ENTRY
[ESC]DOC TAYROC'S [UNSOLICITED] ECONOMICS HOT THOUGHT
Marx and the Death of the Author: Keynes III: In which John Maynard Keynes dies twice
In order to kill Keynes twice, we need to set forth my central argument for the series:
In order for socialism to work, it needs to be the same socialism for everyone. It can't be one for me and one for thee.
Thus let's address the two things that will kill Keynesianism:
Britain and America have deep rooted problems with racism.
Bourgeois capitalism cannot co-exist with socialism, one will always eat the other.
Before we get there, let's address the biggest elephant in the room. Keynes' work was published in 1936, by that point many of the proposed elements within where already being put into motion by various Labour, Liberal, and to a lesser extent, Conservative ministers trying to navigate Britain out of the Great Depression. Keynes was a self-identifying Liberal, since he wasn't fond of all that Marxist talk that the Labour Party was wont to do at this point. Labour had been initially excluded from the 'National coalition' between the former rivals, Liberal and Conservatives because of how radical Labour was seen at this point. Can't think of any parallels to the modern day. No sir. Certainly not with a political party that Kermit the frog might strongly identify with. Anyway, eventually Labour was let in to the talks, bringing in our next big player in British politics, Clement Attlee, who might be the best Prime Minister Britain ever had. Although a quick look over at the esteemed list of Number 10 occupants might suggest it wasn't that close a race.
But before Attlee, Churchill, Chamberlain, or Roosevelt could get anyone out of the depression, the fascists of Germany tried their economic recovery model: invade a neighbouring power and loot it blind the sudden surplus might look like economic recovery long enough to dupe idiots into support the regime long enough for the people at the top of the pyramid to make their wealth. (Fascism, like capitalism, has always been a pyramid scheme). And so, 31 September, 1939 saw the Wehrmacht invade Poland. You probably know the rest of the story, but just in case, Britain and France tell Germany to knock it off, or it's war. Germany, surprisingly, not having suffered any consequences for any of its actions since 1934 does not, in fact, knock it off. Resultantly, Britain and France declare war, thus beginning the European theatre of the Second World War (the Asian theatre had started back in 1937 when the Japanese fascists had run into the same problem as their German counterparts and did the exact same thing except with China instead of Poland).
Like most pyramid scheme types, fascists aren't really big thinkers on logistics and long-term sustainability in their plans. In no small part, this is because every Nazi is a shining example of the Dunning-Kroger effect wherein they think a weekend of reading books on a topic is enough to become an expert, have an incredible disdain for actual experts, and so have a remarkably inflated sense of self-worth, far beyond their actual capacity. This is aided by their belief in the supremacy of their 'nation' and the inferiority of all other 'nations'. For the 1935-1945 variety of Nazis, this led to a series of unwinnable wars across Eastern Europe, before picking a fight with the fully industrialised powers of Britain, the US, and the USSR. Germany's factories weren't nothing, but they also were never going to be enough to take on three fully industrialised powers. Italy's industrial capacity wasn't even up to German spec, nor was Austria's, and Japan was so far way that there was no way for the Germans to actually materially support the Japanese nor vice versa. Making matters more complicated, whilst the German government had, out of convenience, declared the Japanese to be 'honorary Aryans', it's more than likely that several Nazi officials and rank-and-file types hadn't fully signed off on this idea. That's the problem with believing in the supremacy of your nation, you kind of burn through allies rather fast. Again, can't think of any modern fascist powers picking a fight they can't possibly win and alienating all potential allies in the process.
Spoiler alert, in 1945 the Nazis and the Japanese militarists surrender. Britain, the US, and the USSR emerge as the triumphant powers. France is there too. Good for you de Gaulle, you insufferable weirdo. By 1944, it is already pretty clear that Germany and Japan have lost all forward momentum, and the war will end with an allied victory. But how to organise the post-war world to prevent a Third World War?
To answer this question, rather famously, the 'big three' had a series of meetings to try and fix a post-war order where it was unlikely anyone would invade Poland and trigger another global conflict. A lot of people know about the conferences at Algiers and Yalta, of nights of debate between Roosevelt, Churchill, and Stalin, and of de Gaulle getting angry whilst locked out of one of these meetings in London. For those who never studied economics, one of the lesser known meetings of the 'big three' didn't involve any presidents, premieres, or prime ministers, but just the economists of the 'winning powers'. This 1944 conference, held in Bretton Woods, New Hampshire in the US would, however, formalise the dominance of Keynesian economics in the post-war world. Indeed, Keynes himself was at the 'Bretton Woods Conference' as it became (creatively) known. The Bretton-Woods system, which it would create would also be known as the 'Post War Consensus' or the 'Post War Keynesian Consensus' or some other variation on those names.
From the Bretton-Woods System comes some still familiar names, it was here that the World Bank (WB) and the International Monetary Fund (IMF) were born. The General Agreement on Trade and Tariff (GATT), the forerunner of the World Trade Organisation (WTO) wouldn't be born fully here, but the foundations for it would be laid. The main focus of the WB and the IMF was not yet 'global development', rather the rebuilding of Europe after the end of the war. By Europe, it was chiefly meant France, Italy, and West Germany, the capitalist countries most hollowed out by the fighting. The US Dollar, as backed by the gold standard, would become the principle trading currency, although the British Pound would retain special privileges as a trading currency, there would be fixed and standardised international exchange rates for the first time in history. The initial funders of the WB would be Britain and the US, with France rejoining once it was more capable of standing on its own two feet again. The WB and the IMF also represented a shift in the way capitalist countries related to each other, between the WB, IMF, and the separate but similar founding of the United Nations the understanding was clear, there was an international rules-based order for capitalist relations, and it was all based on the assumptions of the British-American understanding of Keynesian economics. To receive help from the WB, the IMF, or the Marshall plan, rather you were in Europe or East Asia, the first places this recovery focused on, you had to agree to develop your economy to look like the British or American ones.
As Hanieh points out, a not small amount of this was done with the under pinning of the British-American 'seven sisters' oil companies, mainly Mobil, Texaco, Chevron, and Exxon from the American side, and Shell and BP (then Anglo-Persian Oil Company) from Britain. The 'petrodollar' hadn't been standardised yet, but foundations had been laid. This focus on oil is important, as you'll see, and you'll note that none of the nationalisations in Britain even tried to touch Shell or BP.
Also of note, in the UK and the states, was the sheer immense profit made from selling weapons both during and after the war, especially for companies like General Electric, Ford, Douglas, Lockheed, Boeing, Avro, Supermarine, Vickers, Rolls Royce, DuPont, Monsanto, and the lot. This will also become important.
By 1945, Keynesian economic thought, thanks in large part to Keynes' presence at Bretton-Woods went from a critique amongst many in British academia to the predominant capitalist economic assumption. Few economists get to experience this level of success in their lifetimes. By 1946, Keynes had burnt the candle at both ends for long enough, and dropped dead of a heart attack in his home. He was only 62, and both his parents out lived him. This is the first time Keynes dies, without getting to see the fruits of his labour, not even seeing the launch of the NHS. In many ways, it was the Americans who killed him the first time, as he was negotiating trade terms with the Americans at the time, an experience that he described as exhausting. Having spent a considerable amount of time talking to Americans, I feel his pain.
In 1948, the British troop transport the HMT Empire Windrush arrived arrived in Trinidad, from Trinidad she travelled to Kingston, Jamaica, Tampico, Mexico, Havana, Cuba, and finally Bermuda, in Kingston, her arrival was heralded with an advertisement that read:
PASSENGER OPPORTUNITY TO UNITED KINGDOM
Troopship 'EMPIRE WINDRUSH' sailing about 23rd MAY
Fares : Cabin Class £48
Troopdeck £28Royal Mail Lines, Limited - 8 Port Royal St.
This was relatively cheap, and many returning Jamaican soldiers, who had fought for the British Empire, had the money on hand. The idea behind sending the Windrush as well as other troopships Ormonde and Almanzora was simple, a lot of British workers had died during the Second World War, and manpower was needed in the metropole to rebuild and maintain the British economy postwar. This wasn't a fluke of private enterprise, the Windrush was a fully commissioned ship of the Royal Navy. This was official government policy. Decades of the British government inhibiting the 'lower classes' of the colonies travelling to the metropole had seemingly disappeared over night, His Majesty's Government was openly inviting folks from the Caribbean to the motherland.
Some say this is the first case of 'mass migration' from the colonies to the metropole for the UK. This isn't entirely true, there was already a substantial population of people from South Asia, Africa, and the Caribbean, largely focused on London, Liverpool, and Glasgow. The UK's first Mosque had been built in Liverpool in the 1870s, and had even converted some 200 white Liverpudlians to the Islamic faith. Of course, in the century prior there had also already been a mass migration of the Irish during the Great Famine, evidence of both these migration patterns in the infamous signs, 'No Blacks, No Dogs, No Irish'.
The key difference of the Windrush was the government sanctioned bit. But as you might've guessed from the 'welcoming sign' mentioned above, whilst the British government might have finally recognised the value of immigrant labour in rebuilding post-war, many members of the British public were, shall we say, less keen, and like the Irish before them, many of the migrants coming to post-war Britain from the 'non-white' parts of the Empire and Commonwealth faced a remarkable amount of bigotry in their new homeland. The same homeland that had spent 400 years telling them how culturally superior it was to them, and yet was surprised when they came to see if the claims had any merit to them.
During the war, Britain had said it was fighting for democracy and human rights and decency. To be fair to Britain, when compared to the literal Nazis, we were doing good. That said, once the literal Nazis were defeated, we had to still deal with the fascists and the lesser bigots at home. Since the focus instead shifted to rooting out the left, the fascists and the bigots had time to regroup. In Britain, this first took the form of one Enoch Powell, a member of the British Conservative Party, who had a long and varied career, but will forever be most known for being an unrepentant bigot:
I can already hear the chorus of execration. How dare I say such a horrible thing? How dare I stir up trouble and inflame feelings by repeating such a conversation? The answer is that I do not have the right not to do so. Here is a decent, ordinary fellow Englishman, who in broad daylight in my own town says to me, his Member of Parliament, that the country will not be worth living in for his children. I simply do not have the right to shrug my shoulders and think about something else. What he is saying, thousands and hundreds of thousands are saying and thinking—not throughout Great Britain, perhaps, but in the areas that are already undergoing the total transformation to which there is no parallel in a thousand years of English history. Those whom the gods wish to destroy, they first make mad. We must be mad, literally mad, as a nation to be permitting the annual inflow of some 50,000 dependents, who are for the most part the material of the future growth of the immigrant descended population. It is like watching a nation busily engaged in heaping up its own funeral pyre. So insane are we that we actually permit unmarried persons to immigrate for the purpose of founding a family with spouses and fiancées whom they have never seen...
...As I look ahead, I am filled with foreboding. Like the Roman, I seem to see "the River Tiber foaming with much blood". That tragic and intractable phenomenon which we watch with horror on the other side of the Atlantic but which there is interwoven with the history and existence of the States itself, is coming upon us here by our own volition and our own neglect. Indeed, it has all but come. In numerical terms, it will be of American proportions long before the end of the century. Only resolute and urgent action will avert it even now. Whether there will be the public will to demand and obtain that action, I do not know. All I know is that to see, and not to speak, would be the great betrayal.
British society, the line of reason went, was under siege from dirty foreigners. Never mind most of these 'dirty foreigners' came from the Commonwealth, and therefore had spent the majority of their lives being educated in the British way of life and its apparent and inherent supremacy over what it was displacing. Never mind that most of these migrants had been schooled so thoroughly in British colonial schools that they could likely recite all post-unification British monarchs but struggled to recite anything about their own land's pre-colonial history. They still committed the unforgivable sin of looking and sounding different. At the time, Powell was condemned in the press and mocked in the media, regardless he would hold office until 1987, retiring entirely on his own terms before dying in 1998 at the age of 85. The 'rivers of blood' speech, as it became known, would never truly leave the British psyche, especially as media titans Rupert Murdoch (from Australia) and Robert Maxwell (from Czechoslovakia) began to build press monopolies around tabloids, and found that anti-migrant rhetoric (presented as 'just asking questions' and 'showing both sides of the argument') moved more copy than actual nuanced conversation. Naked women on page six also helped. Maxwell, now more famous for being the father of Ghislane Maxwell of 'forbidden island' fame, outwardly supported Labour, in order to differentiate himself from his main rival, the Conservative Party and 'White Australia policy' supporting Rupert Murdoch. However, behind closed doors he was a fan of the Conservative Party, and especially the then up-start Margaret Thatcher, and fought alongside his nemesis for deregulating restrictions on creating press monopolies like the ones he and Murdoch were building.
When the 1970s energy crisis came, largely orchestrated by the 'Seven Sisters' who realised that anti-Arabic sentiment could be used to both poison the validity of Arabic attempts to nationalise oil and create a nice bit of artificial scarcity to boot, thus boosting profits, the inflation that came as a result of the increased price of oil created a severe economic downturn. Oil companies used this to push for deregulation and privatisation of the energy sector, promising this would be good the consumer, that Friedman fellow in the states and the Mont Pelerin society in Geneva were saying so, after all, as were the economists of the London School of Economics and the Vienna School. This privatisation of state assets would erode the public availability and affordability of price-inelastic goods for the public. Thus, the public had to made to vote against their best interest. What better way than to spin a story of migrant benefit thieves and fraudsters. Sure the state guarantees you housing and energy, but it does the same for Johnny Foreigner, who is now living off your hard-earned tax money. (Never mind that Johnny Foreigner also pays tax, and that corporations are paying more tax than either of you). Also, of course, tax is bad and is why your pocketbook is so thin these days, and not the provable and readily available data that shows Shell and BP are squeezing more money out of both the British tax payer and state than all the migrants in Britain combined could possibly do. Except, again, migrants like Murdoch and Maxwell, who like all bourgeois held no solidarity with their fellow migrants, and only with the bourgeois class, who wanted to be able to profit off of price inelastic goods again, as by their nature, they're more profitable than price elastic goods will ever be.
On this wave of racism and new found hatred for the state, blaming migrants and welfare for the actions of private enterprise, Margaret Thatcher found her voice, just shy of a decade after Powell gave the 'rivers of blood' speech, in 1977 the British bourgeois fought to reclaim what little bit of the economy Keynes had taken from them. In Britain, this marked the second death of Keynes, his economic system lasting only thirty to forty years, depending on when you mark the start date. What came next was 'the big bang' of deregulations, and in short order the first of many neo-liberal crashes in 1987 on 'Black Monday'. In the US, Reagan talked at length about the Black 'welfare queens' of Chicago, despite welfare fraud being a statistical abnormality in both the UK and the US rather than the norm, the deep fear of 'free riders', and especially migrant 'free riders' was enough to spur the US and the UK to vote against their best interests. Reagan would bring British neo-liberalism to the states starting in 1981, by 1986 the US would experience its first neo-liberal economic crisis in the Savings and Loans Crisis. Luckily for Reagan and those who wish to keep licking his boots for whatever reason, thanks to term limits, most of the financial consequences of 'Reaganomics' happened whilst Bush Sr was 'at the helm'. Whilst Bush Sr was, in many ways, just Reagan but with less charisma, it would be Bush who took the fall for the immediately obvious failures of Reagan. John Major in the UK would find himself in a similar position against Thatcher, thus preserving their legacies in the eyes of those who can only think in up to five-year periods. A shockingly large portion of the population.
So what do we learn from this? That is, I suppose, why bother to write a three-part series of Keynes and Keynesianism and its ultimate death at all. I suppose my answer is this: socialism only works if it works the same for everyone. That is, after all, the point. Where ever we see a tiered system, say for education, healthcare, or housing, where there's an option between private and publicly owned services, the privately owned ones will always thrive at the expense of the public ones. We saw this in Chile, where the privatised healthcare system provided better outcomes than the publicly available ones during Covid-19. Give the rich the option to extract value from public services, and they will to their own benefit, at the cost of the masses. To give truly universal care, the rich have to feel as invested in the public option as the poor do. If you don't, the public will assume the publicly owned good is always going to be inferior (this was a stated goal of Thatcher, for example) since it will not receive the resources the private good enjoys. Finally, the bourgeois will ultimately seek to destroy any public good, as they cannot profit off of it the way they could if it is privatised. The reason the bourgeois need the masses to believe in the myth of the 'tragedy of the commons' is because no one can profit off the commons. This is why the advent of capitalism in Britain co-exists with the enclosure controversies of the late 16th and early 17th centuries.
But also, this is why you should not accept racism as 'just another thing to accept'. Here, in the myths of the benefits cheat and the 'welfare queen' we actively see the bourgeois class weaponising racial bigotry to encourage the proletariat to vote against their own best interests. White racism against Black folk here ended up hurting everyone except the bourgeois. Of course Black folk were hurt more than white folk, but it is every bit the 'cutting off the nose spite the face' moment. One of the reasons many of the unions of old failed was because of their failure to include Black, Asian, or other migrant communities amongst their ranks, making it easier for the bourgeois to use these communities as 'scabs'. The death of Keynesianism in the UK and the US came because the white proletariat could tolerate socialism so long as the only benefactors were white. The instant the perception of the welfare recipient was racialised, the social systems became demonised. To find a better future, Britain and America have no choice but to confront their histories of racism, there is simply no alternative.
But finally, Keynesian failed because it assumed the bourgeois wouldn't seek to undermine it, despite the fact that they began trying almost immediately. Reagan's political career began with a series of pre-recorded anti-union speeches commissioned by General Electric. Powell and Thatcher were both favourites of Murdoch and Maxwell. The bourgeois dominated press, to this day, will seek to discredit leftists in ways that they will never go after the right. Examine the coverage of Reform, the Conservatives, and Labour in British mainstream media versus the higher standards that 'leftists' like Corbyn and the Green party are held to. Polanski and Corbyn will be grilled for hours on anti-Semitism, budget irregularities, 'electability', and even sanity whilst Farage, Starmer, and Johnson's lengthy histories of corruption, racism, and even anti-Semitism goes largely unchallenged. Recent leaked BBC memos show the Cameron appointed Governor of the BBC even trying to 'win over' Reform. Labour's current dismal messaging around 'small boats' and Trans rights further showcasing this 'third way' nonsense way of thinking Labour could, or even should appeal to the far-right rather than acknowledge for even a moment the growing leftist movement in Britain. That's not even touching the way the British media lynched Professor Arday over an unproven plagiarism allegation, but haven't covered Micheal Gove's ex, also a professor at Cambridge, being caught with indecent images of children on her computer.
The centre, the bourgeois will always favour fascists over socialists because the fascists 'respect private property' and the social-Darwinism of unregulated free-market logic. The bourgeois don't mind killing masses of people to maintain the status quo and their profits, as that's what they've been doing daily since the successes of the bourgeois revolutions of both Britain and the Dutch Republic in the mid-17th century. As long as it's not their blood, spill away.
Keynes was never going to succeed because he assumed social-Darwinism had merit, that capitalism and commerce were one and the same, and that the bourgeois would tolerate having any goods taken away from them. They did not, and so here we are, in the bloated corpse of the neo-liberal system, watching fascists take advantage of the final collapse of the post-war order. The left is organising, but decades of anti-left 'red scare' rhetoric very much has us on the back foot. If the left want to win we have to be clear:
Socialism is for everyone. Not just for me or thee.
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