Keynes in Persuasion

J.M. Keynes Essays in Persuasion Vol. IX of the Collected Writings of … Macmillan 1972

II Inflation and Deflation

3 The French Franc (1926, 1928)

Keynes recommends stabilising the Franc to restore confidence. His approach seems similar to George Osborne’s for the UK 2010 on. (But France had low unemployment.)

4 Can Lloyd George Do It? (1929)

In the face of high unemployment, Keynes is critical of Baldwin’s approach, which seems very similar to Osbornes. (Although I haven’t heard the government say that if it builds today it will be taking away work from future generations.)

7 The Consequences to the Banks … (1931)

A ‘sound’ banker, alas! is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him.

IV Politics

1 A Short View of Russia (1925)

[It] seems to me clearer every day that the moral problem of our age is concerned with the love of money, with the habitual appeal to the money motive in nine-tenths of the activities of life, with the universal striving after individual economic security as the prime objective of the endeavour, with the social approbation of money as the measure of constructive success, and with the social appeal to the hoarding instinct as the foundation of the necessary provision for the family and for the future.

2 The End of Laissez-Faire (1926)

[The] guarded and dogmatic attitude of the best economists has not prevailed against the general opinion that laissez-faire is both what they ought to teach and what in fact they do teach.

[The ‘conclusion’] that individuals acting independently for their own advantage will produce the greatest aggregate of wealth, depends on a variety of unreal assumptions to the effect that the processes of production and consumption are in no way organic, that there exists a sufficient foreknowledge of conditions are in no way organic, that there exists a sufficient foreknowledge of conditions and requirements, and that there are adequate opportunities of obtaining this foreknowledge. For economists generally reserve for a later stage of their argument the complications which arise –
(1) when the efficient units of production are large relatively to the units of consumption,
(2) when overhead costs or joint costs are present,
(3) when internal economies tend to the aggregation of production,
(4) when the time required for adjustment is long,
(5) when ignorance prevails over knowledge, and
(6) when monopolies and combinations interfere with equality in bargaining.

I believe that in many cases the ideal size for the unit of control and organization lies somewhere between the individual and the modern State. I suggest, therefore, that progress lies in the growth and recognition of semi-autonomous bodies with the State – bodies whose criterion of action within their own field is solely the public good as they understand it .. .

Many of the greatest economic evils of our time are the fruits of risk, uncertainty, and ignorance. It is because particular individuals, fortunate in situation or in abilities, are able to take advantage of uncertainty and ignorance … that great inequalities of wealth come about … .

V The Future

2 Economic Possibilities for Our Grandchildren (1930)

Keynes extrapolates then current trends to 2028.

   The strenuous purposeful money-makers may carry all of us along with them into the lap of economic abundance. But it will be those peoples, who can keep alive, and cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.

…If economists could manage to get themselves thought of as humble, competent, people, on a level with dentists, that would be splendid.

VI Later Essays

1 Means to Prosperity (1933)

[Our predicament] comes form some failure in the immaterial devices of the mind, in the working of the motives which should lead to decisions and acts of will, necessary to put movement to the resources and technical means we already have. It is as if two motor-drivers, meeting in the middle of the road, were unable to pass one another because neither knows the rule of the road. … Nothing is required and nothing will avail, except a little clear thinking.

… The world is less and less disposed to ‘wait for the miracle’ – to believe that things will right themselves without action on our part.

… [All] our ideas about economics, instilled into us by education and atmosphere and tradition are, whether we are conscious of it or not, soaked with theoretical pre-suppositions which are only properly applicable to a society which is in equilibrium, with all its productive resources already employed.

See Also

Keynes’ II Economic Consequences of the Peace (1919), VII The General Theory (1936), VIII Treatise on Probability (1921).

Dave Marsay

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