Wednesday, April 27, 2016

Keynes on Communism

Keynes visited the Soviet Union in the summer of 1925. He evidently tried hard to take a fair-minded view of Soviet Communism to please other people on the left, but just couldn’t do it.

From his essay “A Short View of Russia” (1925):
“Like other new religions, Leninism derives its power not from the multitude but from a small minority of enthusiastic converts whose zeal and intolerance make each one the equal in strength of a hundred indifferentists. .... Like other new religions, it persecutes without justice or pity those who actively resist it. Like other new religions, it is unscrupulous. Like other new religions, it is filled with missionary ardour and ecumenical ambitions. ....

I sympathise with those who seek for something good in Soviet Russia.

But when we come to the actual thing what is one to say? For me, brought up in a free air undarkened by the horrors of religion, with nothing to be afraid of, Red Russia holds too much which is detestable. Comfort and habits let us be ready to forgo, but I am not ready for a creed which does not care how much it destroys the liberty and security of daily life, which uses deliberately the weapons of persecution, destruction, and international strife. How can I admire a policy which finds a characteristic expression in spending millions to suborn spies in every family and group at home, and to stir up trouble abroad? Perhaps this is no worse and has more purpose than the greedy, warlike, and imperialist propensities of other Governments; but it must be far better than these to shift me out of my rut. How can I accept a [sc. communist] doctrine which sets up as its bible, above and beyond criticism, an obsolete economic textbook which I know to be not only scientifically erroneous but without interest or application for the modern world? How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeois and the intelligentsia who, with whatever faults, are the quality in life and surely carry the seeds of all human advancement? Even if we need a religion, how can we find it in the turbid rubbish of the Red bookshops? It is hard for an educated, decent, intelligent son of Western Europe to find his ideals here, unless he has first suffered some strange and horrid process of conversion which has changed all his values.”
Keynes’ judgement on Marx’s economics is especially interesting:
“How can I accept a [sc. communist] doctrine which sets up as its bible, above and beyond criticism, an obsolete economic textbook which I know to be not only scientifically erroneous but without interest or application for the modern world?”
And we can easily list these erroneous and obsolete doctrines as they exist in volume 1 of Capital:
(1) the size of the working class eventually stabilised and society was swelled by a growing and prosperous middle class and social mobility, contrary to Marx’s prediction of all people – except a small class of capitalists – being reduced to proletarians. Unemployment rates in capitalism are simply a cyclical result of the business cycle: even in the 19th century, unemployment rates did not grow and grow in the long run, as Marx’s theory predicts, but normally simply moved around a point somewhat above full employment, as John Maynard Keynes pointed out:
“our actual experience … [sc. is] that we oscillate, avoiding the gravest extremes of fluctuation in employment and in prices in both directions, round an intermediate position appreciably below full employment and appreciably above the minimum employment a decline below which would endanger life.”
Keynes, J. M. 1936. General Theory of Employment, Interest, and Money , Chapter 18.
(3) Marx thought that the large industrial reserve army is a necessary consequence and necessary condition of capitalism, but this is incorrect. In the Keynesian era of full employment, where there was very low unemployment and indeed labour scarcity in the advanced capitalist world, capitalism continued and thrived – indeed we now call it the “Golden Age” of capitalism.

(4) the long-run tendency of capitalism, even in the 19th century, was to massively increase the real wage, which has soared above subsistence level, even for workers (see here and here), contrary to Marx’s theory that the tendency of capitalism is to keep the real wage at a subsistence level (which is the value of the maintenance and reproduction of labour-power).

(5) the growing real wage and rising disposable income even of workers in capitalism also allowed a massive capacity for production of new commodities and new opportunities for employment (e.g., especially in services and middle class employment), which in turn has helped to overcome technological unemployment for most of the history of capitalism, contrary to Marx’s prediction of subsistence wages and increasing technological unemployment. Even if we do experience mass technological unemployment this century, it need not lead to disaster, with demand-management, a guaranteed income and government employment programs.

(6) Marx’s claim that machines, generally speaking, are an unmitigated evil in capitalism whose primary effect to increase the intensity and speed of work by labourers is an outrageous falsehood – a perversion of history and reality. In reality, machines have, generally speaking, tended to decrease the intensity, difficulty and monotony of human labour and often reduced to human labour to lighter work of visual inspection and overseeing of machine work, not physical labour. On this, see here and here. Advanced capitalist nations have also virtually eliminated child labour as well, and in our time have tended to pay women the same hourly wage for the same type of work as men.

(7) highly developed and advanced Western capitalist states like Britain and the US proved the most resistant to communism and Marxism (contrary to Marx’s theory), and when communist revolutions broke out it was in backward Russia and China.
Keynes, J. M. 1933 [1925]. “A Short View of Russia,” in John Maynard Keynes, Essays in Persuasion. Macmillan, London. 297–311.

1 comment:

  1. LK i saw your comment (i believe its yours on bill mitchell site) and with all of my respect to bill i agree with your opinion about de industralization and the harm of this process of course i dont think that globalization diminshing government capacity to create full employment,but i still think that free non manageable trade can be really harmful in the structural sense for both sides and it can be probelamtic and it will not lead to the best situation for all the parties.

    so what do you think about responding here in your blog on his post or to give him a link to his arguements?

    i think its important that in our post-keynesian blogosphere we will share ideas and discuss them and even argue about them.

    and i think its important to argue with MMTers about the issue of manageable trade.