Thoughts on economics and liberty

That Keynes was socialist is clear. Was he also Fabian?

An economist friend wrote to me today, objecting to my characterisation of Keynes as a Fabain.

As always I agree with everything you say at your Blog – except on Keynes. You are serially wrong about the greatest economist of the last century.
He was never a  Fabian or any other type of socialist, and always a Liberal in both politics and thought. It is true that in the later 1920s he and Lydia became friendly with Beatrice Webb and Bernard Shaw, who were Fabians and were attracted by his support for the miners in 1926-28, whose wages had been slashed to support the over-valued pound resulting from Churchill’s revaluation of sterling against gold, see his The Economic Consequences of Mr Churchill. But he had many friends on all side of politics, so you could equally claim he was a right wing Tory.
Let me analyse this the basic issue first: Was Keynes socialist? As we will see below, indeed he was.

Keynes's passionate defence of socialism

Proof 1: Keynes's passion for communism
In 1917 at age 30 he wrote to his mother about his passion for communism: ”My Christmas thoughts are that a further prolongation of the war, with the turn things have taken, probably means the disappearance of the social order we have known hitherto. With some regrets I think I am on the whole not sorry. The abolition of the rich will be rather a comfort and serve them right anyhow. …Well, the only course open to me is to be bouyantly bolshevik; and as I lie in bed in the morning I reflect with a good deal of satisfaction that, because our rulers are as incompetent as they are mad and wicked, one particular era of a particular kind of a civilization is very nearly over.”
Proof 2: Keynes wasn't put off by the excesses of Soviet communism
An extraordinary experiment in socialism is in course of development. I think that there may be solid foundations on which to build  a bridge. Revolutions are not kid-glove affairs, particularly in Russia. But a mere disgust and moral indignation, which has not even the curiosity to discover the facts, is never by itself the right reaction to a great historical event. (“The Financial System of the Bolsheviks”, Manchester Guardian, 26  April 1922, in JMK 17, p. 420)
[Later he did seemingly develop some mistrust for the Soviet methods and wrote: “Marxists are ready to sacrifice the political liberties of individuals in order to change the existing economic order. So are Fascists and Nazis. … My own aim is economic reform by the methods of political liberalism” (JMK 28, p. 29). – but this was not classical liberalism; it was social liberalism, or Fabian socialism.]  
Proof 3: Keynes asked that the world learn from the USSR how to eliminate the "love of money"
He was also invited to represent Cambridge University at the bicentenary of the Russian Academy of Sciences. He pronounced on this occasion a speech in which he described the contours of his ‘new liberalism’ and recognised as a positive aspect of Bolshevism the fact of having eliminated the love of money as a motor of human action: “We in the West will watch what you do with sympathy and lively attention, in the hope that we may find something which we can learn from you” (JMK 19, p. 441-2)
He wrote: "in the Russia of the future it is intended that the career of money-making, as such, will simply not occur to a respectable young man as a possible opening, any more than the career of a gentleman burglar or acquiring skill in forgery an embezzlement” (A Short View of Russia, 1925, in JMK 9, p. 260).

Proof 4: Keynes’s critique of inequality
In The General Theory (p.372 he writes: “The outstanding faults of the economic society in which we live are its … arbitrary and inequitable distribution of wealth and incomes.” [Note how he calls the results of the market system – of voluntarily choice – as "arbitrary"]. Jealousy against the rich clearly drove Keynes, as it drove Marx.
Proof 5: Keynes’s critique of capitalism
"this remarkable system [capitalism] depended for its growth on a double bluff or deception. On the one hand the laboring classes accepted from ignorance or powerlessness, or were compelled, persuaded, or cajoled by custom, convention, authority and the well-established order of Society into accepting, a situation in which they could call their own very little of the cake, that they and Nature and the capitalists were co-operating to produce. And on the other hand the capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. The duty of “saving” became nine-tenths of virtue and the growth of the cake the object of true religion. There grew round the non-consumption of the cake all those instincts of Puritanism which in other ages has withdrawn itself from the world and has neglected the arts of production as well as those of enjoyment. . . Saving was for old age or your children; but this was only in theory—the virtue of the cake was that it was never to be consumed, neither by you nor by your children after you.”
Proof 6: Keynes's unambiguous advocacy of socialism
“Keynes’ book, End of Laissez-Faire, was his most pronounced and clearcut advocacy of socialism.” [Keynes at Harvard] In this book, “Keynes boldly declares: In fact, we already have in these cases many of the faults as well as the advantages of State Socialism. Nevertheless we see here, I think, a natural line of evolution. The battle of Socialism against unlimited private profit is being won in detail hour by hour.”
Proof 7: Keynes's placed himself on the EXTREME LEFT (well to the left of Labour voters)
In  “Liberalism and labour” (1926) he wrote: I am sure that I am less conservative in my inclinations than the average Labour voter […] The republic of my imagination lies on the extreme left of the celestial space.  
Proof 8: Keynes thought he was the "only" socialist
He irritated Labour Prime Minister MacDonald by declaring after a meeting that he considered himself to be the only true Socialist in attendance. [Source]
Proof 9: Keynes wanted comprehensive socialisation of investment
In the General Theory he wrote: “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 socialization of investment will prove the only means of securing an approximation to full employment. . .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 socialization can be introduced gradually and without a break in the general traditions of society. (p.378)
Proof 10: He wanted a LARGE INCREASE in the role of government
In the General Theory: “The central controls necessary to ensure full employment will, of course, involve a large extension of the traditional functions of government.” (General Theory, p.379)
Proof 11: He wanted DELIBERATE control and DIRECTION of economic forces
In Am I a liberal? (1925) he wrote: The transition from economic anarchy to  a régime which deliberately aims at controlling and directing economic forces in  the interest of social justice and social  stability, will present enormous difficulties both technical and  political. I suggest, nevertheless, that the true destiny of New Liberalism is to seek their solution.  
Proof 12: Socialists used his writings as "touchstones"
“Margaret Cole, English Fabian revolutionary, has stated: “We Socialists used Keynes and the U.S.S.R. as touchstones” (Circa 1923).”

Keynes the Fabian

I've discussed Keynes's Fabian links here. I won't repeat the points here. Basically, he was VERY CLOSELY related to the Fabians, from his family links and his 'partners'. True, he did not agree with everything that the Fabians publicly said, but such whole-scale agreement is not necessary to prove his Fabian inclinations. 
His economic model is Fabian socialist. It uses a few elements of the classical market system but then shifts focus to "social justice", "equality", and other direct socialist objectives, including central planning socialisation of investment, etc.
There is an argument that he was not interested in Marxian socialism but a "mixed" one, with a bit of property rights and markets, and far greater intervention by government. That would be the famous Fabian socialist "mixed economy". Regardless of whether he was "slightly" socialist or "greatly" socialist, he ATTACKED capitalism at every opportunity and imagined that paternalistic government forces could run the economy better than the classical markets that Adam Smith had written about. 
This worldview is also known as social liberalism – the anti-thesis of classical liberalism. Liberty does NOT matter to Keynes. 
a) That he was construed as a public face of the Fabian society is suggested in this book: History of the Fabian Society; The Origins of English Socialism by Edward R Pease 

Its brief summary states: Among its most prominent members were George Bernard Shaw, H.G. Wells, Bertrand Russell, and John Maynard Keynes. 
The book is available in full at: – but does not mention Keynes. – a contradiction

 clarifies that during his lifetime that Keynes was an active member of Fabian society.

c) The Times Literary Supplement | Friday, March 26, 1999 notes that "The Victorian Shaw and the Edwardian Keynes became, as young men, members of two distinctive, but overlapping circles – the Fabian Society and the Bloomsbury Group."

Further evidence:
d) “For many years editions of the Fabian News bore announcements of Keynes’ lectures at Fabian socialist functions.” [Keynes at Harvard]
e) Fabian society also re-published most of his works under its banner. [Keynes at Harvard]

f) John Maynard Keynes was extremely active in his campaign to encourage the government to take more responsibility for running the economy. In 1931 he agreed an amalgamation of the Nation with the New Statesman, a journal owned by the Fabian Society. Keynes now became a regular contributor to what was now Britain's leading intellectual weekly. [Source]

g) May 30, 1919 – Prominent British and American personalities establish the Royal Institute of International Affairs in England and the Institute of International Affairs in the U.S. at a meeting arranged by Col. House; attended by various Fabian socialists, including noted economist John Maynard Keynes.  [Source]



View more posts from this author

Leave a Reply

Your email address will not be published. Required fields are marked *