A review of Geoff Mann, In The Long Run We Are All Dead: Keynesianism, Political Economy and Revolution (Verso, 2019), £14.99
Geoff Mann’s (sympathetic) critique of John Maynard Keynes—“the most influential economist of the 20th Century”—is worth reading for two main reasons: firstly, because of Keynes’s influence on economic thinking in the Labour Party and the left generally, and secondly because Mann, a self-described Marxist, questions the viability of a revolutionary political project in the aftermath of the 2008-9 economic crash and the rise of the populist right.
Mann traces in fine detail the changes in Keynes’s thinking from his initial acceptance of the neo-classical economics orthodoxy to his later sharp critique, shifting from a focus on microeconomics (individuals or firms) to a concern with the “macro” economy at the aggregate (or system/state level). Simply stated, the micro-economic orthodoxy—still the overwhelmingly dominant school of economic thinking—sees the economy as comprised of rational individuals pursuing their own self-interest, which, by the operation of Adam Smith’s “invisible hand”, achieves the optimum public good. It was clear to Keynes that the orthodox economists could neither foresee nor really explain the Great Depression of the 1930s—much as their descendants, the neoliberals, could neither foresee nor explain the most recent crash. On explanations attempted with hindsight, he believed that economists set themselves too easy a task if, “in tempestuous seasons, they can only tell us that when the storm is long past, the ocean is flat again” (quoted in Mann, p51).
Keynes’s 1936 book The General Theory of Employment, Interest and Money takes issue with the orthodoxy over unemployment, which was, as Mann explains, “the single most important indicator of social welfare in liberal capitalist states until the late 1970s…when it was trumped in the eyes of the state and elites, by inflation” (p282). Keynes sought to explain how mass unemployment persisted in the 1930s when orthodox theory suggested that markets, including the labour market, would “clear” (ie demand would equal supply) at a particular wage level. It also assumed that unemployment was a short-term problem and that the economy tended towards long-term stability—equilibrium. While mostly accepting the classical view, Keynes asserted that problems in the economy as a whole, specifically a lack of sufficient investment, meant that “short-run” unemployment could persist.
Very sceptical about the usefulness of mathematical modelling, Keynes advocated demand-boosting state investment as far back as the 1920s, though it seems he was more worried about the effects of mass unemployment on aggregate demand (total purchasing power) than on social upheaval. There is also much debate as to the extent to which Keynesian policies were responsible for the recovery from the 1929 Depression and the post-Second World War boom—see Jane Hardy’s 2016 article, “Radical Economics, Marxist Economics and Marx’s Economics” in this journal.
According to Keynes, investment was driven neither by the amount of savings deposited in banks nor by the supply and demand in the money markets, but by a psychological factor—“liquidity preference”—whether savers would hold on to their cash rather than invest, given their uncertainty about the future. “For Keynes, this uncertainty could not be overcome, it was “an inescapable, trans-historical fact of life” (p234). The task of the state then was to drive down interest rates so as to make investment worthwhile compared to saving and to stimulate the “animal spirits” of investors. In turn, this would increase aggregate demand and reduce employment. This would “euthanise” the rentiers, those who profit from rent, but also lenders such as banks, financiers and patent holders who can extract rent from the productive economy.
Mann is more concerned with the political impact of Keynesian economics, attempting a reconstruction of what he takes to be Keynes’s primary motivation; to develop a “political economy”, for the preservation of what he variously calls “bourgeois civil society”, “civilisation” or “capitalist modernity”. He sees Keynes’s work not so much as a critique of neo-classical economics because it is debatable whether Keynes abandoned that framework (p61). Instead, it is an attempt to develop a more adequate “science” of the economy/civil society in order to ward off its self-generated crises and prevent its collapse into disorder and, concomitantly, authoritarianism. If, as Mann (quoting Michel Foucault) declares, “political economy is the science of liberal capitalist government…then this crisis in the relation between the governors and the governed is the paradigmatic problem for properly political economy” (p191).
Mann claims that the 18th century German philosopher GWF Hegel was the first Keynesian. In doing so he points to the contradictions at the heart of the bourgeois idea of freedom inherited from the French Revolution. Humanity broke free of the fetters of feudal hierarchies. But the citizen masses still faced the practical necessity of sustaining themselves every day in an increasingly marketised economy where hunger regularly overcame their commitment to “abstract universalisms” such as “freedom”. Whatever Maximilien Robespierre declaimed about “honourable poverty”, desperate mobs drove counter-revolutionary regimes in defence of private property. Hegel’s “revolution without revolution” sought a way out of the political consequences of “trans-historical poverty”. This required a skilled administrative elite able to fuse the universal (ie reason) with the particularistic (the interests of the individual): “the constantly changing masses of particularities…set at liberty by modernity”, though always buttressed by the coercive power of the state.
Keynes’s General Theory (of liberal capitalism) could be read as a typically English pragmatism/empiricism countering Continental philosophies of revolution (and disorder). (The later left-wing version of this debate is represented by Perry Anderson and New Left Review. For a critique, see Alex Callinicos, “Perry Anderson and ‘Western Marxism’”). Though poverty is not a natural phenomenon, as classical political economy would have it, unless properly managed by a technocratic political elite standing aside from politics, the hungry poor will transform into a “rabble” and pull down the whole edifice of “civilisation”. The role of political economy, it would appear, is to try to defer the apocalypse by a series of necessarily short-term technical measures—Keynesianism as a “panic button” for the liberal capitalist state in times of crisis. If Mann sees Keynes as the most clear-eyed interpreter of the 1929 Depression and its aftermath, he believes Thomas Piketty, author of Capital in the Twenty-First Century, is a Keynes for our time, though his chasm in bourgeois society is that between the rate of increase in wealth and stagnating incomes.
Keynes’s focus on the “aggregate” (system level) allows him some greater insights. But the rentiers have not gone away. Their “financial innovations” leading to the 2008-9 crash stretched the ability of both technocrats and political leaderships to the very limit in trying to stabilise the system through bailouts (see my review of Crashed by Adam Tooze in the previous issue of International Socialism). In 2019, debt is back at the same levels and the warning lights are flashing.
Given his division of the world into two timeless categories of “rich and poor” Mann unsurprisingly draws a pessimistic political lesson from Hegel, Keynes and Piketty: “The lesson history teaches them…is that the ‘people’ will choose destructive and demagogic means of rebuilding social order and everyone will lose” (pp340-341). His only hope is finding the “radical kernel at the heart of Keynesianism”. Disparaging the Marxist conception of the working class as either producer of value or the agent of change, he entertains the hope that bourgeois “civilisation” may yet grow so widely across the globe that it begins to challenge the “populists” who threaten its liberties. A bourgeois dialectic, even if, as Keynes famously said: in the long run, we’re all dead!
Padraic Finn is a long-standing political activist with an interest in political economy. He is a member of the Socialist Workers Party.