction), this progressive political class increasingly debased itself.
Consider the chasm between British Labour’s Clement Attlee (nevermind Aneurin Bevan) and Tony Blair. Social managers deprived of an organized base able to hold them to account wholly absorbed the values of the professional-managerial class. And after the most recent crisis, even they are disintegrating as a political force, leaving an elite intent on enriching itself as far as it can in their wake.
Today’s crisis of social democracy can be overlaid on—and is partially the cause of—a crisis of capitalism. In fact, in country after country, as described in Three Worlds of Social Democracy: A Global View (Pluto Press, October 2016), an excellent new collection edited by Ingo Schmidt, this crisis can be dated much earlier than our current morass.
The contributions on Europe nearly uniformly date the crisis of social democracy to the late 1970s or early ‘80s, decades before today’s electoral disintegrations. French president François Mitterrand’s program of state intervention disintegrated faced with a capital strike in 1983. In Norway, union proposals for industrial democracy, including reserving half the seats on company boards for worker representatives, dissipated even earlier as the governing social democrats took a more business-friendly tack. In the U.K., New Labour’s path to “progressive neoliberalism” was cleared by the Thatcher Conservatives, who, as Max Crook writes, “made economic management and the appearance of economic competence simpler for governments.” Once the unions were broken there was less need to seek legitimation from a less organized working class.
Across the Global South the experience has been more uneven. Chile, for example, saw the overthrow of the short-lived socialist government of Salvadore Allende in 1973, followed by a right-wing dictatorship that was itself overthrown in 1989. The right had a solution to the fear of the rabble that was very different from the one Mann reads into Keynes: the army and a government of generals. However, when democratic rule returned, the economic strictures of the 1980 constitution put in place by the generals remained unquestioned. The social democrats of the post-dictatorship era were bound by rules they did not create but, taking inspiration from their Third Way counterparts in the North, nevertheless obliged. Here social democracy did not become neoliberal but inherited a neoliberalism it could not shake. (Are Chile’s contemporary social democrats Keynesians of Mann’s variety, foremost afraid of any revolutionary opening when past efforts were so brutally repressed?)
Elsewhere, from South Africa to the state of Kerala in India, the rapid succession of post-colonial development and the opening up of the global economy produced social democratic parties that nevertheless faced pressures to adopt strands of neoliberal policies, creating tensions between government parties, unions and their constituencies. As Schmidt writes in his summary: “Hopes that at least part of the South could belatedly follow the post-WWII model of combining prosperity and class compromise are fading, while the new social democratic governments in the South are facing an explosive mix of rising discontent among different layers of the population, increasing fiscal pressures and the dangers of foreign debt and currency crisis. The mix is pretty similar to the one that derailed the social democratic project in the West during the 1970s.”
The figure of capital and its political representatives, whether in sharp suits or army boots, plays too small a role in Mann’s account. This begs the question: to what extent are the Keynesians who desire to uphold the legitimacy of the liberal capitalist order doing so not on behalf of organized labour, but to seek legitimacy from much more organized capital?
While Mann traces fear of a lumpen rabble from Hegel to Keynes to Piketty, the history of capitalism has had as one of its major protagonists organized labour—the rabble transformed. Organized labour has been the political expression of the power of the working class. The welfare-state Keynesianism of the postwar decades has not been the default economic response to the most recent crisis—the most severe since the 1930s—in part because the decline of organized labour is now so severe. As the historian Eric Hobsbawm put it, “one of the worst things about the politics of the last 30 years is that the rich have forgotten to be afraid of the poor.”
The slow decay of social democracy since the 1970s and ‘80s has only accelerated since the 2007 crash, at least in the Global North. In some places it looks like a near-terminal collapse. In Greece, PASOK was reduced to single-digit support in the 2015 elections won by SYRIZA. The rout continues across Europe: 6% voted for the Dutch Labour Party in elections this March, the same result achieved by the French Socialists’ presidential candidate Benoît Hamon in April (Jean-Luc Mélenchon, running to his left, received three times as many votes). The main counter-examples all feature parties at least rhetorically signalling a break from the legitimation project, most notably in the U.K., where Jeremy Corbyn’s Labour success in the June election has opened space to the left of social democracy.
Keynes after the crash
Keynesianism is the necessary horizon of liberal capitalism, its perennial fallback. Mann calls it “pharmaceutical,” a medicine for when things get out of hand. The more panicked initial years of the current crisis generated rhetorical appeals to Keynes and some fiscal stimulus—from Obama’s TARP (Troubled Asset Relief Program) bank bailout, to Stephen Harper’s temporary spending boost, to quantitative easing by the major central banks. But, as the acute crisis passed, a big portion of the appeals to Keynes subsided, especially as it became clear the crisis was not generating much explosive social discontent.
There are still those who see impending threats to civilization: Financial Times columnist Martin Wolf on the right, or Yanis Varoufakis on the left, for example. But the policy-makers in government and at central banks have largely grown complacent and have chosen a different path. Mann breaks down the Keynesian program this way: “(a) skilled management of the rate of interest…; (b) when necessary state spending to maintain a stable or increasing level of aggregate demand; and (c) as low inflation as is practically possible without too much disruption of the labour market.” Today the bare minimum is largely focused on option (a). But, despite low interest rates and stable inflation, the only thing surging are equity prices—so much for the euthanasia of the rentier!
This response is only barely working, both economically and politically. Across so much of the Global North the crisis may be past, but there is no robust recovery either. The U.S. economy is stuck on a low-GDP-growth, low-wage-growth, low-productivity-growth path. It is neither in crisis nor surging out of it. If not for the commodity boom, concentrated in three provinces, Canada would have been in the same boat; even so, the majority of the population has still seen living standards remain not far from flat. Across the Atlantic, the U.K. is in even worse shape. The EU, too, is largely mired in stagnation, only its peripheries are no longer at the precipice of collapse.
Politically the response has not fully restored the system’s legitimacy. If anything, it has made the legitimacy crisis worse. Today the capitalist system is losing legitimacy at the fastest pace in several generations. More people, especially the young, identify with socialism. The far right is also making a comeback, undermining the legitimacy of liberal capitalism from a wholly opposite direction: the right likes capitalism but not liberalism. Fascism can break through the Keynesian impasse because it breaks the working class; the rule of capital is undisputed and the state, now totalitarian, is left to enforce full employment because the fear of worker bargaining power is gone.
The political transformation and ultimate failure of social democracy across much of the North has enabled the rise of new left-wing political forces—SYRIZA in Greece, Podemos in Spain, the Bernie Sanders movement, Corbynite Labour in the U.K., Jean-Luc Mélenchon's France Insoumise. While most of these formations nevertheless continue to espouse Keynesian economic programs, or have even turned to implementing austerity in power (in the case of SYRIZA), some cracks are showing. June’s surprise showing by Corbyn is instructive: his is the first Labour program in generations to go beyond fiscal redistribution and propose public ownership and economic democracy.
Even if Mann calls Piketty the closest contemporary avatar of Keynes and Keynesianism, it is in fact Mann’s Keynes who is our contemporary—fearful and subdued into timidity. His time, however, may be slowly drawing to a close. And while Mann is good at looking honestly within his own radical soul and seeing Keynesianism, he at times does a disservice to the radical kernels in Keynes that can be taken up by the contemporary left—most notably the socialization of investment that is implied by a true euthanasia of the rentier.
There is a risk of psychologizing Keynes and Keynesianism too much. Yes, there is an element of liberal anxiety, but as a political practice Keynesian political economy can have concrete effects in the world that not only assuage anxiety for liberals but alter material reality for the vast majority. Whether and how Keynesianism achieves this depends on how organized the rabbles of the world are. Poverty can be made bearable to sustain the conditions that produce it, but it can also be made bearable as a precursor to organizing people to eradicate these conditions.
We are still far from either option in the response to 2007-08, still stumbling along. But social democrats and radicals today face choices increasingly sharpened by material reality. Mann lays out a final helpful guidepost: "Deferral is therefore a possibility, sometimes necessary, sometimes simply the best one can hope for—but it is always, in the end, deferral."
Michal Rozworski’s writing has appeared in Jacobin, Ricochet, the Toronto Star, Briarpatch and The Tyee, among other places. He produces the Political Eh-conomy blog and podcast. He currently works as a union researcher in Toronto and is working on a book, The People’s Republic of Walmart, with Leigh Phillips.
This article was published in the July/August 2017 issue of The Monitor. Click here for more or to download the whole issue.