With every major crisis capitalism has faced since the Second World War, we have seen Keynesianism rear its head. Either in the form of actual policy enacted or in the realm of ideas that come to the fore at these times. Our current situation with COVID-19 is no different. It is as the American monetarist economist Robert Lucas Jr. succinctly put it: “I guess everyone’s a Keynesian in a foxhole”, when capital sees itself in major crisis, Keynesianism reemerges in order to offer a solution. However, there is a widespread ignorance about what Keynesianism actually means.
In lay terms the term is synonymous with government intervention into the economy. For sets of policies that are broadly expansionary (that is to say, higher government spending, lower interest rates) in order to make up for shortcomings in economic demand. There is some truth in this but it does not give us the full picture.
For significant sections of the liberal left the term is even considered a synonym for left wing economics on the basis that more government intervention is necessarily more left wing as less is being left up to market forces. This is simply nonsense: It is plain that our current hard-right Conservative government is not in the slightest left wing, though the economic measures that have been put in place in light of COVID-19 are the most interventionist policies that have been seen in Britain for many decades.
Some on the left have even chalked this interventionism up to Corbyn losing the election but winning the economic argument. This shows both the lack of ambition on the part of much of the pro-Corbyn left and a misunderstanding of how social democracy and market intervention relate to one another (of course not all intervention in the market is social democratic).
Lastly, there is a tendency amongst the far left to be entirely dismissive of Keynesianism as purely a tactic employed by the ruling capitalist class in times of crisis to stave off social revolution and maintain the longevity of capitalism as a social order and system of production. This, whilst being an understandable position to reach, misunderstands the core of Keynes’ thinking and why it was that Keynes was anti-revolutionary. It is true that Keynes was through and through a bourgeois economist and indeed did state that if a proletarian revolution were to take place he would be firmly on the side of the bourgeoisie against the “masses” whom he saw as incapable of self governing.
It is important that we examine exactly what is meant by this in order to situate Keynesianism as a historical phenomenon and understand what exactly it represents for us today. We must look both at Keynesianism as Keynes himself theorised it and Keynesianism as it exists today in the hands of the so-called New Keynesians: Thomas Piketty, Joseph Stiglitz, Paul Krugman being the most notable.
Geoff Mann’s 2017 work 'In the Long Run We Are All Dead: Keynesianism, Political Economy and Revolution' is a highly instructive piece of work. Mann rightly identifies the political essence present in Keynes’ Keynesianism that has been lost by Keynesians today.
Modern Keynesians tend to see Keynesianism as a prescriptive economic tool, a set of policy initiatives that can be brought out in times where appropriate. One such economist; Jeffrey Sachs, compared the role of Keynesian economists to doctors, diagnosing the economy with whatever illness it has (lack of demand, high inflation etc) and giving it appropriate treatment (subsidies, raising interest rates etc). Through this attitude we can see how misconceptions of Keynesianism have crept into the mainstream, divorced from Keynes’ original work which featured no such prescriptions for economic success. Keynes’ work isn’t widely read considering his notoriety; Mann offers a useful reading of his work as effectively a political philosophy. This reading brings us much closer to actually understanding the essence at the core of Keynesianism, the essence that is still present but obscured in its modern iterations.
That Keynesianism is a political philosophy that is relatively unconcerned with capitalism for capitalism’s sake as much of bourgeois economics is. Rather, given Keynes’ experience of the Second World War and the rise of both fascism and Stalinism in and around Europe, his writing makes specific reference to “civilisation” over capitalism. In justifying his position for drastic economic intervention in the post-war economy, Keynes stated “civilisation is a thin and precarious crust”. This is not incidental or Keynes merely trying to cover his tracks for engaging in what Marx called vulgar economics (that is, economics that exists solely to justify the existence of capitalism) rather, it is Keynes’ belief that Liberal Capitalism was a preferable system to the barbarism associated with Stalinism and particularly with fascism.
Here is Keynesianism’s unifying appeal in times of crisis. The “economic right” elements of our current Conservative government who are otherwise idealogues for free markets and non-intervention wherever possible are backing Keynesian policy measures with as much vigour as many on the left. For the right, there is an understanding that if left to the free market, the vast social and economic machinery of capital would collapse under its own weight given much of the workforce has effectively been forced into withdrawing their labour in order to maintain public health. Whilst many on the left have been anxious that economic intervention takes place for much the same reasons albeit with differing motivations. Those on the left recognising that should the economy collapse millions of workers will be made poorer as a result of it. This is, in effect, the essence of Keynesianism, a politics of explicitly non-revolutionary unity during times of crisis.
Indeed, many on the left cannot imagine a politics outside the realms of Keynesianism. This is very much the failing of a revolutionary movement of working class militants being able, at any point of crisis, to offer up a viable alternative for working class power. It is our task as socialists and as revolutionaries to build this movement through political education and agitation and find our way out of Keynes’ shadow.