What is Keynesianism?



Considerations on the thought and practice of the open strand by John M. Keynes

In a very synthetic way, Keynesianism can perhaps be exposed through a cheeky analogy that employs the circuit of capital in general. At least that is how it is presented in Geoff Mann's book,[I] In the long run we're all dead (2017): “Just as the commodity was placed by Marx, in the circuit of capital in general, that is, in M ​​– M – M’, as a middle term in the expansion of value, the Keynesian dialectic captures the central dynamic of liberalism illiberal placing the State as a middle term in the L – E – L' circuit, which has actually existed for two centuries” (Mann, 2017, p. 386).

Now, as the thesis contained in this analogy appears to be well thought out even after a second glance, the note that follows aims to explain it.

It should be noted right away that Mann characterizes John M. Keynes as an illiberal liberal, as someone who acts as an advocate of state intervention to modify and preserve liberalism, that is, the enforced freedom and restrictive prosperity that the actually existing economic system does. exist. But this, according to him, is not new. For, capitalism has not subsisted solely on the strength of markets, but, on the contrary, has been renewed and reconstituted by the State and by the interventionist political economy for a long time. According to this author, this has been the case at least since the November 1799 coup, when Napoleon Bonaparte took power in France after the 1789 Revolution.

Keynes, therefore, was yet another protagonist, even if extremely important, in a continuum of counter-overwhelming economic and state policy action that comes from a long way off. Like others before and after him, he illiberally judged that the seeds of his own destruction are always germinating in capitalism. And that they do not develop to the point where this actually happens because the state's action protects, saves, and thus constantly restores liberalism.

Here is how Mann explains Keynesianism: “The decisive contribution of Keynesianism to liberalism consisted in legitimizing its hegemony by continually generalizing, pragmatically and scientifically, a vision of the world in which the well-being provided by the State and the prosperity of civil society are present. conceptually as inseparable. And this is really her definition of “civilization” [from Keynes' perspective]. This inescapable illiberal liberalism proved essential for the survival of even the much more dogmatic classical liberalism; for it supplied him with an anxious political logic, without which he could not have survived without a constant use of brute force. The bourgeoisie and the middle class are thus both the effect and the cause of Keynesian “civilization”. (Mann, 2017, p. 386).

But why mention that the political logic of Keynesianism is permeated by anxiety? Mann suggests that a mixture of hope and fear underlies the legacy of this economist who did not endorse classical liberalism. And that this contradictory compound is implicit in the emblematic declaration that “in the long term we will all be dead” – an expression that, for this very reason, was chosen as the title of his book. This is how Keynesianism installs itself between the promise of economic success and the constant threat that new disasters will supervene, even eventually large ones such as the one of the 1929 Crisis. life of its managers is not easy.

This expression also suggests – as Mann points out – that living in a certain state of restlessness about becoming is the inexorable fate of all possible “civilization”. From this perspective, there would also be no way to build another better future than the one that preserves the core of capitalism in the best possible way. There would be other alternatives, but all of them, inevitably, would somehow bring the specter of authoritarianism and even barbarism. In other words, for Keynes capitalism would be the Hegelian end of history.

From an economic point of view, Keynesianism is what Keynesian economists do in theoretical and practical terms or what is referred to a well-defined set of propositions about the functioning of the economic system, which are present and demarcate Keynes' heritage, in particular in General theory of employment, interest and money? Even though the first alternative may be acceptable, it is clear that Keynes' legacy has certain well-defined characteristics: the activity of money, the instability of investment in maintaining effective demand, the systemic uncertainty surrounding business decisions, the countervailing role State arrestor, etc.

There is, however, a fundamental point. It is central to observe that his economic theory is stagnationist: “the richer the community, the more it will tend to widen the gap between its actual and potential production; and, therefore, the more obvious and harmful the defects of the economic system” (Keynes, 1983, p. 33). As well as verifying that his critical view arises from an analysis focused on circulation – and not on the production of goods, taking these as forms of capital (Prado, 2016). For, as Marx pointed out ironically, “the sphere of circulation or exchange of commodities (…) is indeed a veritable Eden of the natural rights of man (…) liberty, equality, property and Bentham” (Marx, 1983, p. 145). ).

It is, therefore, in the sphere of market sociability that Keynes' reservations about capitalism are found. Exploitation, alienation and conflict between the productive forces and the relations of production are not problems for him. In contrast, he emphasizes above all that the very nature of market interactions makes it difficult to reconcile individual interest with collective well-being. And, in that sense, as Mann points out, he does not share the cynical optimism of Bernard Mandeville exposed in his fable of the bees. For him, the pursuit of self-interest would not always result in common welfare – but a latent and permanent malaise. Furthermore, the poor distribution of income and unemployment resulting, in the last analysis, from interactions driven by self-interest, tend to feed a deep anger in mercantile society that can undermine – he believes – its civilizing potential.

According to Geoff Mann, three characteristics distinguish the long tradition to which John M. Keynes belongs. The first is the absence of a universalist humanism capable of projecting a civilized future for all human beings. On the contrary, all of its civilizing concern only concerns the Euro-American world; behold, only the well-being of this fraction of humanity interests him: “Keynesianism” – he says – “has almost always been not just an elaborate critique within liberal capitalism of the 'industrial' nation-states of Western Europe and North America North – but it has mostly been a criticism that ignores everything else”. In this sense, it is – as he also says – a moderating social critique that “perfectly mirrors the bourgeois, colonialist, male and white world in which and for which he speaks” (Mann, 2017, p. 47).

The liberal doctrine of Keynesianism is generally called “embedded liberalism” to emphasize that it envisages the realization of bourgeois freedom only within a social order that establishes a certain unity, a certain harmony. Keynes, in particular, is critical of what is also often called “disembedded liberalism”, which had underpinned the worldview of classical political economy and free-trade imperialism. As a result of its Euro-American bias, this doctrine, like the one it seeks to overcome, is fully consistent with active or passive acceptance of the gross lack of liberalism on the periphery of the global system. More than that, it is consistent with the thesis that the international order can and should be established only by the group of rich countries that see themselves as more developed – even if the poor and well-off countries reject it.

The second characteristic is the lack of adherence to the liberal dogma that always prioritizes individual freedom over equality and social justice. Differently, this tradition usually welcomes a mitigated individualism, taking the freedom of the person as a necessary condition, but not exclusive in itself and, therefore, not sufficient, to create a civilized society. If it is an end, it is also a means to negotiate the realization of a social state in which it itself can exist together with the collective well-being. According to Mann, the Keynesian project basically contains an ambition to create something new, a place, therefore, that does not yet exist. Here, he believes that “freedom, solidarity and security can be fully achieved in a rational social order”, that is, in an order constructed by human will and reason (Mann, 2017, p. 49).

In this sense, it is well known that Keynes considered the lamentable state of society in his time as a colossal mess (colossal muddle), which he wanted to see overcome. It is also known that he himself was making an effort in the 1930s to contribute as much as possible to this happening. His general theory was never a purely academic undertaking, on the contrary, he intended to intervene in the direction of society, that is, the society that interested him.

The third characteristic of Keynesianism is a certain practical optimism, a strong belief in the ability to solve society's problems through appropriate public interventions. This is how Mann explains the false consciousness at work within this current of thought:

Faced with the self-destructive forces produced by civil society itself, it wants to show that such disastrous tendencies should not necessarily lead to a tragic end or even to a temporary rupture or even to a severe penance. Rather, it holds that through patient and pragmatic supervision, existing institutions, ideas, and social relationships have the potential to produce, without disruption, a radical transformation of the social order.

If conservatives argue that it is possible to arrive at the 'best of all possible worlds' by zealously protecting the status quo, if liberals say that it is possible to achieve it through commitment to a set of abstract ideals, if radicals say that this is possible through a reconstruction at the root of social life, Keynesians say that a radically different world is emerging. peacefully finds power in the existing social order – in the Euro-American, liberal and capitalist order, obviously. (Mann, 1917, p. 50).

Keynesianism is therefore self-confident. He advocates a capitalism without capitalism to be achieved through a revolution without revolution, peremptorily stating that he knows very well how to get there. As a result, it asserts itself in theory – and even more in practice-politics – with a certain arrogance. When he is called upon by a winning political force, he takes action to create the good and prosperous social order he deems possible. This – he believes – can be realized historically through the constant use of a practical intelligence of competent administrators, that is, of a social constructivism capable of putting into practice good corrections and reforms in response to the problems that arise.

It is very clear that Keynes, the founding father of this current of practical-political thought in its contemporary version, did not believe either in society's capacity for self-regulation or in the spontaneous good functioning of markets. On the contrary, he thought that society and markets, when left to their own devices, tended towards disorder, impasses and crises, would prolong themselves in the creation of fraying and ruptures that could always grow and threaten. its very existence. According to Mann, with Hobbes, Keynes sensed that the “state of nature” was hidden under the current “social contract” and that, therefore, it would only remain unharmed through State action.

That is, in short, L – E – L'. Or even "not L - L", that is, Keynesianism is a determined, not radical, denial of classical liberalism.

Keynesianism therefore has faith in the State – and not the market – as a force constantly restoring “civilization”. He believes, therefore, that only the State constitutes itself as a power capable of integrating society, of “harmonizing the particular and the universal, materially and ideologically, without sacrificing any of them” (Mann, 2017, p. 54). It is he and only he who can make the “welfare state” exist.

However, it is necessary to see that this “civilization” desired by the Keynesian imaginary cannot come from a “popular democracy” or a “populist democracy” still within the scope of capitalism and much less could it result from the radical democracy that, according to Marx, would be placed historically, in due time, by “freely organized workers”. On the contrary, Keynesianism maintains a certain disregard for the civilizing potential of democracy, since, to believe in it, it is necessary to have strong confidence in society's capacity to solve its own problems. Now, like the secretly Hobbesian Marxists,[ii] he never believed it. In this sense, Keynesianism – just like neoliberalism – wants to protect a crucial space for certain technocratic decisions from the popular vote – that area where, for example, decisions that affect the foundations of the economy and national security are taken.

Consequently, both these currents have something in common.

Finally, it is necessary to emphasize that neoliberalism can also be synthetically explained by the logic L – E – L', with the difference that, for him, the central task of the State is not to carry out the “social welfare state” , but, on the contrary, it is to impose competition and competition as a norm of life in all spheres of society (Dardot and Laval, 2016).

While Keynesianism proposes a plastic metamorphosis of liberalism through the mediation of the State, neoliberalism proposes a cynical metamorphosis. He confesses that “social justice” does not suit the “liberal order”; postulates that humans should only be subjects of money; and, in order to achieve its objectives, it wants to divide society as much as possible in order to reinforce the dominance of the bourgeoisie. The difference in relation to Keynesianism, therefore, is not small – and can even be considered immense –, but it is placed in a common background of identity. Now, it is the latter – the privilege of the State in social change – that currently needs to be overcome.

Eleutério FS Prado is a full and senior professor at the Department of Economics at USP. Author, among other books, of Complexity and praxis (Pleiad).


Dardot, Pierre & Laval, Christian. The new reason of the world: Essay on neoliberal society. Sao Paulo: Boitempo, 2016.

Keynes, John M. General theory of employment, interest and money. São Paulo: Abril Cultural, 1983.

Mann, Geoff. In the long run we are all dead: Keynesianism, political economy, and revolution. London: Verse, 2017.

Marx, Carl. The capital. Criticism of Political Economy. Book I, volume 1. São Paulo: Abril Cultural, 1983.

Prado, Eleutério FS “How Marx and Keynes define the field of macroeconomics”. Magazine of the Brazilian Society of Political Economy, nº 45, October-December 2016.


[I] Professor of Geography at Simon Fraser University, Canada.

[ii] State mediation, in this case, does not aim to restore liberalism, but to install “really existing socialism”, that is, L – E – SOREX.

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