John Maynard Keynes, a liberal

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By FERNANDO NOGUEIRA DA COSTA*

The economist preached not political agitation or premature experiments, but rather sensible and reformist thinking

John Maynard Keynes, in the last topic of the essay “The End of Let it do” (1926), argues that some coordinated act of intelligent judgment is necessary as to the scale at which it is desirable for the community as a whole to save, the scale at which these savings should go abroad, in the form of Foreign Direct Investment [FDI]. , if the current organization of the capital market distributes savings through the most productive channels at national level. These matters should not be left entirely to the chance of private judgment and private profits, as was the case.

He even dared to defend, in 1926, a demographic policy. “The time has come when each country needs a considered national policy on the size of the population, be it larger or smaller compared to the current one, be it equal, be it the most convenient”. It was only in 1960 that the first contraceptive pill went on sale.

His reflections were directed towards possible improvements in the technique of modern capitalism through the agency of collective action. There was nothing in them seriously incompatible with the essential characteristic of capitalism. For him, this was “the dependence on an intense appeal to the money-making and money-loving instincts of individuals acting as the main driving force of the economic machine.”

I expected the fiercest disputes and deepest divisions of opinion to be fought in the following years, not around technical issues, where the arguments on both sides were mainly economic, but around those that could be called psychological issues. or, perhaps, morals.

At the time, fascism and Nazism were still hatching their “serpent eggs”. Today, neofascism has resurfaced, deployed in electoral campaigns, in which economic programs are no longer discussed, but rather moral or religious agendas.

Three years before the Crisis of 1929, there was a latent, somewhat widespread reaction against basing society, as was done, on the promotion, encouragement and protection of individuals' monetary motivations. The preference was to organize matters so as to appeal to the monetary motive as little rather than as much as possible.

Most religions and philosophies disparaged, or even discredited, a way of life influenced primarily by considerations of personal monetary gain. On the contrary, most people rejected these ascetic notions and did not doubt the real advantages of wealth.

Currently, prosperity theology exalts the possible privileges that wealth and money can bring, presenting them as “retribution from God” to the faithful evangelical followers of its doctrine, replacing faith and divine devotion with prosperous enterprises. This is the commercialization of the Christian faith through the distortion of biblical teachings. He works in congressional politics via the “Bible bench”.

Many militant people, truly opponents of capitalism as a way of life, argued as if they were opposing it on the basis of its inefficiency in achieving their own goals. In turn, devotees of capitalism tended to be unduly conservative and rejected any reforms in its mercantile logic.

On the contrary, these reforms, according to John Maynard Keynes, could actually strengthen and preserve it. Yet, to this day, conservatives are afraid they will prove to be the first steps away from capitalism itself.

John Maynard Keynes thought that “capitalism, if managed wisely, can probably become more efficient in achieving economic ends than any alternative system yet in sight, but it is in itself, in many respects, extremely questionable. Our problem is to devise as efficient a social organization as possible without offending our notions of a satisfactory way of life.”

He preached not political agitation or premature experiments, but rather sensible and reformist – not revolutionary – thinking. In the field of action, reformers would not be successful until they were able to firmly pursue a clear and defined objective, with their intellect and feelings in tune.

John Maynard Keynes said in 1926: “There is no party in the world at present which seems to me to pursue right aims by right methods. (…) We need a new set of convictions.”

Interestingly, in a lecture at Liberal Summer School, in the year before the essay “The End of Laissez-Faire”, later published as two articles reproduced in Essays in Persuasion, discusses whether he should join the Conservative, Liberal or Labor Party.

He said he was not a conservative – “they offer me neither food nor drink – neither intellectual nourishment… nor spiritual nourishment”. In turn, he rejects the Labor Party because it is a class party, “and that class is not my class. I can be influenced by a proposal that seems fair and common sense to me, but the class struggle will find me on the side of the educated bourgeoisie.” This left him the Liberal Party “as the best instrument of future progress – if only it has strong leadership and the right program”.

As an open bisexual, I had no doubt that sexual issues were about to enter the political arena. The beginnings represented by the women's suffrage movement were merely symptoms of deeper and more important issues beneath the surface.

“Birth control and the use of contraceptives, marriage laws, the treatment of crimes and sexual anomalies, the economic position of women, the economic position of the family – in all these matters the present state of the law and orthodoxy is still medieval and out of touch with civilized opinion and civilized practice and with which individuals, learned and unlearned, say to one another in private.”

The change of opinion on these issues would not only affect a small educated class. Working women would not be shocked by the ideas of birth control or divorce laws.

For them, it would be emancipation from the most intolerable of tyrannies: marriage and unwanted pregnancy. A party discussing these things, openly and wisely, in its meetings, would discover a new and lively interest in the electorate – because politics would be dealing with issues capable of profoundly affecting everyone's own lives.

These issues were also intertwined with economic issues, the greatest of all political issues, which John Maynard Keynes felt most qualified to speak about. Until then, the world had experienced three economic orders, the third of which it was entering.

The normal economic situation in the world, until the XNUMXth century, was defined as the era of scarcity, whether due to inefficiency or violence, war, customs, superstition. In such a period, there was a minimum of individual freedom and a maximum of feudal or governmental control through physical coercion.

During the XNUMXth and XNUMXth centuries, people struggled to leave the slavery of scarcity and enter society with the free air of abundance, culminating in the XNUMXth century, gloriously, in the victories of laissez-faire and classical liberalism. In this relative age of abundance, there was maximum individual freedom, minimum coercive control through government – ​​and individual negotiation had taken the place of rationing.

But, in 1925, a third era called the era of stabilization was entering. Truly, according to Keynes, it was characterized as “the real alternative to Marx’s communism”.

In this period, said institutionalist economist Commons, “there is a diminution of individual freedom, imposed in part by government sanctions, but mainly by economic sanctions through concerted action, whether secret, semi-open, open or arbitration, by associations, corporations, unions, and other collective movements of manufacturers, traders, workers, farmers and bankers'. The abuses of this age, in the spheres of government, are fascism, on the one hand, and Bolshevism, on the other.”

Socialism, according to John Maynard Keynes, “also arises from the assumptions of the age of abundance, as much as socialism laissez-faire, individualism and the free play of economic forces, before which everyone still bows regrettably.”

The transition from economic anarchy to a regime aiming to deliberately control and direct economic forces in the interests of social justice and social stability will present enormous difficulties, both technical and political. John Maynard Keynes ends his talk to members of the Liberal Party by suggesting “the true destiny of the new liberalism is to seek its solution”, that is, to offer an alternative to Soviet socialism, whose violent revolution in Russia had taken place just eight years ago, in October from 1917.

*Fernando Nogueira da Costa He is a full professor at the Institute of Economics at Unicamp. Author, among other books, of Brazil of banks (EDUSP). https://amzn.to/3r9xVNh


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