THE Global Justice Movement Website

THE Global Justice Movement Website
This is the "Global Justice Movement" (dot org) we refer to in the title of this blog.

Wednesday, February 5, 2020

Is Keynesian Economics Socialist?

The other day while doing some research into the origins of the “new things” of socialism (which is not all that social), modernism (which is not all that modern), and the New Age (which is not all that new), we came across an article from 1993, “Liberalism and Socialism: The Same Thing?” (Paul E. Corcoran, University of Adelaide, Australian Political Studies Association Annual Conference, Monash University, September 29-October 1, 1993)

Right off the bat we had several problems just with the title of the article.  What, after all did the author mean by “liberal”?
Alexis de Tocqueville
We will cover only political liberalism here, not religious liberalism.  Religious liberalism is the idea that all religions are equally true, which also means they are all equally false.  The analysis of political liberalism is based on that of George H. Sabine from A History of Political Theory, Third Edition.  (New York: Holt, Rinehart and Winston, 1961, 669-753.)  As Sabine defined it, liberalism is “a fundamental postulate about the nature of value, viz., that all value inheres ultimately in the satisfactions and the realizations of human personality.”  (Ibid., 670.)
According to Alexis de Tocqueville as verified by our research, there are three basic types of liberalism, which we follow de Tocqueville in calling “European/French,” “English,” and “American”:
·      European/French Liberalism. The abstraction of the collective, not every human person, is sovereign and has power,
·      English Liberalism. An élite is sovereign and has power, and
·      American Liberalism. the actual human person is sovereign, and thus those who control the collective have power.
John Maynard Keynes
Having said that, we come to a quote by Keynes in the first paragraph of Corcoran’s article:
The question is whether we are prepared to move out of the nineteenth-century laissez-faire state into an era of liberal socialism, by which I mean a system where we hope 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 prosperity.  (John Maynard Keynes, The New Statesman, January 28, 1939.)
This immediately raises the question as to what Keynes meant by the terms “liberal” or “liberalism,” “socialism,” “social and economic justice,” “freedom of choice,” “faith,” “mind and its expression,” “enterprise” and “prosperity.”
On reading through Keynes’s most noted work, his General Theory (1936), we find the following paragraph giving Keynes’s concept of liberal socialism, at least according to the index:
In some other respects the foregoing theory is moderately conservative in its implications. For whilst it indicates the vital importance of establishing certain central controls in matters which are now left in the main to individual initiative, there are wide fields of activity which are unaffected. The State will have to exercise a guiding influence on the propensity to consume partly through its scheme of taxation, partly by fixing the rate of interest, and partly, perhaps, in other ways. Furthermore, it seems unlikely that the influence of banking policy on the rate of interest will be sufficient by itself to determine an optimum rate of investment. I conceive, therefore, that 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 initiative. 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 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 rate of reward to those who own them, it will have accomplished all that is necessary. Moreover, the necessary measures of socialisation can be introduced gradually and without a break in the general traditions of society. (John Maynard Keynes, General Theory of Employment, Interest and Money (1936), VI.24.iii.)
"Property in everyday life, is the right of control."
Correlating this paragraph with a statement in The Economic Consequences of the Peace (1919) that “The immense accumulations of fixed capital which, to the great benefit of mankind, were built up during the half century before the war, could never have come about in a Society where wealth was divided equitably,” (II.iii) we realize that, for Keynes, socialism did not mean necessarily government possession of all capital, but government control.  This, however, is the same as Marx’s abolition of private property.  As Louis Kelso pointed out in his article, “Karl Marx: The Almost-Capitalist” (Journal of the American Bar Association, March 1957), “Property in everyday life, is the right of control.”  We therefore conclude that Keynes used the European/French collectivist version of liberalism, despite the fact that he seemed to be bowing to the English elitist version.  Socialism, for Keynes, meant the same thing it does for all socialists: the abolition of private property in capital.
"Social justice enables, it does not replace justice."
What about “social and economic justice”?  Keynes never defined “economic justice” as far as we can tell, but he did give a meaning for social justice, implying that social justice and economic justice are synonyms.  In V.19.ii(7)(ii) of The General Theory, Keynes stated that social justice involved paying an adequate wage.  In the previous paragraph (V.19.ii(7)(i)), he implied that paying less than an adequate wage is socially unjust.  As these are the only references to social justice we have found in Keynes’s writings, it seems evident that Keynes defined “social justice” as paying an adequate wage.  According to Father William Ferree in his pamphlet Introduction to Social Justice (1948), in reference to wages social justice consists of making it possible to pay a just wage, which is a completely different orientation.
As for “freedom of choice,” it seems that for Keynes, “freedom” consisted of being able to choose for whom one worked and what products to buy, not whether to work, buy anything at all, or anything else.  As for choosing to be an owner of capital, that was not even on the table.  Keynes called for the elimination of the small investor (rentier) from the economy as he or she uses his capital income for consumption instead of reinvestment.  Freedom for Keynes meant freedom to work, take welfare, or starve.
Henri de Saint-Simon
What Keynes the atheist meant by “faith” is not anything with which we’re prepared to deal.  We assume that by “mind and its expression” he meant freedom of speech and of the press, which without widespread capital ownership — which Keynes opposed — are pretty much meaningless.
That leaves “enterprise” and “prosperity.”  In Keynesian terms, enterprise seems to mean the gumption to get an education to qualify you for a good job, while prosperity appears to mean actually having a good job at an adequate wage.
The bottom line?  Keynes’s notion of “liberal socialism” appears to conform very closely to the first principle of socialism as expressed by Henri de Saint-Simon: “The whole of society ought to strive towards the amelioration of the moral and physical existence of the poorest class; society ought to organize itself in the way best adapted for attaining this end.” (“Saint-Simon,” Encyclopedia Britannica, 19: 14th Edition, 1956, Print.)