Keynes and Marx

My new book Keynes and Marx attempts a constructive Marxist engagement with Keynes and Keynesianism. I’ll explain what I mean by this and how the book tries to achieve it.

Three attitudes dominate Marx-Keynes relations. I argue for a fourth.

The first attitude is one of mutual hostility. Seldom a genuine battle of ideas, this is more often involves a cursory dismissal, preferably ornamented with a few choice insults. For Keynes, Marxism is simply ‘illogical and dull’. Marxists reply in kind. Keynes was at best one of capitalism’s more subtle apologists. Expect contamination if you venture too close.

The second attitude is one of mutual appreciation. Both Marx and Keynes were fighting the good fight against a dastardly mainstream, using different language to say much the same thing. For John Bellamy Foster and Robert McChesney, ‘Marx figures centrally in Keynes’s analysis’. Now of course, there can be common cause, whether against austerity policies or for pluralism in the teaching of economics. But it is simply not true that Keynes ever took Marx seriously. There are some sharp differences in their philosophies, politics and economics which militate against a comfortable cohabitation.

Recognising this, a third attitude, says that Keynesians can appropriate Marxist insights. Perhaps best exemplified in the work of Joan Robinson, once we jettison that metaphysical value-theory nonsense, we can graft Marxist ideas about class inequality and economic dynamism onto Keynesian foundations to provide a richer account of imperfect competition.

I’m saying there is mileage in doing something comparable from the other direction. There are important Keynesian insights, which a Marxist critique can radicalise and then appropriate to provide a richer account of capitalism. I’m not claiming to be the only person ever to think like this, but there is at least a relative lack of serious Marxist engagement with Keynes.

There is an immediate practical problem. Keynes often wrote beautifully but his major economic works, the Treatise on Money and particularly the General Theory, are difficult books. They are not like Marx’s Capital, or for that matter Adam Smith’s Wealth of Nations, which may be daunting in their size, but which almost anybody could read, given the time. Keynes was writing for professional economists. And although the mainstream then was less ridiculously mathematical than it is now, Keynes engages with his marginalist peers on their own terms using their own language.

The first part of my book therefore tries to explain where I think – and these things are always controversial – Keynes was coming from. I risk a summary of the General Theory but explain this in the context of Keynes’s social situation as a proud member of Britain’s ruling elite; his politics, ‘small-l’ liberal but also Liberal Party; his philosophy, which I describe as an ‘inconsistent idealism’; and his attitude to his economic forebears, particularly William Stanley Jevons and Alfred Marshall.

I then turn to areas where I think Marxists have most to gain through a critical encounter. The first is on unemployment, which Keynes condemns as an inefficient waste of resources. For Marxists, unemployment is essential to capitalism to keep workers in their place. But simply invoking the industrial reserve army is insufficient. It says nothing about how varied unemployment can be. Keynes’s ideas of ‘unemployment equilibrium’ can help explain the inertia in the system, and why imperatives to accumulate are experienced unevenly between industries and across time and space.

Marxists can also learn from Keynes’s insights on money and interest. Keynes exaggerates the independence of finance from the productive economy and exaggerates the benign powers of the state to set things right. But finance has a distinct moment of its own and Marxists have tended to underestimate and to leave under-investigated the dynamic interaction of finance and the broader economy. States do make history, albeit not in conditions of their own choosing, and states’ influence on monetary relations are vital.

The final chapters turn to Keynesianism after Keynes, to why it went into decline and to the prospect of a return. A recurring theme is that there are an awful lot of Keynesianisms. Economic practices often bore only the faintest resemblance to Keynes’s own ideas. People calling themselves Keynesians can assert diametrically opposite things. Marxists will be familiar with the phenomenon. But this means that some Keynesians are outright intellectual and class enemies. Others should be close allies.

In an important sense, Keynesianism never went away. States’ responses to the global financial crisis of the 2000s and to COVID-19 show a capacity and readiness to intervene, quite alien to the pre-Keynes world of Britain or the US in the 1920s. There are real gains worth defending as well as Keynesian-type reforms worth fighting for. But what we came to know as Keynesian practices were typically the unintended outcome of profound social struggles. They were a hitting the moon by aiming at the stars kind of outcome. We should still aim higher, without expecting to retrace that path to the moon.