Reworking JM Keynes

0 Comments | Sunday Herald, The, Nov 30, 2003 | by Reviewed by Iain Macwhirter

John Maynard Keynes 1883-1946 by Robert Skidelsky(Macmillan, (pounds) 30) John Maynard Keynes is a fairly obscure figure today. We're not all Keynesians now so it's hard to believe just how influential his ideas were throughout the last century. But these things are cyclical, like the economy, and Keynes is due for a revival.

So, let's start here. Keynes wasn't just a radical economist. He was one of the leading intellectual figures of the 20th century. In his various guises as Bloomsbury groupie, Cambridge philosopher and government adviser, Keynes sprawled across worlds which knew little of each other, and cared less.

The Bloomsbury group aesthetes despised "bean counters". They believed they were the vanguard of a cultural revolution. Historian Lytton Strachey and painter/designer Vanessa Bell couldn't understand why "Pozzo", as they called Keynes, should want to spend so much of his time with bankers. Mind you, they were only too happy to accept his advice on their investments. Keynes allowed Bloomsbury Group intellectuals to live in the manner to which they had been accustomed, even during long periods of economic uncertainty. According to Skidelsky, there wasn't an enterprise, cultural or domestic, in which Bloomsbury figures were involved, which didn't benefit in some way from Keynes's largesse. If so, Virginia Woolf's stream of consciousness was partly financed by the stream of revenues from Pozzo's equities.

Keynes was an iconoclast and eccentric who revelled in anti- establishment gestures and attitudes, but he remained very much a product of the English bourgeoisie. He was a well-heeled Bohemian, who returned every weekend to Cambridge, when he wasn't attending country house parties.

He was also a promiscuous homosexual for the first half of his life, though he had a long on-off relationship with the artist, Duncan Grant. Keynes gloried in what he called "the higher sodomy", and openly lusted after young men at Cambridge and in Bloomsbury's free-thinking circles. He sometimes took extraordinary risks seeking out "rough trade" in the streets of London only a decade or so after Oscar Wilde had been imprisoned for buggery. Keynes was a member of the Cambridge gay elite, the Apostles, along with future super-spies like Guy Burgess and Anthony Blunt, though Keynes was never seduced by Marxism. He even tried to seduce Cambridge philosopher Ludwig Wittgenstein Keynes might have become the first gay icon, had it not been for the fact that he became implausibly hetero-sexual in later life. At the age of 40, he married a flamboyant Russian ballerina, Lydia Lopokova, who danced with Diaghilev and would frighten diplomats and Tory politicians by making suggestive advances to them at parties. They made an odd couple: the austere Treasury mandarin and the extravagant dancer.

Keynes had some bizarre habits. He once astonished his literary friends by urinating in front of them. He outraged the Bloomsbury avant garde with his appalling table manners. The conventions of the table was one tradition these radicals somehow never discarded.

He had some weird ideas too. He told a government commission in 1932 that stock market gambling was so prevalent in the United States because not enough grass grew to encourage horse-racing. He was an aficionado of the turf himself and an enthusiastic visitor to casinos.

Keynes was no Marxist, but he could hardly be unaffected by the 1917 Bolshevik revolution in Russia. As a committed bourgeois and supporter of the British Empire (he had served as a civil servant in the India Office after Cambridge) Keynes found the idea of communism repugnant. However, with the capitalist economies of the West stuck in depression, with millions out of work, he realised that only state regulation could prevent the forces of socialism from overwhelming his way of life. He rejected the view of classical or laissez-faire economists that capitalism was a self-regulating system, where full employment would naturally occur provided there was free competition and an absence of price fixing. That might happen in an ideal world. Equally, capitalism could achieve an equilibrium of demand and supply at less than full employment.

Forcing the free market to subject itself to regulation and guidance by the state, Keynes believed, was the only way to get out of the Great Depression. If necessary, the government should pay the unemployed to dig holes and fill them in again. It worked. The Roosevelt New Deal in the US was an early form of Keynesian interventionism.

Free-market economists like Friedrich Hayek never forgave Keynes for demonstrating that capitalism couldn't be relied upon to regulate itself. They got their own back: Keynesian policies of demand management were blamed, wrongly, for the inflation and economic stagnation (stagflation) of the 1970s.

The politicians who had traded on his reputation as an economic miracle worker, needed a scapegoat. Keynes was it. The very word "Keynesian" became synonymous with state controls, nationalisation and trade union militancy. Politicians are still reluctant to invoke his name today, even when they're pursuing his policies.