SEPTEMBER 20, 2015
JOHN MAYNARD KEYNES was one of the most remarkable and influential figures of the 20th century. Yet beyond a relatively small number of cultists, despite making something of a comeback in the wake of the global financial crisis, Keynes, as Keynes, remains largely unknown and unappreciated: reduced to clichés, or, most commonly, invoked as an epithet.
This is an enormous loss, as it withholds appreciation of an astonishing life and a brilliant mind — and a monumental oeuvre, which, in both substance and disposition, has much to offer across a broad range of pressing contemporary challenges and crises. Most notably, as Robert Skidelsky writes, elites were unprepared for the economic catastrophes of the past decade, because “when the world economy collapsed in 2008–’09 the only thing most younger economists, policy-makers and businessmen knew about Keynes was that one did not need to know anything about him. He had vanished from their textbooks, briefings and indeed from their consciousness.”
But we can benefit from — actually we need — a larger place for Keynes in our public discourse and policymaking. How can he be recovered? Two new books offer distinct pathways toward this goal. Universal Man, by the eminent historian Richard Davenport-Hines, presents an unconventional biography — examining pretty much everything about Keynes except for his economics, a laudable approach that, by stripping away the scholarship, reveals and engages the breath of an astonishing, consequential, and vital life so fully lived. The Essential Keynes, edited with an introduction and commentary by Keynes’s celebrated biographer Robert Skidelsky, also takes the reader back to Keynes, but here, and with enormous success, brings the reader all the way back home, to the Master’s own hand.
Universal Man ranges effortlessly across Keynes’s overstuffed life. Davenport-Hines, in a loosely chronological account, identifies the “seven lives” of his subject — Altruist, Boy Prodigy, Official, Public Man, Lover, Connoisseur, and Envoy — an approach very much in the spirit of Leonard Woolf’s characterization of Keynes: “A don, a civil servant, a speculator, a businessman, a journalist, a writer, a farmer, a picture dealer, a statesmen, a theatrical manager, a book collector, and half a dozen other things.” And even these accounts seem to barely scratch the surface — to mention but a few of the “other things,” Keynes was also the editor of Britain’s leading academic economics journal from 1911 to 1945, the Bursar of King’s College, and chairman and chief proprietor, from 1923, of the weekly magazine The Nation and Athenaeum (subsequently The New Statesman and Nation) among many other endeavors.
Any new biography of Keynes is under pressure to justify its publication, given Skidelsky’s magisterial three-volume biography as well as the valuable Maynard Keynes: An Economist’s Biography by Donald Moggridge, which, as Rupert-Hines notes, run to 1,758 and 990 pages respectively. (He might also have mentioned the 674 pages of Roy Harrod’s The Life of John Maynard Keynes. Criticizing Harrod’s circumscribed and self-censored book is a standard rite of passage among serious Keynes biographers, but The Life retains the distinct appeal of having been written by a contemporary.) Universal Man stakes its territory by shedding the economics and honing in on the personal, and clocks in at a highly readable 400 pages.
Universal Man, however, although not a bad choice for the more ambitious beach-goer, falls between two stools. For the uninitiated, it is too much of an odd duck to serve as a proper introduction; those familiar with Keynes will not find enough new here to reward the effort. “Boy Prodigy” does an especially fine job with family and the early years, and it is nice to be reminded that we are consorting with genius — the schoolboy Keynes won 10 prizes in his first year at Eton, and 18 in his second. And from there on to Cambridge, where Keynes would come of age, elected to the Apostles (the private intellectual society founded in 1820), whose members included Bertrand Russell, the philosopher G. E. Moore, and the older boys who brought him into the fold, Lytton Strachey and Leonard Woolf.
Other chapters (Official, Public Man, and Envoy) cover more well traveled ground. In the 1910s, Keynes languished briefly as a Civil Servant in the India Office, but after playing a pivotal role in containing the financial crisis associated with the outbreak of the Great War, he served in the Treasury, managing Britain’s precarious books and its crucial if often touchy financial relationship with the United States. The principal Treasury representative to the Paris Peace conference in 1919, Keynes resigned in protest at the incomplete and short-sighted nature of the Versailles Treaty, and wrote the brilliant polemic The Economic Consequences of the Peace, which brought him international fame.
As Davenport-Hines reviews, in the ’20s and ’30s Keynes was at the center of things, participating in the great debates of the day (such as opposition to then Chancellor of the Exchequer Winston Churchill’s decision to restore the gold standard in 1926 — Churchill took it well) while also producing his best known academic works: A Tract on Monetary Reform (1923), A Treatise on Money (1930), and The General Theory of Employment, Interest and Money (1936). And although it studiously avoids the tall weeds of theory, Universal Man nevertheless, as all Keynes biographers must, patiently disabuses readers of various “Keynesian” tropes; in fact the actual Keynes was very wary of inflation, held that “the ordinary budget should be balanced at all times,” and insisted that “if serious unemployment does develop, deficit financing is absolutely certain to happen, and I should like to keep free to object hereafter to the more objectionable forms of it.”
In the 1940s — that is, during the Second World War and its immediate aftermath — Keynes, ravaged by a serious heart disease that virtually incapacitated him from 1937 to 1939, essentially gave his life in the service of his country, acting as Britain’s chief financial envoy to the United States. These efforts included the meetings that led to the (Keynes-inspired) International Monetary Fund and World Bank, the disposition of Lend-Lease aid (and dealing with its abrupt termination), and the negotiation of the post-war American Loan, which an on-his-last-legs Keynes defended in one of his most memorable speeches in the House of Lords. Of these last years, of transatlantic trips and interminable negotiating sessions, Davenport-Hines notes, “exhausted beyond measure, his indominatable will power and his wife’s loving protection kept him alive.” Keynes suffered a final heart attack in April 1946, in his 63rd year.
However well told, once again, the life of the wartime Keynes is familiar. Ultimately, Universal Man’s most novel chapters are five and six, “Lover” and “Connoisseur.” The latter, crucial for an appreciation of Keynes, is a bit of a “catch-all,” and might have been called “Renaissance man,” but that would have sat uneasily aside the book’s title. Nevertheless, to understand Keynes is to recognize the emphasis he placed on “the good life” — the idea that money was but a means to an end, not an end in itself. (The road from Keynes leads here, thus Skidelsky’s recent book, How Much is Enough? Money and the Good Life.) First and foremost, this meant a commitment to the arts, which, for Keynes, started with his intimate, lifelong association with the Bloomsbury community of writers, painters, and, of course, talkers. (As one observer of the group recalled: “no subject of conversation has been taboo, no tradition accepted without examination, and no conclusion evaded.”) This was the Keynes who appreciated the great cities of Europe, loved the English countryside, supported landmark preservation, amassed an impressive library of rare first-edition books, collected fine art (ultimately bequeathing 150 pieces to Kings College, including works by Cezanne, Renoir, Matisse, and Picasso), served as a Trustee of the National Gallery and on the Committee for the Encouragement of Music and the Arts, and founded the Cambridge Arts Theatre, which opened in 1936, featuring productions of A Doll’s House and The Master Builder.
Awe-inspiring — but not the passages that readers of Universal Man will likely best remember. These will almost certainly come from “Lover,” which is a mixed bag, and not quite as advertised. The discussion is admirably, bracingly, and at times entertainingly frank, but love is not the primary phenomena under scrutiny here — the chapter might have been better called “Sex machine” (one too-easily hears James Brown’s voice providing an exuberant backbeat for the unfolding action). Keynes in his late 20s comes across as a gay, British, turn-of-the-century Warren Beatty. Our knowledge of this is enhanced by the fact that Keynes was an obsessive record keeper and tabulator — in middle age he would pour obsessively over statistics of prices and consumption at the concession stand of the Cambridge Arts Theatre. Some people catalog their stamp collections. Others … the sexually voracious young Keynes once showed “statistics of his sexual conquests […] to selected friends, some of whom gasped.”
What of it? Davenport-Hines argues, convincingly and unabashedly, that “Keynes’s sex life was one of the seven activities that made the universal man.” Additionally, talking freely and plainly and unashamedly about sex is fittingly in accord with the Bloomsbury credo. And the issue of homosexuality is of more than prurient interest, as Universal Man details: it involved real danger — of blackmail, arrest, disgrace, prison, suicide — and informed interpersonal relationships (Lytton Strachey’s jealousy loomed large). Finally, a little bit of love does peek through, as first the artist Duncan Grant and later Keynes’s wife, the Russian ballerina Lydia Lopokova, are properly situated, sequentially, as the two most important intimate relationships in his life. Of Lydia, whom Keynes met in 1922 and married in 1925, Davenport-Hines concludes “without her, his great academic work might not have been accomplished […] without her vigilant love, he must have died years before he did.”
Yet “Lover” elicits mixed feelings. As highbrow gossip it is harmless, but dwelling on the (admittedly often very colorful) details risks providing fodder for those deeply ignorant people (and some deeply disingenuous people who surely know better) who would try to link the young Keynes’s ravenous and at times rash non-traditional sexuality to an allegedly cavalier attitude about consequences of his economic proposals. It ought not be necessary to sift through this garbage, but there is enough of it around to pollute the public discourse. Thus, we might dutifully note that Keynes the promiscuous, risk-taking homosexual was actually more or less a rather conventional mainstream economist — it was only after settling down into traditional, monogamous heterosexuality did Keynes become increasingly iconoclastic and heretical. Indeed, for Skidelsky, the marriage to Lydia, “for whom his love and fascination never waned […] gave his life the emotional stability and regular routine for sustained intellectual effort.” Davenport-Hines floats another theory, that Keynes “broke free from classical economics,” only after the death of his mentor and great teacher, Alfred Marshall, in 1924. I would argue that it was the times themselves — the novel, stubborn, economic puzzles that characterized the difficult dozen years from 1925–1937 — coupled with Keynes’s genius, that called forth a new and necessary and revolutionary economics.
Universal Man is not much concerned with those economics; but the question remains, even setting the technical work aside, does it get us to Keynes? It may well be that to reclaim Keynes, we have to go back to the source. To know Keynes, we must read Keynes.
This is where The Essential Keynes comes in. The task Skidelsky faced in assembling this volume was formidable — Keynes’s Collected Writings clock in at 30 fat volumes, and beyond those are the extensive Keynes papers at the King’s College Archives in Cambridge. Winnowing down to 550 pages could not have been easy. But it was worth the effort. Even faithful readers of his three-volume biography will be rewarded by this collection; Skidelsky is not offering a poor man’s version of his earlier efforts. Essential Keynes reads as if he has revisited the papers with fresh eyes while drawing on the experience of 30-plus years on the Keynes beat. A short introduction offers a highly efficient biographical sketch and also touches on key themes of Keynes’s economics and place in history, again helpfully separating Keynes’s own policy preferences from their contemporary caricatures.
Skidelsky wisely organizes the material thematically as opposed to chronologically, beginning with sections on “The Philosopher” and “The Social Philosopher,” followed by the two meatiest sections of the book, “The Economist” and “The Policy-Maker,” and concluding with “The Essayist.” Each section commences with an enlightening introduction, and, of particular value, clear and contextualizing commentaries on most of the individual pieces.
Opening with “The Philosopher” is an inspired choice, as Keynes was influenced by consistent and underlying philosophical touchstones throughout his life. The section begins with two previously unpublished pieces, both from 1904, “Ethics in Relation to Conduct,” which reflected the influence of G. E. Moore and was read to the Apostles, and a short excerpt from Keynes’s 84-page prize-winning undergraduate essay, “The Political Doctrines of Edmund Burke,” — here, and not the for last time, the reader’s only complaint is to wish that the helping could have been more generous. The Burke essay is especially valuable, Skidelsky explains, as it illustrates Keynes’s lifelong emphasis on “the doctrine of prudence,” which had “a profound effect” both on his theory of economic policy and of statesmanship. “Burke ever held, and held rightly,” the young Keynes wrote, that “our power of prediction is so slight, and our knowledge of remote consequences so uncertain, that it is seldom wise to sacrifice a present benefit for a doubtful advantage in the future.” This early piece (along with an excerpt from Keynes’s early book A Treatise on Probability) hint at his future epiphany regarding the difference between risk (making a bet knowing the true odds) and uncertainty (making one’s best guesses in an environment characterized by unknowables), that would inform The General Theory.
Rounding out this section, crucially, is “My Early Beliefs,” the essay that a convalescing Keynes read before the Memoir Club (a small circle of Bloomsbury friends) in September 1938. In this remarkable reflection, the middle-aged Keynes reviews the philosophical beliefs that were embraced by his undergraduate cohort, “our mental history in the dozen years before the war,” and, despite some offering criticism that comes from the wisdom of hard years (“we were not aware that civilization was a thin and precarious crust”), nevertheless, he concludes, the philosophy “remains nearer to the truth than any other that I know.” In his earlier biography, Skidelsky called Beliefs “a key document for understanding his life’s work,” and, notably, Keynes requested that the paper, along with another memoir (“Dr. Melchior: A Defeated Enemy”) find publication after his death (which they did, in the book Two Memoirs).
Skidelsky also covers a good bit of ground on the development of the “middle way” between laissez-faire capitalism and looming collectivism. Two major pieces, “Am I a Liberal?” (1925) and “The End of Laissez-Faire” (1926), show Keynes positioning himself, as a matter of practical politics, between the Conservative and Labour parties, and embarking on his final break with classical economics: “The world is not so governed from above that private and social interest always collide,” he declared, suggesting the absence of an “invisible hand” of economic efficiency. But where does this lead? Increasingly over the years, the break with classical economics would become more and more explicit, as would the vexing challenge of articulating an alternative. Summarily dismissing laissez-faire capitalism in 1933, Keynes wrote: “It is not intelligent, it is not beautiful, it is not just, it is not virtuous — and it doesn’t deliver the goods. […] But when we wonder what to put in its place, we are extremely perplexed.” Certainly Marxism, in either theory or practice, held no appeal. Unlike many interwar intellectuals, Keynes had a profound aversion to communism, long before Stalin’s horrors became apparent. In “A Short View of Russia,” Keynes’s account of his visit to the country shortly after his marriage, he dismissed communism as “a religion,” and “Red Russia […] detestable,” in the thrall of “a creed which does not care how much it destroys the liberty and security of daily life, which uses deliberately the weapons of persecution, destruction, and international strife.” Collectivist ideologies, on the march in the 1930s, offered no alternative path for Keynes, who was, in Harrod’s apt description, “an individualist to the finger tips.” Even in The General Theory Keynes never let go of his appreciation for much of Alfred Marshall’s microeconomics: “The advantage to efficiency of the decentralization of decisions and of individual responsibility is even greater, perhaps, than the nineteenth century supposed.” And so the search for a middle way, one that combined, as Davenport-Hines recounted, economic efficiency, social justice, and individual liberty, would be a path that Keynes was endlessly navigating.
Non-specialist readers will likely skim over the 200 pages devoted to Keynes’s more theoretical economic writings, but Skidelsky is an able guide, working through the Treatise on Money, Keynes’s most challenging book (actually two thick volumes), which is not an easy read, and flawed in parts. But it is also a book with much merit; Joseph Schumpeter, who had been hard at work on his own opus on the same topic, responded to the publication of The Treatise by abandoning his efforts, telling one student “all that was left [for him] to do was to destroy the manuscript.” And for all its difficulty, The Treatise, which puzzles through the problem of balancing domestic and international macroeconomic autonomy, is alive with contemporary relevance.
Of enormous merit are the eight pages that Skidelsky devotes, in his own voice, to the trip from The Treatise to The General Theory — that is, to unpacking the Keynesian Revolution. What leaps from the page is that, in broad historical perspective, the most consequential divide was not between Keynes and his critics, but among those who would call themselves Keynesians: a battle that pitted “hydraulic” Keynesians against “fundamentalists.” It was not much of a fight — postwar mainstream macroeconomics followed the Hydraulic path (which Joan Robinson labeled “bastard Keynesianism”). It was this version of Keynesianism that stumbled in the 1970s, and which, reconstituted in the 1990s as “New Keynesianism” (chasing to keep up with the ascendant, hyper-rationalist, anti-Keynesian, “New Classical Macroeconomics”), contributed to the intellectual and policy environment that caused the Global Financial Crisis of 2007–’08.
Skidelsky states plainly that “Keynes theoretical ambitions were […] larger than the hydraulic Keynesians recognize,” but he strikes a judicious pose, offering sections of The General Theory privileged by each side and leaving it “to the reader to judge” how successful Keynes was in transcending a hydraulic perspective. Despite this nominal agnosticism, Skidelsky tips his hand, noting “after Keynes’s death, the economics profession discarded his intuitions and kept those pieces of his theory which could be justified in terms of its own formalism.” Fundamentalist Keynesians, in contrast, see uncertainty as the primary theme of The General Theory, and it is hard to come away from a reading of Chapter 12 and disagree. Moreover, Skidelsky follows (most appropriately) selections from the book with a long excerpt of Keynes’s crucial (and very fundamentalist) 1937 Quarterly Journal of Economics paper, his only attempt to distill core insights of The General Theory in an academic journal, as well as some selected private correspondence stimulated by the book’s reception, which again showcases a fundamentalist Keynes. Repeatedly, he stressed the consequences of “the extreme precariousness of the basis of knowledge,” and emphasized how “orthodox theory assumes that we have a knowledge of the future of a kind quite different from what we actually possess.” These arguments are part of a basic critique of an economics profession misguided, its approach built on the assumption of static and predictable behavioral relationships. But economics “deals with motives, expectations, psychological uncertainties. One must be on constant guard against treating the material as constant and homogenous,” Keynes wrote to Harrod in 1938. The “pseudo-analogy with the physical sciences leads directly counter to the habit of mind which is most important for an economist proper to acquire.” But this, of course, was the pseudo-analogy that the postwar economics profession wanted nothing more than to embrace.
Keynes the “policy-maker” ought to leave many present-day pundits, talking heads, and policy wonks contrite. Classics such as “Can Lloyd George do it?” “The End of the Gold Standard,” “How to Avoid a Slump,” and “Paying for the War,” (which Skidelsky neatly describes as “an explicit application of The General Theory to an inflationary full employment economy”), demonstrate that on so many of “today’s issues,” Keynes got there first — exposing “the deliberate intensification of unemployment” via overly restrictive monetary policy; examining the catastrophic Global Financial Crisis (of 1931), and, most remarkably, elucidating problems of macroeconomic adjustment that could have been written about contemporary Europe. Arrangements like the Gold Standard (and the European Monetary Union) create a process of adjustment that “is compulsory for the debtor and voluntary for the creditor” and thus “throw the burden of adjustment” on “the weaker and […] the smaller,” that is, “on the countries least able to support it, making the poor poorer.” This is not only unjust and inefficient; it also threatens to be “disruptive of the social order.”
Skidelsky concludes The Essential Keynes with “The Essayist,” selections from Keynes’s voluminous biographical writings. “Dr. Melchior,” mentioned above, describes negotiations in Treves, Germany, over the conditions by which the allied powers would lift their food blockade. Originally read at two meetings of the Memoir Club in 1920 and 1921, it contains some of Keynes’ finest prose (Virginia Woolf sang its praises in an effusive note); Skidelsky omits my favorite passage:
We watched them as sightseers. They walked stiffly and uneasily, seeming to lift their feet like men in a photograph or a movie. The Marshal could be seen through the window of his railway carriage, tugging a ragged moustache and laying down his pipe.
A moment later we were called back to our own saloon, since the German financiers were announced. The railway carriage was small, and both we and they were numerous. How were we to behave? Ought we to shake hands? We crushed together at one end of the carriage with a small bridge-table between us and the enemy. They pressed into the carriage, bowing stiffly. We bowed stiffly also, for some of us had never bowed before. We nervously made a movement as though to shake hands and then didn’t. I asked them, in a voice intended to be agreeable, if they all spoke English.
Also featured are Keynes’s essays on Thomas Malthus and Isaac Newton, and, of course, his famous memorial of Marshall. Skidelsky can only offer a sliver of what was a 70-page masterpiece, though here my favorite line is included, a lament of Marshall’s perfectionist streak: “he was too little willing to cast his half-baked bread on the waters, to trust in the efficacy of the cooperation of many minds, and to let the big world draw from him what sustenance it could.” The Marshall memorial also includes Keynes’s description of what a “master-economist” must be: “a mathematician, historian, statesman, philosopher […] he must study the present in light of the past for the purposes of the future. No part of man’s nature or his institutions must lie entirely outside his regard.” Alas, this is another battle that has been lost. Most contemporary economics training stops abruptly at mathematician, to our collective impoverishment.