AT THE I OF THE STORM:

Here, via Nexis, is a passage from a 1986 Harvard Business Review article by George Sim Johnston, reviewing a book by Henry Kaufman:

As I say, Dr. Kaufman counsels bond investors to forget the past. Early in the book, however, he tells us that his most strongly held views, particularly with regard to inflation, probably derive from his past, which began in the Weimar Republic. He was born just after the hyperinflation and was weaned on family stories about the overnight disappearance of life savings. Ever since, he has been wary of the state's ability to print money.

It would be useful if more economists prefaced their works with such biographical material. As William James pointed out, analytical thinking always begins with some personal bias; scratch a mathematical model and you'll find that its creator prefers blueberry jam to marmalade. John Maynard Keynes would have done a great service if he had begun The General Theory of Employment, Interest and Money with the disclosure that he was a Bloomsbury aesthete and a practicing homosexual. He could have explained how he and friends did not believe in self-denial or consider that they had any obligation to posterity. (An historian has pointed out that Keynes's famous remark, "In the long run we are all dead," is easy to make if you have no children and don't want any.) Perhaps as a result we might have lower federal deficits. [...]

[K]eynes' himself described the Bloomsbury mindset as a rejection of all standards:

We repudiated entirely customary morals, conventions and traditional wisdom. We were, that is to say, in the strict sense of the term, immoralists. The consequences of being found out had, of course, to be considered for what they were worth. But we recognised no moral obligation on us, or inner sanction, to conform or to obey. Before heaven we claimed to be our own judge in our own case.

Intellectual historian Gertrude Himmelfarb draws quite a few lessons from that mindset. She writes:

In fact, something of the "soul" of Bloomsbury penetrated even into Keynes's economic theories. There is a discernible affinity between the Bloomsbury ethos, which put a premium on immediate and present satisfactions, and Keynesian economics, which is based entirely on the short run and precludes any long-term judgments. (Keynes's famous remark. "In the long run we are all dead," also has an obvious connection with his homosexuality -- what Schumpeter delicately referred to as his "childless vision.") The same ethos is reflected in the Keynesian doctrine that consumption rather than saving is the source of economic growth -- indeed, that thrift is economically and socially harmful. In The Economic Consequences of the Peace, written long before The General Theory, Keynes ridiculed the "virtue" of saving. The capitalists, he said, deluded the working classes into thinking that their interests were best served by saving rather than consuming. This delusion was part of the age-old Puritan fallacy.

So Keynes believed that Puritan values inclined people to embrace an economic theory (capitalism), but the Ferguson episode teaches us that is now beyond outrageous to suggest that Keynes's rejection of Puritan values inclined him to embrace a slightly different economic theory (Keynesianism)? Got it.

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