Was John Maynard Keynes a Socialist? Part Two

by DynamicLethargy in Politics, May 6, 2009

In my previous article “Was John Maynard Keynes a Socialist?”, I concluded that Keynes was not, as some people claim, a socialist. While most people who contacted me expressed agreement, many others disagreed. I have delved into their objections and here’s some of what I have learned.

See part 1: Was John Maynard Keynes a Socialist

What is Socialism anyway?

In reading the comments I got I realized that I had to have a clear definition of what socialism was. While digging around it became clear that there is a variety of things that are called socialist.

State Socialism

This is what most people think of when you say socialism. It is characterised as a single party state with government control of the economy and central planning. The old Soviet Union and Cuba are examples of this kind of socialism.

Marxist Socialism

Karl Marx is recognised as the founder of modern socialism. He believed that laissez-faire capitalism would inevitably lead to the development of socialism in the same way that feudalism lead to capitalism.

Libertarian Socialism

When I came across this phrase, I thought it was an oxymoron that someone made up as a joke. It isn’t. This movement began in the 1850s and advocated complete freedom for all people.

This group agreed with the long term vision of Marx of a society free from the oppression of the state and of capitalists. Where they differed from Marx was that they felt that society could and should go there directly without the intermediary step of state socialism. According to the Wikipedia article on libertarian socialism, the American libertarians split with libertarian socialism over the issue of private ownership.

What is the essential difference between Socialism and Capitalism?

There are several characteristics that may distinguish socialism and capitalism.

Centralised planning of the economy

Socialism does not necessarily mean centralized planning of the economy, such as seen in state socialism. In Marx’s utopian socialism and in libertarian socialism there is no central government. There is no one to do the centralised planning. Conversely, the governments of capitalist societies make and enforce the rules of commerce and must do some kind of planning. In a capitalist system the hand on the tiller tends to be light. So we can not distinguish socialism and capitalism on the basis of central planning.

Free markets

Socialism does not necessarily mean there is no free market. Again, in Marx’s utopian socialism people are allowed to associate and trade with others as they see fit. If this isn’t a free market, what is? Conversely, in a capitalist system it is possible for a single corporation to dominate a single market to such as extent that they control it. This is not a free market. So we cannot distinguish between socialism and capitalism on the basis of free markets.

Democracy

Socialism does not necessarily mean there is no democracy. Marx’s utopian socialism would be a form of democracy. Even state socialism could, in theory, be democratic. Portugal is both democratic and a socialist. Conversely, a capitalist system does not need to be democratic. There are many examples of dictatorships where the economy was capitalist, for example Chile under Augusto Pinochet. So we cannot distinguish between socialism and capitalism on the basis of having a democratic government.

Private property

Karl Marx said that abolition of private ownership was necessary before socialism was possible. In contrast private ownership is an absolute necessity for capitalism to function. In a socialist system individuals cannot accumulate wealth through private ownership. In a capitalist system individuals are allowed, and in fact encouraged, to accumulate wealth (capital). This is what distinguishes capitalism from socialism.

So, was Keynes a Socialist?

The short answer is no. Keynes was not a Socialist.

Keynes was a strong believer in private property and the accumulation of wealth which is what distinguishes capitalism from socialism. In his personal life he took advantage of this to become quite wealthy.

Karl Marx called for the total elimination of government, while Keynes wanted the government to be strong to support capitalism. Karl Marx hoped that laissez-faire capitalism would bring about a socialist revolution, while Keynes feared Marx was right and advocated policies that would help prevent the collapse of capitalism.