BBC's Hopeless Attempt to Elevate Keynes
By Staff News & Analysis - July 23, 2012

A Point of View: What would Keynes do? … What would John Maynard Keynes, one of the most influential economists of the 20th Century, have made of the current economic situation, ponders philosopher John Gray … The influential Cambridge economist has figured prominently in the anxious debates that have gone on since the crash of 2007-2008. For most of those invoking his name, he was a kind of social engineer, who urged using the power of government to lift the economy out of the devastating depression of the 30s. That is how Keynes's disciples view him today. The fashionable cult of austerity, they warn, has forgotten Keynes's most important insight – slashing government spending when credit is scarce only plunges the economy into deeper recession. – BBC/John Gray

Dominant Social Theme: John Maynard Keynes, the irreplaceable man.

Free-Market Analysis: John Maynard Keynes has had a bad run in the 21st century, and this article may mark an attempt by the powers-that-be to rehabilitate him.

This is no doubt important to a power elite that wants to run the world and needs the justifications that Keynes provided to continue to offer its modern brand of ruinous monopoly central banking. Keynes was extraordinarily important.

But being important and being correct are two separate things. Unfortunately, we shall likely never know exactly how Keynes emerged as the chief spokesperson for monetary price fixing. No doubt his intelligence was noted and promises were made.

Probably, he was given to understand if he did his part, wealth and fame awaited him. Accordingly, he wrote a book, his General Theory, that provided a powerful justification for government interference in the marketplace.

It is both ironic and fitting that the man writing the current apologia is John Gray, an eminent British philosopher who is known, to put it politely, for his "mobility" of thought. What this means, bluntly, is that he changes his mind a good deal. Here's something from Wikipedia:

Gray's political thought is famous for its mobility across the political spectrum over the years. As a student, Gray was on the left and continued to vote Labour into the mid-1970s; by 1976 he had shifted towards a right-liberal New Right position, convinced that the world was changing irrevocably through technological inventions, realigned financial markets and new economic power blocs, and that the left failed to comprehend the magnitude and nature of this change.

In the 1990s Gray became an advocate for environmentalism and New Labour. Gray now sees the conventional (left-wing/right-wing) political spectrum of conservatism and social democracy as no longer viable.

More recently, he has criticised neoliberalism, the global free market and some of the central currents in Western thinking, such as humanism, while moving towards aspects of green thought, drawing on the Gaia theory of James Lovelock. It is perhaps for this critique of humanism that Gray is best known.

We can certainly see the mobility of Gray's perspectives in the above bio excerpt. From socialism to a kind of market-conservatism and then toward "green thought" and Gaia, Gray's positions have ranged across the entire spectrum of political thought.

Keynes had some of this intellectual flexibility as well. He never seems to have let consistency interfere with his larger theorizing. Where we can see this most clearly is in his definition of economic slowdowns and their antidotes.

The free-market analysis of economic recessions and depressions begins with an explanation of how they come about, via monopoly central bank money printing. Too much money leads first to a boom and then a bust.

But Keynes is famous for his solution to economic downturns, which is government stimulation. This begs the question, however, as to why there is a downturn in the first place.

Keynes never really explained this because to do so would have involved the kind of free-market analysis he was attempting to rebut. He did talk of "animal spirits" and the need for "confidence" in the larger marketplace, but this does not provide us with a factual analysis of why recessions and depressions occur.

Keynes could not talk about the causative effects because his analysis focused on monopoly central banking not as the problem but as the solution.

What he offered as his analysis was the idea that government in cooperation with the central bank should print as much money as necessary to restimulate the economy. Keynes's idea was that an economy in the doldrums needed some sort of employment stimulus to reignite prosperity.

Thus he came up with the idea that government could be an employer of last resort, paying people to do anything that would gainfully employ them and give them a salary that they could then inject into the larger economy.

This brings up the issue of why Keynes did not merely advocate that money simply be printed and shipped directly to out-of-work individuals, bypassing banks altogether. The reality is that modern banking is merely a disguise. Money flows through commercial banks because then the modern system of money creation is better disguised.

As in Keynes's day, modern fiat money is basically created by a printing press or at the touch of a button. There is no need for a bank intermediary to "decide" where the money is going. It could simply be distributed directly to the end user.

But this would expose the true sham of modern money and the tremendous injustice that arises from having a tiny group of men control trillions while most others scramble just to make ends meet.

This injustice was, in fact, the reason the power elite needed Keynes to begin with. Moving gradually from a gold standard to pure fiat demanded various kinds of moral and economic justifications.

Keynes, either through an accident of history or because of his own evident brilliance and connections, was the "economist" designated to provide the necessary rationales. Those at the top still need the storyline that Keynes provided.

For this reason, we see various convulsive attempts to rehabilitate Keynes and repackage him to justify today's central banking, which is actually not much different than yesterday's. Here's some more from Gray's article:

What is needed now … is what Keynes urged in the 30s – governments must be ready to borrow more, print more money and invest in public works in order to restart growth.

But would Keynes be today what is described as a Keynesian? … Keynes condemned Britain's return in 1925 to the gold standard, which famously he described as a barbarous relic. Would he not also condemn the determination of European governments to save the euro? Might he not think they would be better advised to begin a planned dismantlement of this primitive relic of 20th Century utopian thinking?

I suspect Keynes would be just as sceptical about the prospect of returning to growth. With our ageing populations and overhang of debt, there's little prospect of developed societies keeping up with the rapid expansion that is going on in emerging countries. Wouldn't we be better off thinking about how we can enjoy a good life in conditions of low growth?

Keynes' most important lesson is to let go of inherited ideas. If we cling to the panaceas of earlier times, we risk losing the civilisation we have inherited. This is the truly Keynesian insight that our leaders … have yet to grasp.

We can see the reverence with which Gray treats Keynes, but is this reverance really called for? Keynes was both a Fabian and a member of the socialist Bloomsbury group, the logo of which was a wolf in sheep's clothing. The idea was to move Britain toward socialism by subterfuge.

This is why, from our point of view, it is difficult to share Gray's reverence for Keynes. He was a Fabian apologist for the power elite that employed him for a specific task, which was to justify what is unjustifiable: monopoly, statist-oriented central banking.

It is perhaps an emergent elite dominant social theme, that Keynes's globalist nostrums are as relevant today as 60 years ago. In fact, Keynes's ideas were promotional and grounded in a kind of elite propaganda. He used complex mathematics and impenetrable language to conceal the essential puerile nature of what he was proposing.

In his day, Keynes could count on VIPs in and out of government to sing his praises, reinforcing the unlikely idea that he was his generation's leading economist. In fact, he was a kind of court apologist and played his role well.

After Thoughts

Today, there are surely a host of neo-Keynesian justifiers like John Gray ready to try to rehabilitate Keynes once more, to make him relevant and compelling. But perhaps his time may have come and gone.