When Keynes Killed Laissez-Faire (Samuel Gregg, 8/26/24, Law & Liberty)
As if, however, he recognizes the inescapability of some type of intellectual framework to order our decision-making about what governments should and should not do, Keynes distinguishes between “those services which are technically social from those which are technically individual.”
The “technically social,” Keynes says, are those “decisions which are made by no one if the State does not make them.” While that sounds like a public goods argument, Keynes’s “technically social” turns out to involve not only an incipit embrace of state macro-management of the economy but also full-blown corporatism.
Keynes the Corporatist
One of market liberalism’s failures, Keynes claimed in his lecture, was its inability to address problems generated by the prevalence of “risk, uncertainty, and ignorance” in the economy. These, he stated, produced “great inequalities of wealth” and “are also the cause of the unemployment of labour, or the disappointment of reasonable business expectations, and of the impairment of efficiency and production.”
Keynes deemed it possible to minimize these difficulties through “deliberate control of the currency and of credit by a central institution.” Another of Keynes’s “technically social” policies involved state agencies collecting and disseminating “on a great scale” all “data relating to the business situation, including the full publicity, by law if necessary, of all business facts which it is useful to know.”
How we distinguish useful from non-useful facts is not specified. But such information, Keynes insists, must be collated so that “society” can exercise “directive intelligence through some appropriate organ of action over many of the inner intricacies of private business.”
This, Keynes hastens to add, “would leave private initiative and enterprise unhindered.” Keynes, however, does not elucidate why this is the case—perhaps because he cannot. Indeed, one reason why Keynes underscores the need for a government agency to assemble business facts is his belief that:
some coordinated act of intelligent judgement is required as to the scale on which it is desirable that the community as a whole should save, the scale on which these savings should go abroad in the form of foreign investments, and whether the present organization of the investment market distributes savings along the most nationally productive channels. I do not think that these matters should be left entirely to the chances of private judgement and private profits, as they are at present.
In other words, Keynes does want to hinder the workings of private initiative and enterprise by means of “the community as a whole” making decisions about the aggregate distribution of savings between domestic and foreign investments.
Things get even more complicated once we discern what Keynes means by “society” and “the community.” In some cases, this functions as Keynesian shorthand for direct state intervention. In other instances, Keynes holds that “many big undertakings, particularly public utility enterprises and other business requiring a large fixed capital … need to be semi-socialized.”
By “semi-socialism,” Keynes has in mind something akin to “medieval conceptions of separate autonomies.” In general, he comments, we should “prefer semi-autonomous corporations to organs of the central government for which ministers of State are directly responsible.” As examples, Keynes suggests institutions like universities, the Bank of England, and railway companies, all of which operated at one or more removes from the state but whose legal status was not that of a strictly private association. “In Germany,” Keynes observes in a casual aside, “there are doubtless analogous instances.”
That reference indicates Keynes’s awareness of corporatism’s influence throughout the early-twentieth-century German-speaking world. Nor should we forget that corporatism had become official government policy in Italy following Mussolini’s seizure of power just two years before Keynes’s laissez-faire lecture. In short, corporatist ideas that posited the corralling of individuals into state-supervised groups and promoted the public-private amalgams envisaged by Keynes were “in the air”—and the Cambridge don had breathed deeply.
The Left is the Right.