Excerpts from ‘Keynes: The Return of the Master’
From Keynes: The Return of the Master: Why, Sixty Years After His Death, John Maynard Keynes Is the Most Important Economic Thinker for America, by Robert Skidelsky
Listen to Lord Skidelsky read the first half of the excerpt:
Born in 1883 into an academic family, John Maynard Keynes was a product of Cambrdige civilization at its most fertile. His circle included not just the most famous philosophers of the day — G.E. Moore, Bertrand Russell and Ludwig Wittgenstein — but also that exotic offshoot of Cambridge the Bloomsbury Group, a commune of writers and painters, with whom he formed his closest friendships. He was caught up in the intellectual ferment and sexual awakening which marked the passage from Victorian to Edwardian England. At the same time, he had a highly practical bent.
After the First World War, Keynes set out to save a capitalist system he did not particularly admire. He did so because he thought it was the best guarantee of the possibility of civilization. But he was always quite clear that the pursuit of wealth was a means, not an end — the end being to live ‘wisely, agreeably, and well’. He did not much admire economics, either, hoping that some day economists would become as useful as dentists. All this made him, as his wife, the ballerina Lydia Lopokova, put it, ‘more than an economist’. He himself felt that ‘all his worlds’ fertilized his economics, giving him a richer, more complex, understanding of human nature than that of the economist’s ‘economic man’. In fact, given his other interests, he might be seen as the most brilliant non-economist who ever applied himself to the study of economics. In this lay both his greatness and his vulnerability. He imposed himself on his profession by a series of profound insights into human behavior which fitted the turbulence of his times. But these were never — could never be — properly integrated into the core of his discipline, which expelled them as soon as it conveniently could. In the 1930s Keynes’s lifestyle became more conventional as his work became more creative. He died of heart failure in 1946, having worked himself to death in service of his country.
He had a universal curiosity, and could not touch any topic without weaving a theory about it, however fanciful. He called the seventeenth-century scientist Isaac Newton, ‘the last of the magicians’, and not the first of the rationalists. In late middle age he used to complain that young economists were not ‘properly educated’, by which he meant they were not able to draw on a wide culture to interpret economic facts.
He was formidably intelligent. Bertrand Russell, one of the cleverest men of his day, wrote that ‘Keynes’s intellect was the sharpest and clearest that I have ever known. When I argued with him, I felt that I took my life in my hands, and I seldom emerged without feeling something of a fool.’ Others, like the art historian Kenneth Clark, felt he used his brilliance too unsparingly:’ he never dimmed his headlights.’
His mind was mercurial, which meant that he quickly changed his opinion. He liked to play with ideas in a reckless way, but, in this manner, as his friend Oswald Falk remarked, ‘in spite of false scents, he caught up with the march of events more rapidly than did others.’
Keynes was the most intuitive of economists, with an extraordinary insight into the gestalt of particular situations. He possessed in marked degree the scientific imagination he ascribed to Freud, ‘which can body forth an abundance of innovating ideas, shattering possibilities, working hypotheses, which have sufficient foundation in intuition and common experience’, though unprovable. He claimed for the economist Thomas Malthus ‘a profound economic intuition’, and quoted De Morgan’s verdict on Newton, ‘so happy in his conjectures as to seem to know more than he could possibly have any means of proving’. Keynes also felt sure of his unprovable conjectures.
Keynes ascribed to Malthus ‘an unusual combination of keeping an open mind to the shifting picture of experience and of constantly applying to its interpretation the principles of formal thought’. This expressed his own economic philosophy in a nutshell. Economics, he told Roy Harrod in 1938, is a ‘science of thinking in terms of models joined to the art of choosing models that are relevant to the contemporary world…Good economists are scarce because the gift of using “vigilant observation” to choose good models…appears to be a very rare one.’ Keynes paid close attention to economic facts, usually in statistical form. He used to say that his best ideas came to him from ‘messing about with figures and seeing what they must mean’. He could be as excited as any economist at discovering correlations in the data. Yet he was famously skeptical about econometrics — the use of statistical methods for forecasting the future. He championed the cause of better statistics not to provide material for the regression coefficient, but for the intuition of the economist to play on. He believed that statistical information in the hands of the philosophically untrained was a dangerous and misleading toy.
Keynes was the greatest persuader in twentieth-century economics. (Some would allow Milton Friedman to share pride of place with him.) Of today’s leading economists, only Paul Krugman and Joe Stiglitz seriously aim to persuade the public. His success as an economist is inseparable from his style, just as the failure (as I would call it) of mainstream economics today is inseparable from its style. What was his secret? He lived much of his life in a commune of writers, whose books he read — Virginia Woolf, Lytton Strachey, E.M. Forster — and Lytton Strachey’s irony certainly rubbed off on him. He read widely in philosophy. Much of his imagery came from a religious background. But clarity, succinctness, an unerring sense of the fitness of words, and an uncanny ability to use simple language to convey profound thoughts were innate emanations of the quality of his mind. He was a wonderful user of the English language, but even more important was his passionate commitment to communicating his ideas in language which his readers could understand, in words which they might use themselves, and which reflected their experience of what was going on. In the history of public language, this comes closest to the Aristotelian notion of the enthymeme — a ‘rhetorical logic’, appropriate to reasoning about ‘things which are variable’, and taking its premises from the audience’s stock of social knowledge.
Keynes’s generalizing passion was often at odds with his uncanny sense of the significant particular. It was his very ability to ‘touch the abstract and concrete in the same flight of thought’ which is such a dazzling, but also bewildering, feature of his economics. To one contemporary, Kurt Singer, he evoked, ‘by gesture, eye and word…the figure of a bird, of incredible swiftness, drawing circles in high altitudes, but of deadly precision when suddenly sweeping down on some particular fact or thought’. Fellow economists often accused him of mixing up the abstract and the concrete. His contemporary Joseph Schumpeter criticized him for offering ‘in the garb of general scientific truth, advice which … carries meaning only with reference to the practical exigencies of [a] unique historical situation’. In Schumpeter’s view, he constructed ‘special cases which in the author’s own mind and in his exposition are invested with a treacherous generality’. His Cambridge colleague Dennis Robertson called his ‘general theory’ the ‘theory of a very deep slump’. Kurt Singer also wondered whether it was ‘not in fact tailored to fit a very particular situation dominated by the political vicissitudes and their psychological consequences of that uneasy weekend between the two world wars, and whether [Keynes] was not in fact dealing with a phenomenon not likely to recur’.
Keynes replied effectively to these charges by saying that the world constructed by classical economics happened not to be the world we actually live in. The debate between what is ‘normal’ and what is ‘abnormal’, and whether any epoch has a special claim to be considered one or the other, still lies at the heart of economic theorizing, and has paralysed the ability of economics to be useful to the policymaker.
In my biography of Keynes I called him an ‘unusual economist’. I would now go further. Deep down, he was not an economist at all. Of course, he could ‘do’ economics — and with the best. He put on the mask of an economist to gain authority, just as he put on dark suits and homburgs for life in the City. But he did not believe in the system of ideas by which economists lived, and still live; he did not worship at the temple; he was heretic who learned how to play the game. In former times he would have been forced to recant, perhaps burnt at the stake. As it was, the freedoms and the exigencies of his times enabled him to force himself on his church. Only a person of colossal self-confidence, outstanding intellect and passionate concern for his countrymen and humankind could have set himself the task of rewriting a large chunk of the Western intellectual tradition. Yet this is what Keynes set out to do. One can only marvel that he got as far as he did. He mesmerized and fascinated his contemporaries; for thirty years after his death they lived in his intellectual and moral afterglow. But to the technicians who inherited his mantle his ideas seemed strangely alien to the main themes of their subject. They tried to assimilate them, but found it difficult and made a mess of it; and the next generation gave them up altogether. Orthodoxy won out; the economic temple was shaken, but stood still.