KEYNES AND LIBERAL SOCIALISM : radical views on the economic role of the state

Keynes is one of the most important and influential economists who ever lived. It is almost universally believed that Keynes wrote his magnum opus, The General Theory of Employment, Interest and Money, to save capitalism from the socialist, communist, and fascist forces that were rising up during the Great Depression era. This book argues that this was not the case with respect to socialism. Tracing the evolution of Keynes’s views on policy from WWI until his death in 1946, Crotty argues that virtually all post-WWII "Keynesian" economists misinterpreted crucial parts of Keynes’s economic theory, misunderstood many of his policy views, and failed to realize that his overarching political objective was not to save British capitalism, but rather to replace it with Liberal Socialism. This book shows how Keynes’s Liberal Socialism began to take shape in his mind in the mid-1920s, evolved into a more concrete institutional form over the next decade or so, and was laid out in detail in his work on postwar economic planning at Britain’s Treasury during WWII. Finally, it explains how The General Theory provided the rigorous economic theoretical foundation needed to support his case against capitalism in support of Liberal Socialism. Offering an original and highly informative exposition of Keynes’s work, this book should be of great interest to teachers and students of economics. It should also appeal to a general audience interested in the role the most important economist of the 20th century played in developing the case against capitalism and in support of Liberal Socialism. Keynes Against Capitalism is especially relevant in the context of today’s global economic and political crises. Series page 3 Title page 6 Copyright 7 Dedication 8 Contents 10 Acknowledgments 13 1 Introduction: was Keynes trying to save capitalism or create “Liberal Socialism?” 14 PART I: From The Economic Consequences of the Peace to The General Theory 36 2 The Economic Consequences of the Peace: 1919 38 3 Making sense of chaos: 1919– 1923 47 4 Public investment and state planning in 1924: the real Keynesian revolution begins 61 5 The return to gold in 1925: deflation, social justice, and class struggle 76 6 Three important “essays in persuasion” on the proper economic role of the state: 1925–1926 83 7 Destructive competition, corporatism, industrial policy, and the new economic role of the state: 1927–1928 97 8 Britain’s Industrial Future and the Board of National Investment: a detailed analysis of the institutions to be used by the state to regulate capital accumulation in pursuit of full employment under Liberal Socialism 108 9 On the edge of the Great Depression: Keynes continues his efforts to gain political support for the radical policies in Britain’s Industrial Future 129 10 Keynes on “insane” financial markets and the emergence of stagnation in the USA in the early 1930s 149 11 National self-sufficiency: 1933 165 PART II: The General Theory: the ultimate defense in theory of Keynes’s radical policy agenda 172 12 Methodology and ideology: Keynes versus the classicists 174 13 The priority of high-unemployment long-run equilibrium or “secular stagnation” in The General Theory 185 14 Upon further reflection: Keynes on secular stagnation in 1937 214 15 Keynes versus the classicists on the effects of wage and price deflation 222 16 Keynes versus the classicists on disequilibrium processes in the bond market 234 17 Chapter 12 of The General Theory: the “insane” stock market, capital investment, and instability 252 18 The theory of the business cycle in chapter 22: integrating the profit rate and the bond and stock markets in a theory of financial and economic instability 277 19 Are the “models” Keynes created in The General Theory compatible with the IS/LM interpretation of the book? A digression 282 20 Keynes’s radical policy views in The General Theory 304 PART III: State planning, public investment, and Liberal Socialism after The General Theory 324 21 From The General Theory until Britain entered WWII: 1936–1939 326 22 Keynes and government postwar economic planning for “Liberal Socialism” during the war: 1939–1945 339 23 Thoughts on the relevance of Keynes’s work to solving today’s economic problems: the society–economy nexus, methodology, theory, and policy 379 References 392 Index 396 1. Introduction: Was Keynes Trying To Save Capitalism Or Create Liberal Socialism? -- Part I. From The Economic Consequences Of The Peace To The General Theory: 2. The Economic Consequences Of The Peace: 1919 ' 3. Making Sense Of Chaos: 1919-1923 ; 4. Public Investment And State Planning In 1924: The Real Keynesian Revolution Begins ; 5. The Return To Gold 1925: Deflation, Social Justice And Class Struggle ; 6. Three Important Essays In Persuasion On The Proper Economic Role Of The State: 1925-1926 ; 7. Destructive Competition, Corporatism, Industrial Policy And The New Economic Role Of The State : 1927-1928 ; 8. Britain's Industrial Future And The Board Of National Investment : A Detailed Analysis Of The Institutions To Be Used By The State To Regulate Capital Accumulation In Pursuit Of Full Employment Under Liberal Socialism ; 9. On The Edge Of The Great Depression : Keynes Continues His Efforts To Gain Political Support For The Radical Policies In Britain's Industrial Future ; 10. Keynes On Insane Financial Markets And The Emergence Of Stagnation In The Usa In The Early 1930s ; 11. National Self-sufficiency : 1933 -- Part Ii. The General Theory: The Ultimate Defense In Theory Of Keynes's Radical Policy Agenda: 12. Methodology And Ideology : Keynes Versus The Classicists ; 13. The Priority Of High-unemployment Long-run Equilibrium Or Secular Stagnation In The General Theory ; 14. Upon Further Reflection : Keynes On Secular Stagnation In 1937 ; 15. Keynes Versus The Classicists On The Effects Of Wage And Price Deflation ; 16. Keynes Versus The Classicists On Disequilibrium Processes In The Bond Market ; 17. Chapter 12 Of The General Theory : The Insane Stock Market, Capital Investment And Instability ; 18. The Theory Of The Business Cycle In Chapter 22 : Integrating The Profit Rate And The Bond And Stock Markets In A Theory Of Financial And Economic Instability ; 19. Are The Models Keynes Created In The General Theory Compatible With The Is/lm Interpretation Of The Book : A Digression ; 20. Keynes's Radical Policy Views In The General Theory -- Part Iii. State Planning, Public Investment And Liberal Socialism After The General Theory: 21. From The General Theory Until Britain Entered Wwii : 1936-1939 ; 22. Keynes And Government Postwar Economic Planning For Liberal Socialism During The War : 1939-1945 ; 23. Thoughts On The Relevance Of Keynes's Work To Solving Today's Economic Problems : The Society-economy Nexis, Methodology, Theory, And Policy. James Crotty. Includes Bibliographical References And Index. It is almost universally believed that Keynes wrote his magnum opus, The General Theory of Employment, Interest and Money to save capitalism from the socialist, communist, and fascist forces that were rising up during the Great Depression era. On the contrary, this book argues that this was not the case with respect to socialism.