I always thought that this was a bit of an exaggeration, and that Keynes own assessment of his work - that he aimed to save capitalism not damn it - was more accurate. I think the point was that an 'equilibrium' account of capitalism was just unsustainable at the time that Keynes was writing, and could only be understood as myth-making.
In tailoring a pro-capitalist ideology more closely to the facts of market failure Keynes saved the system. I think it is interesting that he is coming back into fashion now, after the Reagan-Thatcher free market ideology is seen as a busted flush. More than the left wing Keynesians the mainstream ones (Skidelsky, Krugman) are important. They are drawn to Keynes view that there is nothing given about capitalist success, and that crisis is always a possibility.
In LM next month I'm running a review of Krugman's book by Phil Mullan who says that if anything, he's too pessimistic about the world market.
In message <37ACD0B5.F356318D at igc.org>, Roger Odisio <rodisio at igc.org> writes
>Keynes "blurted out" that
>probably social control of investment was necessary to deal with the
>disequilibria he
>analysed. As far as I know he never followed up on that point. But I
>doubt it was
>because he didn't understand its implications. Things improved after
>WWII; capitalism looked more stable as it rebuilt its productive base.
>And he
>wasn't antagonistic to capitalism; he didn't *want* to pursue such a
>revolutionary thought.
I don't see 'social control of investment' as a 'revolutionary thought'. Given that Keynes conception of society was premised upon an ostentatious elitism, such 'social control' would have been more reactionary in its content than the free market. Tempered by the post- war Labour party's limited relation to the masses it became that most revolutionary of institutions: the National Coal Board, the Board of Trade, the National Economic and Development Council, and British Steel. Needless to say, these institutions were wholly indifferent to the interests of working people who they exploited and slaughtered at will. -- Jim heartfield