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Ten O’Clock Scholar

ISSUE:  Summer 1936

The General Theory of Employment, Interest, and Money. By John Maynard Keynes. New York: Harcourt, Brace and Company. $2.00.

One of the most amusing things in political economy today is to observe the impact of the depression, and, through the depression, of collectivist thought, upon the minds of conservative theorists. Degrees of shock and of conversion vary. Some traditionalists are stopped in their tracks, but do no more than declare their agnosticism. Others try to parry the blows which fortune seems to be aiming at their idol. Some, without questioning premises, set industriously to adapt their old thought to new demands. Those who go farthest in admitting defeat insist upon preserving their solemn mien. One would suppose that a sense of humor would make them briefer and more open in their admissions. It is allowed in law that a bankrupt may keep out a house to live in and the clothes to cover his back, and I cheerfully grant the insolvent classical economist this much. I would not shame him by utter nakedness. But playing the game requires that he yield up the bulk of his substance. John Maynard Keynes’ latest book, “The General Theory of Employment, Interest, and Money,” has had a long period of gestation. Probably unconsciously, a plan for his confession of former failure shaped itself in his mind. He would end by abandoning economic individualism and faith in the self-regulating character of private capitalism, but this surrender would be preceded by a long prologue in which apology should be concealed partly in continued defiance, partly in incomprehensible algebra, and for the rest in English sentences hardly less inscrutable. He has made the mistake of publishing this record of his wrestlings with his own soul. Its only justification is that it is interesting as showing how exceedingly slow a slow-motion picture can be. Every tiny step toward the inevitable denouement is taken with the greatest circumspection—peerings about in every direction, longing glances behind, and shuddering looks to the front. Furthermore, there is an elaborate pattern of dance steps, with variations, in which the net movement forward is so deftly concealed as to be, over short spaces, barely perceptible. This is not to say that his surrender in the end is frank or complete. He hands over his sword, but with a plea to have it back since he has himself blunted its edge and bent its point.

Some will proclaim superior joy in the one sinner that re-penteth. For my part, I take more pleasure in the righteous men that need no repentance. Why detour through miry roads and get lost in a wilderness when there is a straight path, all of the time better trod, leading to the same goal? It has taken Socialist travelers, since before the days of Marx, a fraction of the time and distance needed by Mr. Keynes, to journey from acceptance of capitalism to disillusionment to collectivist reliance. Why congratulate a thinker for circumlocution when a few words would suffice? Especially why should he be the object of admiration when he refuses to acknowledge that a familiar formula exists? One might be tolerant of a pious attempt to reconcile the old with the new in economic doctrine; an ingenious and nimble mind might at least give an engaging performance in casuistry. But Mr. Keynes claims to be at odds with classical beliefs, and fiercely takes his colleagues to task. He quarrels more with the classicists’ methods, and lays about him in text and notes and appendix.

For all his show of precision in his own thought, with exasperating addiction to mathematical expressions, his equations are solved only by the use of several blithe assumptions, as, for instance, the nature of “propensity to consume.” He forces a balance by supplying pennies, and sometimes dollars, from his own pocket.

One reviewer has said that the book contains “technicalities which might baffle the lay reader.” This is comical understatement. Deciphering this book is a headache for any economist, and he may get the headache without being sure that he has got the answer, which is my case. Defeated by the English, I have gone to the mathematics, only to be flung back upon the English. In one who can express his thoughts in such admirable prose as Mr. Keynes has often written, this text is inexcusable. Clear thought does not wrap itself in obscure language. Mr. Keynes, not content to hide his light under a bushel, has actually succeeded in hiding his bushel under a light, so adroitly has he avoided the obvious.

I shall not attempt to follow Mr. Keynes’ reasoning. In brief, the extent of employment, and hence the national income, depends upon the decisions of enterprisers as to how they may obtain optimum profits. In making these decisions they calculate upon three factors—the “propensity to consume,” the prospective yield of new investment, and the present rate and supposed future trend of interest. In considering the reactions of these variables one upon another, the author comes to practical conclusions: first, employment is not stimulated by lower wages, for reduced consumption discourages investment; this is a merited rebuke to many, academic economists as well as business men, who have been saying that workers should think less about wages and more about the numbers that can be given jobs; second, capital, which has a tendency to flow into the hands of a functionless rentier class, should be taken by the government in progressive income and inheritance taxes and put to work in a way that the hoarder, hoping for higher interest returns, will not put it to work. Through the “socialization of investment,” and by developments flowing from full employment, the marginal efficiency of production goods would fall to such a low point that interest would be minimal, covering simply replacement, necessary risk, and supervision of capital.

All of this is simply saying, in a devious way, what Socialists have historically contended, that under the capitalist 3ystem workers do not receive enough in wages to buy back what they have produced. Indeed, that our trouble is first with distribution of purchasing power and only secondarily with production constitutes the staple of current newspaper comment. We did not need Mr. Keynes or the Brookings Institution to tell us this.

One would suppose that, having reached this point, and having declared that “central controls necessary to ensure full employment will . . . involve a large extension of the traditional functions of government,” Mr. Keynes might go the little extra distance of sanctioning public ownership of the means of production as the most expeditious way of securing the desired redistribution of wealth and income. But no, attenuation of capitalism satisfies him for the present, and he foresees the “euthanasia . . . of the functionless investor” as coming by slow and natural stages.

The “Concluding Notes,” with a good deal which is loose and untenable even on his own showing, contains statements that “classical theory . . . cannot solve the economic problems of the actual world,” and “It is certain that the world will not much longer tolerate the unemployment which, apart from brief intervals of excitement, is . . . inevitably associated with present-day capitalistic individualism.”

The whole laborious book comes reluctantly to findings which might have formed the starting point rather than the finish. They are that capital is a social product, that robust and continuous consumption is as essential to capital as to labor, and that economics is made for man, not man for economics. It is a book many years late, a first-class instance of intellectual lag.

I remember the action of a small-town mechanic which pretty much illustrates what Mr. Keynes has done in this book. The fellow was a confident jack of all trades, good at none. We had him come to rebuild the chimney where it stuck out of the ridge of the gable roof. His scaffolding was shaky, he did not know too well how to use the plumb-line. We watched the chimney rise brick by brick, all the time leaning more and more to one side. We wondered when it would topple. Finally even he realized that in a moment it would go by the board. Suddenly he yelled to the painters working below: “Look out down there, I’m going to change my plans!”


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