Review of Robert Skidelsky and John Maynard Keynes' The Economist as Saviour 1920-1937(New York: Allen Lane, Penguin Press, 1994).

In his obituary of Maynard Keynes in the American Economic Review in 1946, Joseph Schumpeter said presciently, "Whatever happens to the doctrine, the memory of the man will live--outlive both Keynesianism and the reaction to it." Actually the doctrine has lived on, despite periodic death certificates, much longer than Schumpeter would have liked to think, and yet there is no doubt that the man, Keynes, continues to tower above it, a presence who haunts anyone who ever sought to understand his ambiguous masterpiece--"the most important book on economics in the 20th century," as Nicholas Kaldor called it on its fiftieth anniversary.

When Schumpeter collected that obituary into his Ten Great Economists, he was not tempted to say as much of the others, for all his admiration of Marx and Pareto; economists are generally dull fellows who seldom rate a full-length biography. If Keynes is an exception, we now know of another: Schumpeter himself. Richard Swedberg's recent moving biography of him confirms Peter Cain's judgment: "Schumpeter was a bravura character whose life history could have been specially scripted for a TV mini-series." Born in the same year as Keynes (1883), all his life he regarded Keynes as his main rival, felt upstaged whenever Keynes brought out a book on a subject Schumpeter was working on, raged with despair when his colleagues and best students ( J.K. Galbraith, Alvin Hansen, Paul Samuelson) deserted his Harvard courses for Keynesianism, and even became mentally unbalanced about his supposed eclipse: "Keynes is Allah...Just as the nigger dance is the dance of today, so is Keynesian economics the economics of today." Yet all the while the diminutive Austrian--whose youthful ambitions had been to be the greatest economist in the world, the greatest horseman in Austria, and the best lover in Vienna--was building a grandiose work of economic sociology and acquiring the awesome learning, displayed in his History of Economic Analysis, that would make Keynes look like a narrow, parochial Englishman.

But Keynes has won the biography stakes. Already in 1977 Samuel Brittan could say:

"One of the greatest growth industries of the English-speaking world is the exegesis of the writings of J.M.Keynes....As a 20th century subject for life-and-times hagiography, he joins the select company of Freud, Mahler, Wittgenstein, and a very few others."

In 1992, the Economic Journal said of its former editor, "The Keynes industry...is now surely running a close second to the output of the Marx industry," while last spring a journal entirely to his devotion, the Journal of Post Keynesian Economics, declared that "each year seems to bring forth yet another 'new interpretation' of Keynes." Increasingly, these works are not so much about "what Keynes really meant" as they are attempts to find the origin and true significance of that meaning in his life; in Cambridge and the Apostles, in Bloomsbury, in his pre-1914 philosophical speculations, in his homosexuality, in his British patriotism, or whatever--anywhere but in economic theory.

In fact, these efforts reached an extraordinary climax lately when Piero Mini, in his Keynes, Bloomsbury and the General Theory (London: St. Martin's Press 1991) proposed we give up the works in favor of the life: "Given the hopeless distortion of Keynes's message (by the economists) we might perhaps do better to abandon General Theory as a guide to policy and look for inspiration to Keynes's life, to his devotion to work." The last author I heard that said of was Saint Francis of Assisi.

There is indeed a reason to go behind the work of an economist, in a way one should hesitate to do with a natural scientist, to look for clues in his biography. That reason is explained by Schumpeter in the introduction to his History of Economic Analysis: every great economist, he said, has an original vision of the world, which is prior to his technique. His published economic work is about the technique and he might never mention the vision, because he can not "prove" it. Keynes's "vision," said Schumpeter, was of a tired British capitalism declining into stagnation. (And Schumpeter's "vision," says his biographer, was that of the Austro-Hungarian bourgeoisie aware that its time was up and fearful that socialism was just around the corner.) It is reasonable that a Life should seek to show how personality and experience combine to produce a vision that in turn colors all the Work.

There was something of the vision in Roy Harrod's 1951 The Life of John Maynard Keynes: what Harrod called "the values of 6 Harvey Road," Keynes's Cambridge birthplace. But Harrod was, quite properly for the time, anxious to avoid anything too personal, let alone scurrilous, and he was best at the exposition of Keynes's technical theories. Ever since Michael Holroyd's Lytton Strachey revealed Bloomsbury to have been a bisexual merry-go-round, biographers have felt free to drag Keynes's social and sex life into the arcane recesses of his monetary theory. Charles Hession's 1984 John Maynard Keynes: A Personal Biography of the Man Who Revolutionized Capitalism and the Way We Live explained everything in terms of Keynes's "androgyny," his homosexuality and his female intuition, all of which, it was said, can be detected in Tract, Treatise, and General Theory.

Piero Mini thinks that the General Theory is "the biography of Keynes's soul," and that it expresses the masculine and feminine elements of that soul. For him, Keynes

"...was a dramatist manque. For General Theory is the dramatic encounter of two characters: enterprise and liquidity, whose different psychological makeups produce disharmony. Those whose minds turn on the 'androgynous' may wish to see the liquidity as coy, uncertain, tentative, fickle, easily discouraged--in other words, 'feminine'; enterprise could be seen as rash, over-optimistic, 'sanguine' (Keynes's word), driven by animal spirits and by libido--in other words 'masculine'. Production of course is the offspring of the two but the insecurity and uncertainty of liquidity holds back enterprise, its impetuosity becoming paralysis. It's Elizabeth and Essex once again. Why can't liquidity take a noble risk, throw away caution and join enterprise in fighting the good fight against poverty? In a few generations the two of them could abolish poverty forever! But as things stand, there is no hope: a vicious circle of timidity and frigidity and impotence sets in...."

This gives a whole new meaning to "liquidity preference," but as economics it is silly and as "vision" it is arbitrary assertion. Some contemporary efforts to convert Keynes from economist into social reformer, philosopher of probability, or ethical theorist enslaved to G.E. Moore are scarcely more convincing.

While these faddish attempts to "interpret" (i.e. get away from) Keynes's economics come and go, one man is persisting in an heroic labor that has taken most of an even otherwise useful and busy lifetime. Robert Skidelsky's John Maynard Keynes: Hopes Betrayed 1883-1920 appeared in 1983; his John Maynard Keynes: The Economist as Saviour 1920-1937 came out in 1992; and the third volume, dealing presumably with the war, Bretton Woods, the American loan to Britain, and Keynes's death in 1946 is something we can look forward to. For this is biography on the grand scale, fully up to its two tasks: to recount the career of a polemicist, civil servant, scholar and speculator, and at the same time to expound the economic theory that led to what is quite accurately called the Keynesian Revolution.

I understand that Lord Skidelsky (he followed his political colleague Lord Owen into the upper house) now lives at Tilton, which was Lord Keynes's country house in Sussex. The shades of Maynard and Lydia Lopokova (the Russian Ballerina who became his wife) and of such visitors to Tilton as Virginia Woolf, Vanessa Bell, Roger Fry, and Joseph Schumpeter must be powerful stimulants. (Schumpeter did visit, at least once, though as Skidelsky says, "J.M.K. thought Schumpeter a bit of a charlatan; Schumpeter thought the same of J.M.K.") Yet he is skeptical about Bloomsbury. He shows up the arty-crafty hypocrisy of the Bloomsberries, who would disdainfully mock Maynard's money-grubbing work in the City but gave him their cash to invest in short-term speculations.

As to the economic theory, he is, I believe, too skeptical. Not that he has yet given his final summing up judgments; they are no doubt for volume three. But this is, after all, the same Robert Skidelsky who in 1977 edited The End of the Keynesian Era: Essays on the Disintegration of the Keynesian Political Economy. So it is no surprise, but nevertheless striking, to find him saying at page 502 of volume two (now he tells us!), after recalling Keynes's theory of the innate voice of capitalism, "For today, in truth, there is little left of Keynes's vision, only some crumbling bones of scholasticism, disinterred for first-year macroeconomics students." You could have got away with that in 1977 in Chicago and in 1979 in Mrs. Thatcher's London, but today it would presuppose overlooking much that is vigorous and useful in work being done at various American, British, and Continental universities; it would also entail undercutting the very interest that will greet Skidelsky's biographical labors.

The postwar history of Keynesianisms (there are half a dozen of them) is a roller-coaster ride. In his 1947 obituary in The Economic Journal, E.A.G. Robinson could say that Keynes had triumphed;

"Full employment of resources had become the national objective...Ordered flexibility of exchange rates has become the agreed world system. Low interest rates have become the official policy to the extent that former advocates now begin to fear."
Keynesian principles had governed every British budget since 1941, while the commitment to "a high and stable level of employment" was given before the war ended. The same new principles were embodied in the U.S. Employment Act of 1946, the French Constitution of 1946, in Article 55 of the UN Charter and Article 104 of the Treaty of Rome. As Lord Kaldor once observed, "None of this would have occurred without the appearance of Keynes's General Theory, since 'maintaining full employment' would not have occurred to economists or politicians as a feasible policy objective." As to theory, Robinson truly said in 1947 that "economics has been about Keynes. In a sense we have all been parasitic upon him."

By the early 1950s the Keynesian Revolution was consolidated and for twenty years it flourished in central banks and faculties, generating the Phillips curve, giant econometric models and a lot of hubris. There was a "hydraulic Keynesianism" that claimed to manipulate the economy with a few fiscal levers; there was "fine tuning" that promised miracles--as though Keynes had never said "Our power of prediction is slight, our command of results infinitesimal." And there was what Harvard grandly called Neoclassical Synthesis Keynesianism but what Joan Robinson, no slouch with insults, called bastard Keynesianism. The fine points don't matter because they all went broke in the 1970s, wrecked upon a stagflation they could neither explain nor control.

"The insurgents that sacked the Keynesian temple in the 1970s," in Alan Blinder's phrase, left little standing from theories to policies. The very notion of "involuntary unemployment" was thrown out and apostates were forced to accept such un-Keynesian ideas as rational expectations and a natural rate of unemployment. By the end of the decade, Robert Lucas, in Chicago, could celebrate "The Death of Keynesian Economics" in these terms:

"One cannot find good under-forty economists who identify themselves or their work as 'Keynesian'. Indeed, people even take offense if referred to as 'Keynesian'. At research seminars, people don't take Keynesian theorizing seriously anymore; the audience starts to whisper and giggle at one another." (Issues and Ideas, Winter 1980)

By now we can all recognize the singular hubris of economists. This lot's turn on center stage was briefer than Keynes's, its act ruined by inability to control or even define the "money" that was its magic genie. When the fiftieth anniversary of the General Theory was marked in 1986, the unbelievers like Milton Friedman and Leland Yeager were still spitting on the grave. But elsewhere the sun was rising: papers with titles like "The Reincarnation of Keynesian Economics" (that one by N.G. Mankiw) began to appear. Alan Blinder noticed that

"In 1986...Keynesian economics appears to be moving out of the dark ages into a renaissance. It has been victorious by default, I think, because the new classical economics failed miserably to meet the criterion for a Kuhnian paradigm change."
Monetarism, said the wit, expired croaking, "Buddy, can you spare a paradigm?"

The revival has gathered pace and breadth ever since, and expressions like the "New Keynesian Economics" and the "Neo-Keynesian Macroeconomics" acquired the solemn capitals that consecrate recognition. Last winter, the Journal of Economic Perspectives ran a symposium on the "new Keynesian Synthesis," in which Nobel Laureate James Tobin even consented to appear cast in the role of an "unreconstructed old Keynesian." Meanwhile, the old-style-religion Post- Keynesians, whose journal has doggedly fought on since the darkest 1970s, continue to argue for government intervention and an incomes policy, while seeking to give their case philosophical foundations.

What has been called back from the dead is as various and contradictory as old Keynesianism (some would say, as Maynard Keynes himself). There are several proposed plans for a new reconciliation between Keynes and classical theory, and they happen to contradict each other on vital points; and they are all denounced as new Keynesian bastards by the Post-Keynesians, who refuse any compromise with the classicists of the long run. There is still tiresome dispute about what Keynes meant, what was the main point, and if it was about the short run can it also apply to the long run? There has been no shortage of economists who think they know the answer better than Keynes himself ever since Joan Robinson said cockily, "there were moments when we had some trouble in getting Maynard to see what the point of his revolution really was...."

Nor is the discourse any less in the other branch of Keynesian studies, where the search for the key to his economics in his philosophical thought sparks continuing debate. Skidelsky started this hare in his first volume, and he notes some of the work he has inspired in the second. It ranges from siftings of Keynes's probability treatise to efforts to show that his attachment to G.E. Moore's Principia Ethica is the secret source of all his thought. Far from helping, these labors have multiplied confusion; one leading practitioner complains that "the excessive proliferation of interpretations of Keynes's [philosophical] thought is a matter of concern." What could they hope to achieve? Keynes was, after all, a friend of Wittgenstein and thus would be keenly aware of the futility of trying to use philosophy to "illuminate" science. But are these philosophers really interested in economics at all? One has said, "Publishers are aware that almost any book on Keynes, whether soundly argued or not, will find a market, such being the continued fascination with the man and his thought." So there are books and essays on Keynes and this, Keynes and that; Bernard Corry said of one such collection, "Indeed I kept expecting to turn the page and come across 'Keynes and the Interpretation of Finnegan's Wake'--surely somebody out there has published it?"

If I have painted a scene of disputation, even confusion, as the site of contemporary Keynesianism, it was to contrast with those dry bones of scholasticism that Skidelsky saw being disinterred for students. He was not obliged to go into these current developments in his second volume and might not even make much of them in his third, but I think they should be in our minds if we are to take the measure of, even sustain our interest in, Keynes the man. However the latterday exponents of what Thomas Carlyle called "Donothingism" may resent it, Keynesian activism is here to stay (even if only as a temptation of governments) because Keynes irreparably undermined the abstract model of a self-correcting, full-employment equilibrium as society's "normal" state.

Skidelsky, naturally, does no better than Roy Harrod at explaining this theory; Harrod, apart from being an eminent economist himself, knew Keynes for twenty-four years and actually contributed to shaping the General Theory. But the period 1920-1937 gets two hundred pages in Harrod, and almost seven hundred in Skidelsky, aided by copious personal documents of a sort Harrod often hushed up. Keynes was a gift to biographers in this regard. Unlike Schumpeter, who lost or left behind in Germany most of the documents of his life, Keynes hand-copied a double set of some letters before he sent them, and filed replies. For years he spent long weekends in Cambridge while Lydia stayed in London, so he wrote her loving, indeed doting, billets doux, giving her (and us) all the news, from progress on the Arts Theatre he founded to the fact of finding Joan Robinson writhing on the floor with R.F. Kahn ("I expect the conversation was about the pure theory of monopoly."). One is reminded that Wystan Auden said biography was "always superfluous [and] usually in bad taste."

Lord Skidelsky's own experience in Social Democrat politics gives him a sure touch in recounting Keynes's constant political dabbling. Not that he was ever tempted by offers (they came) to enter politics but he was one of those men who feel that their place is at the prince's right hand, a foot or two in retreat. But if the prince would not listen, Keynes would write to the papers, not just The Times but any popular rag that would run an attack on the government. As Elizabeth Johnson said, "He had a clear idea of his own role...the chief economic advisor to the world." Skidelsky's ironical subtitle--The Economist as Savior--is amply justified. Like every biographer, he stresses Keynes's practicality: he never took up a problem that was not a concern of government, or at least of that enlightened ruling class that deserved to govern. Sure, he was so clever he could produce a theory, even several theories, for each practical problem, but it was not the theory that mattered most. As he told Harrod, you should choose whatever theory will be relevant to your efforts to change things for the better. With that intense practicality went caution, the painful uncertainty of our limited foresight, the concentration on the short run, not just because we are dead in the long run, but because we can't foresee it, know nothing about it, and so shouldn't risk it.

Thus Skidelsky has performed a service in unearthing Keynes's early paper on Burke, for the mentality is the same: the principle of least risk, and awareness of the dangers of long-term social objectives. Both the "hydraulic Keynesians" with their faith in smooth, long-term growth schemes, and zealots like Mini who imagine Keynes wanted to realize Bloomsbury's utopian aesthetic projects on a national scale, are as far as could be from Keynes's temper. Perhaps the thinker who most resembles him is Clausewitz. Inevitably, both have been accused of inconsistency, of theoretical failure, but that was because they were concerned less with theory than with the art of practice, the discipline of how to proceed in uncertain matters where there are no firm rules, but where it is dangerous to rely on improvisation. To be sure, this does not say much for "economic science," but then its practitioners' continued veneration for the "magic book" of 1936, their inability to agree on what it means or to settle any of the issues it raised, have already done the damage to their scientific pretensions.