> Keynes offers a warning of how not to do political
> economy for the 21st century. First of all, Keynes had no intention
> of
> really challenging the status quo, either politically, economically,
> or
> academically. As he wrote in the General Theory:
> ##the foregoing theory is moderately conservative in its implications.
> For whilst it indicates the vital importance of establishing certain
> central controls in matters which are now left in the main to
> individual
> initiative, there are wide fields of activity which are unaffected.
> [Keynes 1936, pp. 377-78]
> In effect, elite individuals, such as Keynes, could make moderate
> adjustments in the system, thereby letting it continue more or less
> as it
> had in the past. Again, the vast mass of people played no part in the
> system.
This ignores the essence of Keynes's analysis of capitalism, i.e. his claim that "the essential characteristic of capitalism" is "the dependence upon an intense appeal to the money-making and money-loving instincts of individuals as the main motive force of the economic machine" and, hence, misinterprets the quoted General Theory passage.
If you look up the claim about "the essential characteristic of capitalism" (in "The End of Laissez-Faire" <http://www.panarchy.org/keynes/laissezfaire.1926.html
>) you'll find it occurs in a context where questions that concern reforms that leave "capitalism" in this sense intact are put aside in order to consider "questions ... which, for want of better words, may be called psychological or, perhaps, moral."
"These reflections have been directed towards possible improvements in the technique of modern capitalism by the agency of collective action. There is nothing in them which is seriously incompatible with what seems to me to be the essential characteristic of capitalism, namely the dependence upon an intense appeal to the money-making and money- loving instincts of individuals as the main motive force of the economic machine. Nor must I, so near to my end, stray towards other fields. Nevertheless, I may do well to remind you, in conclusion, that the fiercest contests and the most deeply felt divisions of opinion are likely to be waged in the coming years not round technical questions, where the arguments on either side are mainly economic, but round those which, for want of better words, may be called psychological or, perhaps, moral."
In taking up these questions, Keynes points to "a latent reaction, somewhat widespread, against basing society to the extent that we do upon fostering, encouraging, and protecting the money-motives of individuals” and claims that a “preference for arranging our affairs in such a way as to appeal to the money-motive as little as possible, rather than as much as possible, need not be entirely a priori, but may be based on the comparison of experiences."
He asserts the following as his own position on these “questions”:
"For my part I think that capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself it is in many ways extremely objectionable. Our problem is to work out a social organisation which shall be as efficient as possible without offending our notions of a satisfactory way of life."
That Keynes judged "capitalism" to be "in many ways extremely objectionable" and that he did so on grounds "which, for want of better words, may be called psychological or, perhaps, moral" is made evident elsewhere, most obviously in "Economic Possibilities for Our Grandchildren" <http://www.eco.utexas.edu/facstaff/Cleaver/368keynesgrandchildren.html
>.
However, he also judged dominance of the economy by the "vulgar passions" he claimed defined capitalism as the most "efficient" way of ultimately solving "the economic problem" and in this way removing the "material" obstacle in the way of actualizing "the ideal republic" which he imagined as being "on the extreme left of celestial space". In addition, "vulgar" as they were, these "passions" were less dangerous than the ultimate human "instincts" - "the insane and irrational springs of wickedness in most men" - they "canalised".
For these reasons, he claimed that "for at least another hundred years we must pretend to ourselves that fair is foul and foul is fair" and that even then the strength of these "instincts" would make the removal of the "spiritual" obstacles in the way of actualizing "the ideal republic" - "the task of transmuting human nature" - extremely difficult.
“For my own part, I believe that there is social and psychological justification for significant inequalities of incomes and wealth, but not for such large disparities as exist today. There are valuable human activities which require the motive of money-making and the environment of private wealth-ownership for their full fruition. Moreover, dangerous human proclivities can be canalised into comparatively harmless channels by the existence of opportunities for money-making and private wealth, which, if they cannot be satisfied in this way, may find their outlet in cruelty, the reckless pursuit of personal power and authority, and other forms of self-aggrandisement. It is better that a man should tyrannise over his bank balance than over his fellow-citizens; and whilst the former is sometimes denounced as being but a means to the latter, sometimes at least it is an alternative. But it is not necessary for the stimulation of these activities and the satisfaction of these proclivities that the game should be played for such high stakes as at present. Much lower stakes will serve the purpose equally well, as soon as the players are accustomed to them. The task of transmuting human nature must not be confused with the task of managing it. Though in the ideal commonwealth men may have been taught or inspired or bred to take no interest in the stakes, it may still be wise and prudent statesmanship to allow the game to be played, subject to rules and limitations, so long as the average man, or even a significant section of the community, is in fact strongly addicted to the money-making passion." (Collected Writings, vol. VII, p. 374)
It was, however , the removal of the "spiritual" obstacles that would constitute "the real problems of the future", "the heroic tasks of the future".
“The real problems of the future are first the maintenance of peace, of international co-operation and amity, and beyond that the profound moral and social problems of how to organise material abundance to yield up the fruits of a good life. These are the heroic tasks of the future.” (vol. XXVII, pp. 260-1)
So, for Keynes, a "political economy for the 21st century" would be concerned with "the profound moral and social problems of how to organise material abundance to yield up the fruits of a good life."
Such a discussion of "practical affairs" from this perspective would necessarily require, however, engagement with the role of "irrationality" in "human affairs" and with the obstacle the instinctive sources of this irrationality put in the way of the development of individual "enlightenment" – of “the universal element in the soul of man” - required for actualization of "the good life" that defines "the ideal republic", "the true realm of freedom".
"Our [early Bloomsbury's] comments on life and affairs were bright and amusing, but brittle - as I said of the conversation of Russell and myself with Lawrence - because there was no solid diagnosis of human nature underlying them. Bertie in particular sustained simultaneously a pair of opinions ludicrously incompatible. He held that in fact human affairs were carried on after a most irrational fashion, but that the remedy was quite simple and easy, since all we had to do was to carry them on rationally. A discussion of practical affairs on these lines was really very boring. And a discussion of the human heart which ignored so many of its deeper and blinder passions, both good and bad, was scarcely more interesting.” (vol. X, p. 449)
Ted