Monday, October 6, 2014

Thoughts on Keynes and Socialism

This is inspired, ultimately, by Simon Wren-Lewis's post, "Is Keynesian Economics Left Wing," which came to me via The Economists View. I do not feel confident that what I have written here is correct; it seems to me what one might think, after much more study.

As to the question of Keynesians being socialist, or not, I might call him a technocratic socialist, to distinguish his position from the labor socialism of Marx and his successors. Keynes argued that "a somewhat comprehensive socialization of investment" was sufficient to bring about full employment and maximum (or desired) productivity and offered methods for achieving that using existing financial and governmental structures. The goals he set out, I would say, were socialist, in the sense of governing the economy for the welfare of all, rather than a ruling class, but his methods were entirely different from those proposed by socialist parties, and in contradiction to those of communism. Rather than the minute planning of every aspect of the economy, which was popular among some socialists of his day, he proposed to eschew minute planning and instead govern investment in a way favorable to a broad middle class. He set out ways in which a democracy might accomplish goals of economic fairness without overturning the whole of society.

Because of this, socialist and communist parties opposed his ideas and, so far as I know, still do. The whole labor socialist project is called into question by Keynesian economics. Because of his advocacy of control of investment, he also has strong opposition on the part of the right, from the wealthy who do not wish to give up even partial control of their wealth and also from people who prefer an aristocratic social order.

And all of this is very much a shame, because it is not like labor activism would be unnecessary in an polity governed by Keynesian precepts, nor would leaders and rulers become unnecessary in such a society. If the various factions would see past their ideologies, Keynesianism has much to offer both sides. In such a society, labor need not fear impoverishment from arbitrary financial policies or random economic weather and rulers and leaders need not be authoritarians.

11 comments:

john_burke100 said...

" He set out ways in which a democracy might accomplish goals of economic fairness without overturning the whole of society.

Because of this, socialist and communist parties opposed his ideas and, so far as I know, still do. The whole labor socialist project is called into question by Keynesian economics...

And all of this is very much a shame, because it is not like labor activism would be unnecessary in an polity governed by Keynesian precepts, nor would leaders and rulers become unnecessary in such a society."

To the extent that communist (if not socialist) movements adopted the goal of a classless society, their program ultimately called for them (as working-class political parties) to become unnecessary. Keynes used to be seen on the Marxist Left as someone whose aim was to save capitalism from collapsing as the result of its "internal contradictions;" in this view, economic fairness was a means, not a goal.

I think this criticism is misplaced, since I think the Marxist scenario--inevitable capitalist crisis leading to a revolution and the replacement of capitalist relations by workers' power in a completely socialized economy--is a dangerous illusion. (I didn't always think this.) But for a movement committed to that scenario, anything that postpones the inevitable crisis, preserving private ownership of capital (though subject to democratic governance of the investment function), is a diversionary maneuver by the class enemy.

The Raven said...

Thank you. You have clarified something I was not quite able to get my claws into. Would you mind if I quoted you over at Economist's View?

What you describe sounds very much like the views of some Christian apocalyptics. Don't try to do anything about the problems of this world: think about the next world instead. But Marx was a materialist and an atheist, and for him there no next world. After revolution, was there to be economic unfairness? How Marx would have satirized that idea! (And perhaps he did—there is a lot of Marx I have not read.)

I think the Christian elements of Hegelian dialecticism ran away with Communism, something I doubt Marx intended.

john_burke100 said...

Thank you, and sure, feel free to repost.

Marx was indeed a materialist and an atheist, but I've come to think he developed his economic theories in order to substantiate a basically idealist, Hegelian claim about history: that, proceeding by dialectical struggles (which he assimilated to class struggle), it would ultimately lead to the realization of the Absolute Ideal (which he assimilated to Communism, the society where abundance would permit "from each according to his ability, to each according to his need" (rather than "his labor" as under Socialism.) There's an 1851 letter to Engels in which he writes "I am so far advanced that I will have finished with the whole economic stuff in 5 weeks’ time. Et cela fait [and having done that] I shall complete the political economy at home and apply myself to another branch of learning at the Museum. Ça commence de m'ennuyer [it’s beginning to bore me]." This about 18 years before finishing Vol. 1 of Capital.

The whole "standing Hegel on his feet" and "uncovering the rational kernel in Hegel" business, I think, shows that he started from a model and then set about finding a material logic that would fulfill it. He develops a theory of capitalist crisis in order to argue that one day there will come the final capitalist crisis, at which time "the integument [will be] burst asunder." He develops a sociology according to which the mystified consciousness he's already ascribed to commodity fetishism will (dialectically) turn into its opposite, i.e. class consciousness; the proletariat will cease to be merely a "class in itself" and become a class for itself." "Man is at last compelled to face, with sober senses, his real conditions of life and his relations with his kind"--it's the "compelled" that I think gives the game away. The presuppositions are idealist; the materialism is invoked ex post, to show why they must become real.

This is, I realize, a minority view.

The Raven said...

A minority view, and a better studied one than mine. I suspect you are correct, though. Marx carefully avoided making idealist arguments, but he was personally an idealist.

The Raven said...

I did quote you, and added, "More moderate socialists (Wikipedia informs me) embraced Keynesian policies for a time, though not without doubts. The doubts seem to have been justified: the past 35 years have seen largely successful attempts to assert the power of a wealthy ruling elite.

So is Keynesian economics leftist? Ultimately, I would say yes. The political reforms made to implement Keynesian policies have proven to be inadequate, and I can see no way Keynesian policies can ever be maintained without much stronger laws, institutions, and regulations than we have so far created.

john_burke100 said...

"The doubts seem to have been justified: the past 35 years have seen largely successful attempts to assert the power of a wealthy ruling elite."

This is why, to my surprise, I've become a Bernsteinian. There was progress toward labor rights, racial justice, an end to gender discrimination, provision of social benefits as a matter of right; the other side re-took the offensive about 1980. I'm willing to hear an argument for the view that the earlier period was made possible only by an anomalous economic situation, and that situation will never return (the "boot stamping on a human face forever" vision of the future.) But I think the likeliest future is Bernstein's: "the end is nothing [or illusory and in any case not worth debating], the struggle everything." We can be certain there will continue to be all kinds of contention over issues of economic and social justice; I think predicting anything more specific is a pointless activity.

The Blog Fodder said...

This conversation fascinates me as I have been trying to understand Marxist-Leninist ideology in order to understand WHY people did what they did in Soviet times. As a Ruminant Nutritionist by academic training, getting my head around Hegelian, materialist, consciousness, and dialectic simply grinds me to a halt every time I run into them. Damn.

john_burke100 said...

I can think of a couple of lines of inquiry into how Marxist-Leninist ideology was connected to the horrors of Stalinism. One is the same dangerous apriorism that I think was at the root of many of Marx's unsustainable analyses and forecasts: the capitalist integument must be burst asunder, Socialism must be able to achieve extraordinary economic gains, whence it follows that failure can only be the result of deliberate sabotage, so let's go looking for saboteurs.

Leszek Kolakowski (whose "Main Currents of Marxism" I very much admire) proposes another: if everything is historically contingent, if in particular codes of ethics and fairness are always expressions of class interest disguised as universals, then anything is permitted in the cause of the (notional) working class. Thus objections to Stalinist terror may be voiced in the language of universal human rights, justice etc., but there are no such universals, and those who invoke them are hypocrites, pursuing a class agenda of their own. The charge of hypocrisy is in fact often well-founded--I'll see your Ukrainian famine and raise you the Atlantic slave trade--but it remains the case that historical materialism, the insistence that ideas and values are ultimately reducible to class interest, amounts to a license to kill.

The Raven said...

I had to look up Eduard Bernstein. Do I grasp correctly that his thinking was ancestral to modern social democracy?

I think the period 1950-80 was a result of the genuine fear of class revolution and above all nuclear war on behalf of "the ruling class." Revolution on Russian lines was never likely in the USA but, as we have lately been reminded, there is a faction of the very wealthy that is enormously fearful, and regards even mild criticism threatening. Great concessions were made to avoid these eventualities. Once the USSR fell, they returned to their old tricks. This faction is now failing to recognize that they are actually in a much more risky situation than in the period 1950-80. Fear is not rational.

(More, perhaps better thought out, later.)

john_burke100 said...

As I understand it, Bernstein was the best-known representative of one of three contending groups within the German Social-Democratic Party before the First World War. The center was led by Karl Kautsky and August Bebel, the Left by Rosa Luxemburg. Lenin attacked him (and Kautsky) very harshly for betraying the workers' cause, notably by voting for war credits in the Reichstag in 1914.

I'd locate the fear-of-revolution motive earlier in US history. Even in the 20s, when the American Communists were a small, faction-ridden group, their ability to organize workers whom the AFL ignored--textile workers in Gastonia, North Carolina, big groups inside the needle trades unions in New York, et al.--scared the pants off capital, and come the 30s the fear got almost hysterical at times. On this reading, the genius of FDR was to finesse the far Left by bringing the CIO on board, committed to the Democratic Party in electoral politics and made quasi-official (the French call this "étatisation") via the Wagner Act and its basic principle of exclusive bargaining representation for each NLRB-defined unit. The Communists balked until 1934 (Roosevelt was called a "social-fascist") but did a U-turn thereafter; the reasons are complex.

Finally, I'm not sure the People in Charge really are at greater risk now than when there was a concrete example (however illusory) of how to modernize an economy without private ownership of capital. By the late 1960s the USSR was so discredited that the new revoutionaries in the US (and elsewhere in the developed world) looked to China, or Cuba, or "liberated zones" in the anti-colonial wars in Asia and Africa, for models--even more remote from our realities, and less likely to convince most Americans, than the USSR in (say) 1936. I keep hearing that capitalism is through, that Marx's theory (theories) of crisis have been confirmed by events. (A dubious claim for a doctrine that called itself "scientific Socialism"--insofar as Marx's predictions were falsifiable they've been consistently falsified, and cherry-picking evidence to "confirm" a claim ain't "scientific.") But I'm not hearing (though I may well just be overlooking) anything like a proposal to run this economy, at this historical moment, in a fundamentally different way. So I fall back on Bernstein, incrementalism, reformism, a revival of unionism, a renewed push to regulate the worst capitalist depredations... also not what I'd call a very likely scenario, but moreso than a revolution with no revolutionary organization or a socialized economy without even the outline of a plan.

Some of this, I admit, is subjective; at 72, I feel safe in saying the Commonwealth of Toil (old IWW phrase) lies beyond my time horizon. Labor law reform? Single-payer health insurance? I'll take it.

The Blog Fodder said...

Gentlemen, thank you. I have downloaded Kolokowski's three manuscripts but have not had the nerve to read them yet. I did read Richard Sakwa's Communism in Russia (twice with coloured markers) and got a fair understanding from it of what you say about the need to find saboteurs as the system was perfect and could not possibly fail. Also the "class-based" universals as a licence to kill. Funny, even today in "civil society" meetings rather than solve problems, the meeting degenerates into finding someone to blame.
I had not heard of Bernstein before but certainly you describe where I am coming from in terms of some kind of middle path to the two extremes. I also think the 1% or better the 0.01% are terrified of a revolution as there is no way they will allow even Bernsteinian reforms. Funny, in pre-revolutionay Russia, the nobility was 1.5%, the peasants and serfs about 83-87% and the balance was the middle class - Doctors, lawyers, merchants. Where the USA is headed.