Michael Roberts on Keynesianism & the modern left

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I'm finding Michael Roberts's latest book a lot punchier than "The Long Depression". After a strong and penetratingly-clear review of Marx's 'three laws' (of value, of accumulation and of the tendency of the rate of profit to fall) he moves on to Marx's critics and has this interesting analysis of the continuing popularity of Keynesianism in the ranks of the modern socialist left.

"Marx, Keynes and the labour movement

Keynesian economics dominates on the left in the labour movement. Keynes is the economic hero of those wanting to change the world; to end poverty, inequality and continual losses of incomes and jobs in recurrent crises. In the US, the great gurus of opposition to the neoliberal theories of Chicago school of economics and the policies of Republican politicians are Keynesians.

In the UK, the leftish leaders of the Labour party around Jeremy Corbyn and John McDonnell, self-proclaimed socialists, look to Keynesian economists for their policy ideas and analysis. They bring them onto their advisory councils and seminars.

Those graduate students and lecturers involved in Rethinking Economics, an international attempt to change the teaching and ideas away from neoclassical theory, are led by Keynesian authors like James Kwak or post-Keynesians like Steve Keen, or Victoria Chick or Frances Coppola. Here the idea that inequality is the enemy, not capitalism as such, dominates the media and the labour movement. This is not to deny the ugly importance of rising inequality, but to show that a Marxist view on this does not circulate.

So why do Keynesian ideas continue to dominate? Geoff Mann provides us with an insightful explanation. In a new book, entitled In the Long Run We are all Dead, Mann reckons it is not that Keynesian economics is seen as correct. There have been "powerful Left critiques of Keynesian economics from which to draw; examples include the work of Paul Mattick, Geoff Pilling and Michael Roberts", but Keynesian ideas dominate the labour movement and among those opposed to what Mann calls 'liberal capitalism' for political reasons.

Keynes rules because he offers a third way between socialist revolution, and barbarism, i.e. the end of civilisation as we (actually the bourgeois like Keynes) know it. In the 1920s and 1930s, Keynes feared that the `civilised world' faced Marxist revolution or fascist dictatorship. But socialism as an alternative to the capitalism of the Great Depression could well bring down 'civilisation', delivering instead 'barbarism' - the end of a better world, the collapse of technology and the rule of law, more wars etc. So he aimed to offer the hope that, through some modest fixing of 'liberal capitalism', it would be possible to make capitalism work without the need for socialist revolution. There would be no need to go where the angels of 'civilisation' fear to tread. That was Keynes' narrative.

This appealed (and still appeals) to the leaders of the labour movement and 'liberals' wanting change. Revolution was too risky and we could all go down with it. Mann: "the Left wants democracy without populism, it wants transformational politics without the risks of transformation; wants revolution without revolutionaries". This fear of revolution, Mann reckons, was first exhibited after the French revolution. That great experiment in bourgeois democracy turned into Robespierre and the terror; democracy turned into dictatorship and barbarism — or so the bourgeois myth goes.

Keynesian economics offers a way out of the 1930s depression or the Long Depression now without socialism. It is the third way between the status quo of rapacious markets, austerity, inequality, poverty and crises and the alternative of social revolution that may lead to Stalin, Mao, Castro, Pol Pot and Kim Jong-Un.

It is such an attractive 'third way' that Mann professes that it even appeals to him as an alternative to the risk that revolution will go wrong (see his last chapter, where Marx is portrayed as the Dr Jekyll of Hope and Keynes as the Mr Hyde of Fear).

As Mann puts it, Keynes reckoned that, if civilised experts (like himself) dealt with the short-run problems of economic crisis and slump, then the long-run disaster of the loss of civilisation could be avoided. The famous quote that makes the title of Mann's book, that 'in the long run we are all dead, was about the need to act on the Great Depression with government intervention and not wait for the market to right itself over time, as the neoclassical (`classical' Keynes called it) economists and politicians thought.

For "this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past, the ocean is flat again" (Keynes). You need to act on the short term problem or it will become a long-term disaster. This is the extra meaning of the long run quote: deal with depression and economic crises now or civilisation itself will come under threat from revolution in the long run.

[...]

Like all bourgeois intellectuals, Keynes was an idealist. He knew that ideas only took hold if they conformed to the wishes of the ruling elite. As he put it, "Individualism and laissez-faire could not, in spite of their deep roots in the political and moral philosophies of the late eighteenth and early nineteenth centuries, have secured their lasting hold over the conduct of public affairs, if it had not been for their conformity with the needs and wishes of the business world of the day...These many elements have contributed to the current intellectual bias, the mental make-up, the orthodoxy of the day.". Yet he still really believed that a clever man like him with forceful ideas could change society even it was against the interests of those who controlled it.

The wrongness of that idea was brought home to him in his attempts to get the Roosevelt administration to adopt his ideas on ending the Great Depression and for the political elite to implement his ideas for a new world order after the world war.

He wanted to set up 'civilised' institutions to ensure peace and prosperity globally through international management of economies, currencies and money. But these ideas of a world order to control the excesses of unbridled laissez-faire capitalism were turned into institutions like the IMF, World Bank and the UN Council, used to promote the policies of imperialism, led by America.

Instead of a world of 'civilised' leaders sorting out the problems of the world we got a terrible eagle astride the globe, imposing its will. Material interests decide policies, not clever economists. "

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Michael Roberts has the strengths and weaknesses of an orthodox Marxist. I lay stress on the word orthodox here. He dismisses Keynes, along with the other critics he considers, because in no case do they propose socialist revolution to deal with the ills of capitalism (as he portrays them).

Roberts's critiques seem wholly compelling: the crises in capitalist reproduction are indeed crises of profitability (and not lack of effective demand, as Keynes claims), yet the brutal methods (devaluation of capital, lowering of wages) required to restore profitability within the framework of capitalism are not at all congenial to well-meaning economists or politicians seeking votes. Yet when executed by the impersonal forces of the crisis itself, they do work.

Roberts would prefer less callous, less cyclical pathways to growth. That's why he's a socialist. Yet he has no model for socialism, no hint as to how the overwhelming motivational and coordination issues of a global economy can be addressed in a manner superior to capitalism. There's just the blind faith that somehow the organised proletariat can do the job.

No political proposition with such a 'manifesto' has a prayer of being taken seriously and in his heart of hearts, Roberts knows it. Hence the ritualistic quality of his denunciations. Yet this selective myopia does neither him nor his book any favours.

And before uncritically lauding the (capitalist-driven) post-1980 successes of China and denouncing the (capitalism-blamed) stagnation of the third world he might try to emulate the bravery of bourgeois economist Garett Jones and absorb this.

But of course I have no serious expectations.

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I recently wrote about Steve Keen and Corbyn. I plan to work my two posts so far about Marx 200 into an Amazon review over the next few days.