Keynes and the Good Life
Books reviewed are James Crotty, Keynes Against Capitalism: His Economic Case for Liberal Socialism (Routledge) and Zachary D. Carter, The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes (Random House)
As the economy collapses and the death toll mounts from COVID-19, economists are bound to ask, “What would Keynes do?” As two new intellectual histories of the great British economist make clear, that question is about much more than technical issues of monetary and fiscal policy, the Keynesianism found in economic textbooks. The real Keynes was a philosopher in the most profound sense. His was a towering intellect in search of the good society—human well-being—on the trail of Aristotle. Keynes today would address not only a searing health crisis and economic turmoil; he would instruct us on how the crisis lays bare the rot of our decayed public institutions, and he would bid us to pursue dazzling new solutions for our time.
Both James Crotty’s Keynes Against Capitalism and Zachary Carter’s The Price of Peace show brilliantly how Keynes was vastly more important to modern social thought and today’s politics than the “Keynesian models” of aggregate demand conventionally associated with Keynes today. Even in Keynes’s own time, when his magnum opus The General Theory of Employment, Interest and Money (1936) was still hot off the press, Keynes’s philosophical reflections on the social order were turned into a few mechanistic equations in disciple John Hicks’s IS-LM model (1937). As a new economics student almost 50 years ago, I was entranced by the IS-LM model: The economic fate of nations could be determined by the levers of monetary and fiscal policy. Yet this model, accessible even to a first-year enthusiast, did not convey Keynes’s real messages and thinking; it diverted our attention from a far deeper and more consequential political agenda.
Keynes indeed emphasized monetary and fiscal policy as tools of recovery from the Great Depression of the 1930s. In the 1920s, he emphasized the need to break with the gold standard to enable war-ravaged Europe to surmount the chaos after World War I. And in the 1940s, he helped to lay the monetary and fiscal foundations for economic recovery after World War II. He was an economic engineer of the greatest brilliance. Yet his financial engineering, dazzling as it was, is not why Keynes was the greatest public intellectual of his era, nor how we should distill his wisdom today. Keynes’s greater importance for us lies in the philosophical realm.
He was, I would argue, the unexcelled master of the moral virtue that the Ancient Greeks called phronesis, or practical wisdom. The Greeks were in search of the good life, or what they called eudaimonia. They believed that the good life could be achieved by cultivating moral virtues, in individual behavior and in politics as well. The leading moral virtues included practical wisdom, courage, moderation of wants, and justice, virtues that were to be pursued by each person in search of a good life, and through the collective life of the polis, or political community.