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[ESC]DOC TAYROC'S [UNSOLICITED] ECONOMICS HOT THOUGHT
Marx and the Death of the Author: Marx versus Keynes: Part I: Keynes is born
I've written previously about the alternative claims for the birthplace and time for the system we now call capitalism. I'm going to stick with my previous assertion that capitalism, as we know it, became discrete from previous modes of economic thought somewhere around the mid to late 17th century somewhere between it's parents, the Dutch Republic and the emerging unified Great Britain. As such, I think we can safely say that even if capitalism wasn't strictly born entirely within the area contained within the modern nation-state known as the 'United Kingdom', the UK was a fairly early and enthusiastic adopter. As such, I don't think it's too much of a stretch to say that by the time 1883 rolled around, it was largely seen as 'just the way we do things', what with 1883 being over two centuries from many of the agreed upon starting points of the British co-invention and/or adaptation of the capitalist mode of production. You see, I bring this up because a colleague of mine frequently refers to neo-liberalism (and arguably wider capitalism) as a 'mental prison' that legitimises itself by making it seem like the 'way things have always been', or just the natural evolution of commerce, trade, bartering, etc. Once this assumption is buried in the mind, you internalise all of the assumptions of capitalism and assume that it is indeed the only way things can be done. Resultantly, when trying to 'fix' problems that capitalism causes, you get trapped thinking that you can only reform capitalism, with more capitalism rather than replace it. This is further pushed by societal constructs built by the bourgeois to favour the bourgeois, framing capitalism as inevitable progress, and all things contrary to capitalism as impediments to progress. If you're familiar with the 'accelerationists' in the AI cults, then you might notice certain familiarities in narrative structure.
The assumptions of capitalism were well imbedded into the majority of facets found in British culture in the 19th century. Questioning these assumptions was akin to questioning many agreed upon scientific 'facts' of life in 19th century Britain. It was scoffed at, scorned, and driven out of 'respectable conversation'. Mind you, the 'facts' included social Darwinism, phrenology, Gibbon's beliefs that homosexuality destroyed the Roman Empire, the belief that if women travelled too fast their uterus would move around inside their body, and Lord Kelvin's assertions that everything worth discovering had already been discovered (take that, nuclear fusion). As such, there's already plenty of reason to doubt many of the 'facts' of late 19th century life. Regardless, many of these assumptions held, and influenced academic, political, and economic thought throughout Britain, Europe, and the United States. They also became the underpinning for British domestic and foreign policy.
This was the culture and the assumptions that John Maynard Keynes was born into in Cambridge. Further compounding the importance of these assumptions amongst the bourgeois class, Keynes' father was a lecturer at the University of Cambridge. In economics no less. For those of you somehow outside the historical influence of the British Empire, Cambridge is the second-most establishment university in the UK's tertiary education system, outranked in this regard by only the University of Oxford, which predates the establishment of the Kingdom of England. You don't get much more establishment that predating the state that predates the state you're currently in, especially when said state dates back to 927 CE, and even that is contested. Here, for example, I'm using the date that AEthelstan (Stan to his friends) was proclaimed 'King of the English' in London. Others put the date somewhere in the late 800s, etc, others move it up to the Battle of Hastings in 1066, still others to the signing of the Magna Carta in 1215. Regardless, England is old, Oxford older (allegedly going back to teaching being done by Archbishop Theodore of Tarsus in the seventh century), and Cambridge is also old, but not as old, dating back to 'only' 1209. Calling Oxford and Cambridge 'establishment' is, frankly, putting it mildly. By the time Keynes' father is teaching at Cambridge, it had already been the centre of aristocratic and bourgeois teaching in the UK for nearly seven centuries. As such, Keynes' father, whilst he may have been a member of the proletariat, was very much a part of the 'clerisy' that would have likely sided with capital over labour, having fooled themselves into believing that capital was a necessary evil, or even a force for good and progress, and these messy labour movements popping up all around Britain was just the action of the poor, unwashed, uneducated masses inhibiting further progress.
I'd say 'stop me if you've heard this one', but I know you've heard this one, and we have got to keep moving on. It should, therefore, be unsurprising to learn that both Keynes and his father were members of the Liberal Party of the UK, the same party whose previous leader, William Gladstone, justified British Imperialism by discussing the British Empire as an 'Empire of Conscience' in the 1880s. This is to say, 'we will still do the imperialism thing, but we'll try to feel bad about it when we do the war crimes that inevitably come with it'. Again, don't stop me even if you've heard this. Gladstone and long-term Tory leader Benjamin Disraeli would spend years basically doing the same thing as each other whilst attacking each other over which flowery language was used to justify the ongoing expansion of the British Empire and exploitation of the proletariat for the better part of the 19th century. This saw massive improvements in the quality of life for the aristocracy, bourgeois, and the 'petty bourgeois' in Britain, but rather (in)famously at tremendous cost to the proletariat, who had been doing the actual labour necessary to build and maintain the increasingly complex infrastructural networks and goods that connected London to her growing international empire, and let her grow fat on the backs of exploitation. The Liberals pretended to feel bad about the exploitation, but did little to improve the material conditions of the masses. Resultantly, by the late 19th century politics in Britain had become increasingly frayed, and vitriolic as the masses felt like they were kicking a brick wall to gain even just a shred of dignity from a distant bourgeois class that occasionally pretended to care, might even donate a library or two, extolled the virtues of the nation-state, but moved a not insignificant amount of capital to rival nation-states, away from the workers who had laboured to gain them the capital being moved. The bourgeois, of course, blamed the Irish, the Catholics, the Blacks, the Muslims, the Jews, etc for the woes of the exploited, despite the Irish, the Catholics, the Blacks, the Muslims, and the Jews having little to no control over the material conditions of their lives. Any sign of imperial decay was blamed on migrants, homosexuals, or a 'crisis of masculinity', thanks in no small part to the aforementioned work of Gibbons.
Capitalism itself could not have been the problem, it was the way things had always been, and since capitalism had proclaimed itself a meritocracy, then clearly this meant the bourgeois had to have intelligence, strength, God's favour, or something that had put them in their pre-eminent places. There's that Social Darwinism thing I was talking about. Reform was needed, not revolution to address the alleged rot across Britain and its Empire, since after all, 'we're also all agreed that the British Empire is a net positive for the human race, despite the obvious cons'. On these two things the Liberal and Conservative Parties agreed, the logic of empire and capital were sound, were natural, and were permanent. This up-start Labour Party, these 'extremist' socialists, and these unruly labour movements just did not understand the sacrifices necessary to be the British Empire, and the strength it took to maintain this 'natural order' of things. Those independence movements in Ireland, India, and Ghana just did not appreciate how Britain had benefited them, likely because of naive propaganda spread to them by those damned socialists. We need to educate them all on how the British Empire brings civilisation and progress, you see. These 'fringe' socialist and civil rights movements will likely forever stay fringe, as logic favours the strength and growth of the British Empire. Quiet reform is all that's necessary, because Britain and capital are inherently good. Not perfect, but they're the best we can do, and therefore should stay here forever. Hey, at least we're not the Belgians, the Russians, or the French, who commit far more open atrocities in their imperial borders than we could ever deign to. Britain invented modern democracy, after all, with our Magna Carta, and English is the language of democracy.
Keynes himself may not have believed all of these notions, but they were very popular throughout his lifetime, and because they were well entrenched in British intellectual circles when Keynes received his training (receiving a BA in Mathematics in 1904, earning a role as Lecturer by 1909, simpler fucking times), they would have had a considerable amount of influence on his work. We are all, after all, products to an extent of the material conditions that mould us. A lot of similar assumptions went into my training as an economist in the shadow of the 2007/08 Financial Crisis, and even if I disagree with a lot of the assumptions of the fairly neo-liberal training I received now, I didn't, or couldn't disagree back when I was in my very early 20s. I lacked the context and vocabulary to properly disagree. That's part of being in your very early 20s, you're building the context and vocabulary still. That was true for me in 2009, and that was true for Keynes in 1904, that's been true for kids in their early 20s forever. They think and believe they're a lot smarter than they actually are. Impressionable, one might say, and so ideas planted in your late teens, early twenties stick with you for the rest of the time you spend building context and vocabulary, influencing (both positively and negatively) how you interpret the context and vocabulary you encounter. As such, keep all this background in mind as we progress through the rest of this series. Also, I'm not saying people in their early 20s are stupid, just not entirely formed yet. It's a process we all go through, it's called growing.
Like I said, by 1913 Keynes put out a book on monetary reform in British-controlled India, again not questioning the logic of Britain controlling India but reckoning that Britain could improve the material conditions of Indians despite all logic around British control of India running directly contrary to that. This put him on the British Government's RADAR, and soon he was on a Royal Commission addressing the foremost problem of the day: should the Rupee be directly translatable into silver? If the British government could just crack that nut then everything would be fixed in British India, and therefore the world.
Meanwhile, Franz Ferdinand was having a spicy disagreement with Gavrilo Princip, and cooler heads did not prevail. Well, technically Ferdinand's head got rather cool rather fast, as would Princip's shortly after.
As several million additional bodies joined those of Ferdinand and Princip for the next four years, just to end in moderate compromise for the good people of Western Europe, Keynes worked for His Majesty's Treasury. By the end of the war, Britain and France fought for status quo ante bellum, the US fought for roughly the same but now the Balkans would be Balkanised, and Wilson's ideas around ethno-linguistic nationalism mixed with British and French capitalist gains in the Middle East meant that the world would not know peace for the remainder of the 20th century. The German, Austro-Hungarian, Russian, and Ottoman Empires were thrown into the dust bin of history, and the first real threat to global capitalism since 1814 emerged in the form of the Soviet Union. Keynes was amongst many academics who saw the Treaty of Versailles as damned to fail. In Keynes' defence, everyone who wasn't in the British, French, and American ruling class of the era also felt the same. Unfortunately for Keynes, the British, French, and American ruling classes didn't care, there was short term profit to be had in plundering the vanquished and handing over Ottoman assets to British Petroleum, Shell, and any of Standard Oil's many babies. War profiteers in Britain and America had money to blow, and blow it they did they did, and thus we now have the golden Twenties. Everything will be fine forever, shut up Keynes and other detractors.
Not only was it status quo ante bellum, but the British Empire had built back better! All of Germany's colonies were now British! (Excepting the ones that were now Japanese). The US had proven itself as a 'global power', France was, well, still there, and we could all go back to pretending nothing happened between 1914-1918, learn no lessons, and change nothing. Oh yeah, there was also a global pandemic, but we'll just group that into the larger generational trauma of 1914-18 and blame, oh I don't know, the Spanish. What're they going to do about it? They didn't even participate in the global bloodshed. God clearly loves the British and the British-American global economic system, and nothing could go wrong.
Keynes spent this time accepting that no discernable change was going to happen, and so returned to previous work on probability theory. His work on Indian finance reform having been so rudely interrupted by a self important Austrian Prince, he also wrote a scathing review of British financial reform in the post-war era. Noted racist Churchill, who had believed in inherent British racial supremacy over the Turks to the tune of a horrendous failed invasion at Gallipoli, had stubbornly remained in British politics and was now asserting that the way to fix Britain's economic woes was to centre the economy on shiny rocks, since we all know said rocks hold intrinsic value. Churchill's views were important because his punishment for getting countless Britons, New Zealanders, and Australians needlessly killed over his insane assertions was to become the Chancellor of the Exchequer. Keynes, who had actually studied economics, knew that Churchill was, in a word, full of shit and published a book to this effect: The Economic Consequences of Mr Churchill. Regardless, Britain went back to the gold standard in 1925, even fixing values to pre-war levels thus fixing all of Britain's economic woes forever. Churchill's plan to just ignore unions until they went away, however, wasn't working, since that up-start Labour Party kept making more and more gains, what with those entitled veterans feeling they were owed for years of nearly dying daily despite both the Conservative and Liberal Parties telling them to 'get over it' because it would 'ruin the economy' if they had 'economic rights'. Churchill also tried using violence against the unions, but that somehow worsened his image in the public eye. What with the public being made up of unionised workers.
Keynes was starting to become sceptical of this whole British capitalism thing, since the problems he had been 'solving' since he left university seemed to keep stubbornly persisting. Regardless, maybe things will get better, he just had to figure out this inflation thing that kept plaguing the British economy.
Meanwhile, in the US, a fervent belief in supply-side economics driven by Fordism (no pun intended) had investors drunk with power. If they could keep making factories more efficient, the factories could keep putting out cheaper goods, which would be more and more consumed if they became cheaper. Part of this efficiency, however, was cutting wages and labour. Regardless, more goods probably always meant more profit! And so invest in the people making the most goods!
Well, that lack of investment in labour came back when the labour class got to a point of not being able to afford the surplus goods. Soon the most productive American factories had warehouses full of unmoveable goods, which led to 'down-sizing', making more in the labour class incapable of consuming the goods in those warehouses. The owners of these factories had 'earned' their money, and so refused to part with it or endorse any policies or politics that would inhibit their ability to make more of their money, even as their money dwindled because there was no one left to buy their cheap goods. Stock markets responded calmly by admitting the socialists maybe had a point about the intrinsic value of labour versus the lack of concrete value found in capital.
Just kidding, it's a stock market crash. In 1929, so not just a stock market crash, rather the stock market crash. By this point, bourgeois capital was very freely flowing between the US and Britain, and so the shocks in the US market saw British capital similarly panic. That shiny metal rock hadn't saved the British economy after all, and decades of assuming the concerns of labour didn't really mean anything were now becoming an existential threat to Britain. The panicked British capital class stopped investing in the economy, both at home and throughout the empire, and the bourgeois class of the world began to fortify themselves as the masses began a global outcry.
The shroud of the dark side had fallen, begun, the Great Depression had.
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