Mr Keynes' Revolution

by E. J. Barnes

For the last twelve years the people who've have manouevred themselves into a postion to make law and policy have been obsessed with 'austerity.'  For other people, of course, not for them.


Their only idea of 'economy' was to cut. Cut wages. Cut funding. Cut jobs.

We've heard the tired old argument that 'the economy is just like a household. You mustn't spend more than you earn.'   Look away from the wagging finger and study some of the richest people in our economy instead. Ask yourself what the word 'earn' means. And also, where the money generated by our economy is being spent. (Millions on the white elephant that is HS2? Millions on Piffle-Paffle's 'Garden Bridge' which hasn't and never will be built?)


When most people manage their household economy, the first thing they set aside money for is the rent or mortgage -- but this country, under Tory management, first sold off social housing-stock under Thatcher and never replaced it with the result that we now have, mostly, 'unaffordable housing.' But hey, Russian oligarchs are happy. And they're happy to fund the Tory Party. I wonder why? (Follow the laundered money.)


The term 'austerity' is the latest dressing that Tories have draped their policy with but in fact it's the same old, same old they've always pursued, for centuries --  profit for the top few per-cent at the expense, sometimes painful expense, of everyone else. They are the trade union of millionaires, tirelessly promoting the interests of millionaires and defending their right to the biggest share of everything. (But when Trade Unions defend the rights of working people, Tories call that 'the politics of envy.')


In the early years of the 20th Century, the economist, John Maynard Keynes, was a severe critic of the Tories 'Cut, cut, cut' approach. The Tories often tried to damn him with the name 'socialist' but, although a compassionate man, he was not a socialist. He made himself rich by playing the stock-market and in E. J. Barnes' book 'Mr Keynes' Revolution' -- as in life -- he declares that, despite his suspect sympathy for working people, he is trying to save capitalism, not destroy it. If the Tories continued on the path they were pursuing, he argued, they would, by increasing poverty and class tensions, foment the very  revolution they dreaded. An argument that is rapidly becoming relevant again.


Keynes was, to put it mildly, a complicated man. He campaigned strenuously to persuade the world powers not to punish Germany after World War One, but failed. He said:

"The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable, – abhorrent and detestable, even if it was possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe."

He saw, clearly, that if the buying power of Germany and the German people was reduced, then not only would the German people suffer but the economy of the whole of Europe would be damaged. As it was. It would lead, inevitably, Keynes said, to another shocking war. As it did. When did World War Two begin? -- In 1918.


Keynes is probably most famous for being the man who persuaded President Roosevelt to 'spend his way out of a depression.' Keynes argued that following the usual prescription of wage cuts and job cuts, would only make the depression longer and deeper by hindering growth and recovery. It would inflict unnecessary suffering on the poorest.


Keynes pointed out what should have been obvious: That times of uncertainty made even fairly affluent people cut back on their spending for fear of 'rainy days,' while the unemployed have no option but to cut back. The result is a drastic fall in demand for everything: clothing, cinema and theatre tickets, cars, farm machinery, houses, confectionary, vegetables -- everything. That was all cutting jobs and wages ever achieved, then and now: a devastating fall in demand.


When demand falls and firms can't sell what they produce, they cut back on production-- which means they make even more people unemployed, which means even more people cutting back on their spending. As a result, demand falls still further.


Cutting jobs, cutting wages, cutting government spending -- the Tories favourite and only solution -- always made a bad situation worse. The wealthy can weather it. For the poor it means a rise in unemployment, homelessness, family break-ups.


A rise in the number of hungry children.


It means rising crime. It means charities, soup kitchens and food banks being unable to cope with demand.


I remember, all too well, Thatcher's version of 'austerity.' Almost overnight, it seemed, I went from never seeing a beggar or a rough sleeper to seeing several in almost every street. I was told more than once that they weren't homeless. Oh no. In fact, they all had a fancy sports car parked round the corner and lived in big houses. They just pretended to be homeless because begging for small change paid so well. And because sitting around on pavements in British weather was so much fun.


If that's the case, why did they wait until Thatcher arrived in Downing Street? Why weren't there always happy beggars sleeping in every other shop doorway?


Way back in the 1930s Keynes argued that what Roosevelt should do to help America recover from the Great Crash was to increase government spending, not cut it. Ignore the screams of millionaires asked to pay higher taxes. Nobody screams louder than millionaires and billionaires asked to pay a few pounds more from the higher end of their earnings.


Use government money despite them, Keynes said, to build roads, schools, hospitals, railways. Pay people to do this work, pay people to supply the materials, pay people to feed the workers. All this would inject surplus money into the economy.


With surplus money in their pocket, people would have a night out. They would buy new boots, a new dress. They'd replace worn-out furniture; they'd buy their children ice-creams and toys. They'd take their family on a day-out. All this spending would put money into the pockets of others, who, likewise, would spend a little more freely. Money is only useful to an economy if it's circulating. As the old Depression-era song put it, 'Let's lend it, spend it, send it rolling a-l-o-o-ng.'  Money is not useful to an economy if it's sitting in a tax-shelter in the Caymans. But the Tories are so desperately fond of their tax shelters and money laundering that they've dragged us, oven-ready, out of the EU to preserve them from new EU laws about tax-havens.

Roosevelt followed Keynes' advice and it worked. The worst consequences of mass unemployment and poverty were eased and the rise in demand brought about a rise in employment, which put even more money into circulation. The country was nudged towards recovery.


Keynes' subjects were mathematics and economics but he was a generous lover of the arts -- generous with money as well as admiration. He all but supported several of the Bloomsbury group. Although he made more than one fortune, he considered the drive to make money for the sake of it was a sickness. The point of making money, he thought, was to have leisure to enjoy life.


Politically, he was a Liberal, back when they had some shreds of political influence (and hadn't revealed themselves as merely Tories in sheep's clothing.) Keynes also strongly supported equal rights for women: equal access to the work-place, equal pay, the right to vote and the right to birth-control. In his time and class, this was unusual.


Well, you can see why Duncan Grant...
Well, you can see why Duncan Grant...

He campaigned, too, for the repeal of the laws making homosexuality illegal. This might be seen as self-serving, given that, from his youth to middle-age, his love-affairs had been exclusively homosexual-- something which, in his own circle, he made no attempt to hide. (In fact, he had quite a wild sex-life: not at all what we expect from an economist.) His lovers included the Bloomsbury artist, Duncan Grant (right), Lytton Strachey, the publisher Daniel Macmillan and the politician Arthur Hobhouse. Self-interested or not, his open support of the cause was especially courageous, given his vulnerability to prosecution.


But, beside this generous concern for the freedom and rights of others, he also supported eugenics and served as director of the British Eugenics Society. The aim of eugenics, of course, is to 'improve' the human race by excluding 'inferior' people and groups and 'promoting' those considered 'superior'. Let's bluntly say, sterilising or killing the 'inferior' and encouraging the 'superior' to have big families.


Who guards the guardians, and who decides whether you-- yes, you!-- make it into the superior group or are chucked into the bin with the inferior?-- How do you judge 'inferior' and 'superior'? Does Johnson's wealth and Eton education make him superior? Does Marcus Rashford's upbringing in poverty make him 'inferior'? You decide.


Keynes' support of eugenics doesn't seem to have sprung from racism-- his attitude towards the Nazis changed immediately, from appeasement to loathing, when he learned of their treatment of minorities. I can only suppose that the inferior people he thought should be eugenised were the disabled and those less intelligent or mathematically talented than him. Which would have meant large numbers of all the rest of us.


What a man otherwise so intelligent, kind and compassionate was doing in the Eugenics Society, I can't imagine. But, as I said, complicated.


He further confused his friends by starting to fall in love with women -- and spending his final years in a devoted marriage to a Russian ballerina, Lydia Lopokova, (left) who was famous in her own right as a member of the Ballet Russe and could easily equal Keynes' famous charm.


Emma Barnes couldn't possibly cover every aspect of Keynes' life in one novel (though there is another promised), but in Mr. Keynes' Revolution, she's written a cracking read. The Bloomsbury Group are there: Vanessa and Virginia and Duncan and Lytton, with all their gossip, back-biting, jealousies and hissy-fits.


She conjures up the atmosphere of the times: the smell of tobacco and sooty rain soaking woollen suits: and sets against it the political struggles and disappointments.


She brings both Keynes and Lydia to life and makes them endearing characters -- especially Lydia who seems surprisingly un-starry for a star ballerina.


The book provokes more than a few shivers at how similar the madness of Then is to the madness of Now.


Highly recommended.