Keynesian Revisionism

Now that the possibility of a new New Deal has been broached during the presidential campaign, along with hosannahs for FDR himself, we can expect to hear more praise for the leading economic defender of the New Deal, John Maynard Keynes.

The status of Lord Keynes among historians is a paradox: on the one hand, many consider him to have been a great liberal in the tradition of John Locke, Adam Smith, and Thomas Jefferson; on the other hand, his neo-mercantilism and advocacy of the welfare state blatantly contradict genuine liberalism (as opposed to what goes by the name of “liberalism” nowadays). Genuine liberalism relies on free markets and civil society to solve economic and social problems. Classical liberal historian Ralph Raico sheds light on this paradox in “Was Keynes a Liberal?” (The Independent Review, fall 2008).

Keynes always called himself a liberal, and he endorsed broad cultural values, such as tolerance and rationality, often referred to as “liberal,” but this hardly suffices to establish Keynes’s credentials, Raico notes. Keynes parted company with liberalism on core issues such as its adherence to the rule of law, as well as its general prescription of laissez-faire. Moreover, he called for the state to impose on society his version of utopia. His wistful sympathy for the economic policy “experiements” of the Nazis, Fascists, and Stalinist Communists is surprising in a supposed model liberal thinker, argues Raico.

“Viewing Keynes as perhaps ‘the model liberal of the twentieth century,’ or as any authentic liberal at all, can only render an indispensable historical concept incoherent,'” Raico concludes.