Was John Maynard Keynes a Socialist?
by With governments considering stimulus packages and running deficits to deal with the current economic crisis, people are again debating the merits of the economic prescriptions of John Maynard Keynes. Some call his ideas socialist and I decided to find out for myself.
When I speak of socialists in this article, I mean the idealistic true believers, not the opportunists who adopt socialist trappings for personal gain.
A Brief Description of Keynesian Economics
Spend when it will do the most good.
Tax when it will do the least harm.
Why do people think he was a socialist?
The main reason for this perception is the similarity between the prescriptions of socialism and those of Keynesian economics. The difference between the two lies in their motivations and goals of their policies.
Socialist economists believe in government intervention in the economy, while traditional capitalist economists do not. Keynes also believed in government intervention in the economy. While socialists wanted to run the economy in the interest of the workers, Keynes wanted to prevent the collapse of capitalism.
Socialists want to take care of the low income workers and the poor of society, while traditional capitalist economists believe that they can take care of themselves. Keynes wanted to give the capitalist economy a boost by encouraging spending. If you gave the money to the rich they would save it. If you gave the money to the poor, they would spend it. Giving the money to the poor would do more to stimulate the economy.
Many people think Keynes was a socialist because he suggested that governments should run deficits. That is not quite right. He advocated running deficits as a way to stimulate the economy during recessions and depressions. When the economy was booming and inflation was the top worry, he advocated running a surplus. The rest of the time he said they should run a balanced budget. This was how government could intervene in the economy without taking direct control.
What Did Keynes Say About socialism?
John Maynard Keynes was a British economist who has given his name to Keynesian economics. After becoming an economist he went on to become quite wealthy playing the stock market. After the First World War he was a representative at the Versailles peace conference. After the Second World War he helped create the World Bank and the IMF. Later in life the King made him Baron Keynes.
Here is what Keynes had to say about socialism.
“Marxian Socialism must always remain a portent to the historians of Opinion — how a doctrine so illogical and so dull can have exercised so powerful and enduring an influence over the minds of men, and, through them, the events of history.” – John Maynard Keynes
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Post CommentJenny Heart
On January 26, 2009 at 7:48 am
Yes indeed I pray for a restored economy. Very valuable information. Great detailed information!
Olivia Reason
On February 5, 2009 at 3:04 pm
I have been looking for some information that would put economic problems in some kind of perspective for me. I don’t have a good grasp of economics and everytime I try to learn more, I get bogged down in partisan, one-sided information. This gives me some history and some theory and now I can seek further information. This is really, a great article, James.
Skinner
On February 14, 2009 at 11:55 am
I haven’t heard Keynes being called a socialist, but those who are implementing his economic theories certainly are. It’s true that Keynes wanted gov’t to intervene in the economy to prevent the collapse of capitalism, but modern-day liberals want the gov’t to intervene in the economy in the interest of the workers, even going so far as to desire the Nationalization of many, if not all, industries.
JC
On February 18, 2009 at 6:39 pm
Skinner:
I find it interesting that you think liberals, whose primary party is funded by large corporations, would be interested in socializing our economy. Liberal ideology simply reflects the will of the more responsible members of the upper classes; they understand the market can get out of hand and when that occurs certain sectors must be temporarily supported or nationalized in order to protect the economy as a whole. The government has nationalized banks before and once the economy gained a healthy footing they sold it back to the market place.
FiSh
On February 27, 2009 at 4:07 pm
I recommend you all this little book by Zygmund Dobbs. This book is out of print for a long time /first printed in 1960/. It explains a lot, it is a must read for all americans.
http://www.keynesatharvard.org/book/index.html
JBM
On February 28, 2009 at 4:36 pm
I went and had a look at Zygmund Dobbs book on-line. In the introduction he says that many socialists don’t consider Keynes a socialist, but then he says that socialists can not be trusted, so that proves that Keynes is a socialist. After I read that piece of circular logic I took the rest of what he had to say with a grain of salt.
FiSh
On March 10, 2009 at 7:33 pm
If you find Dobbs`s book a piece of circular logic then you should read something from real economists like Hazlitt, Mises, Hayek. But if you like and look forward to be part of collectivistic form of society ruled by big government that controls every aspect of your life then Keyenes is your man!
All truth passes three stages. First, it is ridiculed. Second it is violently opposed. Third is accepted as being self-evident. A.S.
JBM
On March 30, 2009 at 7:20 pm
Note to FiSh – I am not ignoring you. My research is taking a longer time than I anticipated. I will be writing another article, or maybe two, about I what I have learned.
Kwok
On May 30, 2009 at 10:17 am
Sounds like people are confusing with government spending and government ownership, and also the description of the effect of government action with advocating the government action.
Keynes showed how fiscal polices (government spending and not ownership) will affect a capitalistic economy. And he advocate the government to expand and contract expenditure as the economy changes. He did not advocate high expenditure or low expenditure, but appropriate expenditure as the economy needs. He also showed that low taxation has similar effect as high expenditure, and high taxation has the same effect as low expenditure. However, in a democracy where over 50% of people are greedy, during good times, government cannot increase taxes, and can easily increase expenditure, while Keynesian theory told them to do exactly the opposite. In bad times, government find it difficult increase deficit, which is exactly the opposite of what Keynesian theory told them to.
Capitalism only works when people and government understand economics. But that is surely too much to ask.