Читать книгу The Ideas That Shaped Post-War Britain - Anthony Seldon - Страница 10

Keynes himself seemed to pre-empt one answer to the question of what caused his revolution to fail when he remarked, famously, that ideas are more powerful than vested interests and strongly implied that in economics, as in all sciences, newer ideas are likely to be truer than older ones (the progressive credo).⁶ Both Keynesian and anti-Keynesian economists have taken him at his word, the Keynesians attributing the defeat of the ‘classical’ system to flaws in its reasoning corrected by Keynes, and anti-Keynesians explaining the ‘fall’ of Keynesian ideas by flaws in Keynesian reasoning corrected by Friedman and others.

Milton Friedman says that Keynes was a great economist: he asked the right questions, but the answers he gave were wrong – they did not stand up against evidence and experience.⁷Friedman’s own inter-linked investigations of the consumption and ‘demand for money’ functions convinced him that economies were much more stable than Keynes believed. The severity of the Great Depression, then, was wholly the result of policy mistakes, avoidable on existing theory. There was no need for a ‘Keynesian revolution’. Similarly, Harry Johnson argues that it was not wrong theory, but wrong policy, which produced Britain’s mass unemployment in the 1920s.⁸ More fundamentally, Hayek argues that the whole of macroeconomics was a wrong turning, made possible by Cambridge’s ignorance of Austrian capital theory.⁹

The consequence of flaws in Keynes’s reasoning was that the Keynesian age inevitably generated accelerating inflation, as indeed Jacob Viner predicted it would in his review of the General Theory.¹⁰ The Keynesian doctors treated economies for the supposed diseases of deflation and unemployment, and this inevitably produced inflation and overfull employment. Notice that it is being assumed in all this that the policies pursued by governments in the Keynesian age were a more-or-less accurate application of Keynesian ideas. Ideas do not cause inflation, policies do.

The question of Keynes’s relationship to the Keynesians was interestingly raised by Terence Hutchison.¹¹ One important contention of those who wish to defend Keynes from the Keynesians is that Keynes’s General Theory could be made to point both ways – against inflation as well as against unemployment. John Hicks was the first to say that within the General Theory there were a number of possible models of the economy.¹² The implication of this line of argument is that, had he lived, Keynes would have become a ‘monetarist’. That Keynes would not have been an orthodox Keynesian is as indisputable as it is banal. It is a characteristic of great thinkers – Freud and Marx are other obvious examples – that they cripple the creativity of their followers, followership being precisely the state of accepting the authority of the Master religiously, rather than rationally.

Those who argue that the Keynesian revolution was ruined by policy mistakes do not deny that ideas influence policy. But they claim that they do so mainly in their rhetorical aspect. Policy is not theory-based. Politicians use ideas as weapons – to promote their interests and legitimise their policies. This is probably the view of the role of economic ideas most widely held by political scientists and historians, reinforced by their typically poor opinion of economics as a science.

It is a short step from such arguments to the notion that ideas are simply covers for ‘vested interests’ – a view which Keynes explicitly rejected. Marxists have argued that Keynes’s ideas were taken up because they served the interests of the bourgeoisie in the 1930s, and were dropped when they started to endanger capitalist profits in the 1970s. Friedman and Hayek, Marxists say, became popular in the 1980s because they legitimised the recreation of a ‘reserve army’ of the unemployed.

The main thrust of this kind of argument is to rob ideas of the sovereignty Keynes gave them. Policy will only coincidentally be appropriate to the situation – when the self-interest of politicians coincides with the ‘needs’ of the economy. The politically-generated business cycle is said to be a classic example of the misuse of Keynesian ideas by politicians.¹³ The public-choice theorists of the Virginia School have tried to demonstrate rigorously that the incentives facing politicians and bureaucrats will cause them to run budget deficits. Once deficits have been legitimised for certain purposes they will be used for any purpose.¹⁴

Keynesian economists have often complained that their advice was not followed, or was followed in such a politically-distorted way as to saddle them (and more generally Keynesianism) with the odium of failure. In the 1960s it was easy for the right-wing press to caricature the Hungarian-born Nicholas Kaldor as the itinerant economist whose tax-reform proposals in developing countries brought ‘revolution, inflation and toppling governments’.¹⁵ The much more serious claim is that Keynes and the Keynesians were politically naive. Interventionist ideas were bound to be misused. Classical economics, based on the idea of a self-correcting market, discouraged political intervention in economic life. Keynes’s theory, by postulating an extreme instability of unmanaged economies, removed all inhibitions to intervention. From this point of view, Keynes’s cures for relatively minor diseases opened the floodgates to the politicisation of the economy. An important element in the reaction against Keynesianism was the demand for fixed rules to replace discretionary policies.

The idea that it was exogenous events which brought about the downfall of the Keynesian revolution comes in at least three versions. Keynes said that the test of a good model is that it should be ‘relevant to the contemporary world’.¹⁶ It should be able to explain the ‘facts of interest’ at a particular time. Because these facts change, models must change with the facts. In the 1930s the problem was unemployment; from the 1960s it was inflation. But Keynesians remained trapped in the depression economics of Keynes. The General Theory has a theory of prices (chapter 19). But its central reasoning was not about inflation, and it was vague about the relationship between prices and output needed for a modern theory of inflation. In this view, post-war inflation is held to have occurred independently of Keynesian ideas or policies; the Keynesian failure was a failure to adapt the Keynesian model to the new world.

It may also be argued that the world has changed in such a way as to render Keynesian policy inoperative even though Keynesian theory retains some validity. For example, neither expectations nor institutions may now be capable of supporting a Keynesian policy; a more dispersed, de-regulated, economy may be inherently more difficult to manage. However, it may be asked whether these changes in expectations and structures were really independent of ideas and policies. Sir Alan Walters wonders ‘whether the economists or the economies have become less Keynesian and more monetarist’.¹⁷ This notion, that economies may have become more monetarist, reflects the impact of the rational-expectations revolution. Expectations about the effects of policy are formed from the experience of policy. If economies became more monetarist, in the sense that agents came to expect that injections of extra spending would raise prices rather than output and acted accordingly, this was because of their experience of the effects of Keynesian policies. However, there is another possibility, which is that anti-Keynesian expectations were at least partly formed by the ‘rhetoric of reaction’ itself.

Finally, it may be argued that the long upswing of the 1950s and 1960s and the slowdown which followed were not policy-induced at all, but were different phases of the ‘Kondratieff cycle’ first observed in the nineteenth century. Keynesianism was unjustly credited with the upswing and unjustly blamed for the downswing. Economists and politicians fiddled away: Rome prospered or burnt despite their best efforts.

Every historian knows that ideas, policies, and events form complex explanatory wholes. It would be naive to look for a single explanation for the demise of Keynesianism. The historical record may throw some light on the relationships between the explanatory variables and the extent to which one or other dominated at any single time.