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Of Reform and Revolution: The Case of John Maynard Keynes

Review by Marko Beljac.* NIBS stocks the Jacobin Magazine. 

Geoff Mann, “The Left in a Foxhole,” Jacobin February 12, 2018.

Mike Beggs, “The Keynesian Counterrevolution,” Jacobin February 12, 2018.

To imagine the ideal society is easy, to bring it about is hard. That is as true as it is cruel, and it is a dilemma that revolutionaries have faced from time immemorial. One aspect of that dilemma is the brute fact, neglected as brute facts often are, that one must begin where one is. That is why the gap between reality and imagination needs to be filled by reform, and as reform begins to show its limitations relative to the ideal so revolutionary consciousness grows. When a broad cross section of society comes to see that the structures and processes of the social order, in its political, economic, and cultural aspects, prevent the further attainment of freedom and justice we begin to approach a genuinely prerevolutionary situation.  

For the Left reformism has come to be synonymous with Keynesian social democracy or Keynesian liberalism, and revolution, of course, with Marxism. The former is enjoying greater levels of attention amongst Leftists given the advent of reformist, as opposed to neoliberal lite, political movements such as exhibited by the Labour Party in Britain, on the continent for instance Podemos in Spain and of course the Sanders insurgency among Democrats in the United States. A good and thought provoking paper that was recently published by Jacobin which I commend the reader. 

I would like to begin by accepting three theses regarding the Left pretty much a priori. The Left should be, in whatever fashion and degree, anti-capitalist, its vision of an alternative society must be more democratic than what has obtained hitherto, and it should be internationalist given the commitment to solidarity. Viewed thus the Left can only have a problematical and deeply ambiguous relationship with both Keynes and Marx. 

Here I focus on Keynes. 

The Jacobin paper does well to focus, as Keynes’ foremost biographer Robert Skidelsky also does, on Keynes less as the developer of macroeconomic theory and more as the rebuilder of liberalism. 

Regarding the macroeconomics of Keynes, we need to be careful that Keynes comes with many masks, manufactured by others we might add, so making it hard to discern his true face. When we speak of Keynesian macroeconomics we are usually referring to the neoclassical synthesis of Paul Samuelson or the bastardisation of Keynes, as Joan Robinson dubbed the neoclassical synthesis which combined the Keynes of The General Theory with neoclassical economics. The tools of macroeconomic management employed by, and the broad contours of policy pursued by, the state during what we now call the Keynesian era were those of the neoclassical synthesis. The more left wing Keynesians of the time, known as the Post Keynesians, felt that no accommodation with neoclassical theory and practice ought to be made, and they advocated, for example, decidedly leftist approaches such as the socialisation of investment. 

We return to this later. 

Although Keynes was interested in the overhauling of liberal philosophy we need to recognise that it was a liberalism of a peculiarly odd hue. We say this because Keynesian liberalism, and the social welfare state that embodied it, accommodated two centres of power. The first centre of power was political, for Keynesian liberalism accepted the necessity of a centralised and technocratic state exercising political authority from the centre. The second was economic for here Keynesian liberalism accommodated large concentrations of private capital, that is corporations continued to be recognised as the basic institutional form of economic life. 

Keynesian liberalism was robustly capitalist and statist.  

The argument for this accommodation doubtless was based on the observation from which we started namely the attainable demanded it. But we must be mindful that what was attainable then may not be attainable now. The scope and limits of reform for us might be even less than they were back in the day so requiring a deeper accommodation with power than we would countenance or a recognition that we already sit at or very close to the limits of attainable reform.  

Today both forms of accommodation are evident among those on the Left that seek a return to Keynes. It is argued that, despite globalisation, there exists scope for states to pursue Keynesian policies in accord with the principles of social justice much like the halcyon days of the post war era. There are two, potential, problems with this view. Firstly, this neglects the manner capitalism constitutes a world system based on a global division of labour between core and periphery which globalisation further entrenches. Globalisation might not preclude more social welfare spending and stimulation of aggregate demand, but if so that would apply much more to the advanced western industrial economies of the core. That leaves out much of humanity, and what that ultimately means is that improved conditions of life in the core would continue to depend upon highly repressed workers subsisting on a low wage in the periphery.

The principle that the strong do what they can, and the weak suffer what they must would continue to be the guiding principle of international affairs. That is a vulgar vision, and not one that accords with our three theses. Consider for a moment what that vision for the Left entails. It means we need to accept the necessity of state action emanating from the core dedicated to maintaining the structures of stratification and differentiation of the world capitalist system, and that includes the maintenance of discipline and order through offensive military action. Keynesian social democrats supported Western imperialism throughout the post war years, and that was because it was recognised that the social welfare state at home was embedded in a wider system of global power. It might be argued that the opposition to the Vietnam War shows this to be wrong, yet it was the liberal administrations of the 1960s that escalated that war to grotesque levels and opposition to it was sparked and maintained by the New Left which rejected the Keynesian accommodation, in part, on internationalist grounds.  

Secondly, the Keynesian era was underpinned by a global economic order, sometimes known as the Bretton-Woods order, that placed restrictions on the movement of capital at the international level. This provided space for social welfare policies in the core, and developmentalist policies in the periphery but only to the extent permitted by the prerogatives of western capital. Absent a similar new international economic order that is centrally concerned with regulating the movement of capital, whatever scope exists for the pursuit of social welfare spending and expansionist fiscal policies under globalisation must by necessity be relatively limited as compared to what could be achieved under internationally coordinated capital controls.  

That’s an important point for us to consider in Australia, for we have functioned and continue to function as a neocolonial dependency of global capital and of the imperial states of the core. How much space do we have in Australia to pursue Keynesian reforms? We might exclude a priori reformism of a Post Keynesian type without a Corbyn and a Sanders in power at the centre. It is interesting to observe that the Left analysis of capitalism in Australia traditionally emphasised our status as a dependency but somehow this has been lost. Intriguingly this has been neglected precisely at a time when neoliberal globalisation makes it especially relevant, which suggests that much of the Left has adopted the view that Australia from 1970 onward has become autonomous. 

Keynesian liberalism also arose during a unique period of human history, namely a period of staggering and sustained economic growth. Indeed, Keynesianism could not function without it. This leads to a few questions. For example, can society ecologically sustain similar levels of economic growth in future? When considering this question, we need to be mindful that we are speaking of economic growth in the context of capitalism. To what extent must corporate profits be free from the constraint of environmental regulation? The modern ecological movement that arose in the 1960s and 1970s rejected the grand bargain with capital that underpinned Keynesianism from the start, for like much of the third world nature was out of the Keynesian picture. Indeed, the Keynesian “paradox of thrift” and the emphasis upon aggregate demand encourages a crass consumerism which does not sit well with the ecological temper of the times. When thinking about a return to Keynes we need to be mindful of this ecological critique. Just how compatible is capitalism with nature, and what does that mean for the nature and scope of a reformist politics at a time of ecological crisis? 

Furthermore, if the period of headlong economic growth was a unique period not to be repeated, not just for ecological but also economic reasons, then the engine underpinning any future Keynesian order cannot run on as many cylinders as we would hope for. Of course, Keynesians will argue that the post war economic growth model delivered the goods because Keynesian macroeconomic policy was consciously dedicated to the pursuit of full employment, and they are surely right about that. However, it was not the only factor at play and those other factors, some of which were objective such as cheap and abundant fossil fuels, may not obtain in future. It is dangerous to assume that Keynesianism can and should deliver trend rates of economic growth that typified much of the post war era. This is something that needs to be established. 

When discussing economic growth under capitalism it is hard not to think of corporate profits. Accepting a role for corporations in an alternative social order is to accept that profit making remains a core feature of society, if not the core feature. That places a break on so many things of concern to the Left, and not just the obvious of wages. It accepts limitations on autonomy at work because we leave the hierarchical structure of corporations as are. It accepts limitations on ecological sustainability, if not in the core certainly in the periphery.  It accepts a definite scope to working class action. It accepts the necessity of maintaining power asymmetries internationally. All of these do not sit well with our three theses. 

One gains the impression that there is an element of the functional, for the ruling class that is, to the revival of Keynes. Neoliberalism might be construed as an attempt to maintain corporate profitability and returns on capital at a time of declining economic growth. When the trend rate of economic growth declines but the share of profits in the wages-profits share reaches record levels, for example, it is hard not to see neoliberalism as grand larceny under conditions of, relative, capitalist stagnation. We see bourgeois economists, even pillars of the establishment, calling for Keynesian type policies to stimulate wages growth and lower levels of inequality. This arises not from a principled concern with equality and social justice, but from a worry that capitalism is losing its dynamism. In this sense Keynes becomes less a harbinger of an alternative social order and more the buoy for capitalism. 

As we know Keynes reconstructed liberalism not just out of an analysis of the instabilities of capitalism, but because of the advent of an increasingly powerful and organised working class. Keynesian liberalism took the form of a class accommodation between labour and capital, and so it was with good reason that the neoliberals tore that social contract apart by attacking the working class for neoliberalism can raise its ugly head only when the proletariat is enfeebled. The rise of Hayek, like Keynes, was made possible on the picket lines. One of the least discussed aspects of this class war was the way in which mass consumerist culture was employed to erode working class consciousness. Any return to a reformist order cannot happen on the back of an intellectual disquisition. It must be made to happen, and at the risk of sounding like Marx, that requires a historical subject and in capitalist society that can be only a highly organised and self aware working class united in thought and action across borders. That, unfortunately, remains a work in progress.

We noted that Keynes comes with many a mask. The Keynes that would be returned would be a function not of analysis but rather of working class power. The more powerful the working class the more closely a reformist class accommodation with capital will approximate the Keynes of The General Theory. We note that working class power is not just relative to capital, for it is also relative to class collaborationist trade unions and parliamentary parties that claim to represent workers. When a narrow layer of officials and parliamentarians tightly control the labour movement any reformist social contract that emerges between labour and capital would be more accommodating of the needs and requirements of capitalism than it would be should the working class be organised democratically. 

An insurgency within the labour movement is the necessary midwife of both reform and revolution. 

So we return to our paradox. Although Keynes was engaged in the reconstruction of liberalism it was a reconstruction made possible by socialism. The working class, which made itself through struggle and sacrifice, animated by a vision of an alternative socialist order, is what made reformism possible. Without revolutionary vision there is no reform for the contours of reform lack content without a revolutionary, dare I say it utopian, horizon toward which reform aspires to reach. 

Such a horizon, to be consistent with our three theses, must be of a libertarian socialist type arising from modern anarchism. It is a pity, therefore, that anarchists are blissfully ignorant of the brute fact with which we began and with which we can only but begin.

*The opinions expressed in this piece are those of the author a not NIBS as an organisation, though of course we agree to publish it. 

Jonathan Rutherford