From the TML Archives

Invoking the Ghost of Keynesianism to Derail the Workers' Movement

Originally published in December 2010.

Some people have the habit of resurrecting the ghost of Keynesianism in an attempt to divert the workers' movement from engaging in a concrete analysis of concrete conditions. It is not uncommon to hear that what is needed to deal with the present economic crisis are "Keynesian measures to stimulate employment and strengthen the domestic market." This prescription is pitted against the neo-liberal measures in a manner designed to suggest that there are two options facing the peoples of the world.

What does this mean in practice? Does a formula exist that corresponds to "Keynesian measures"? Why would Keynesian measures from the economic crisis of the 1930s be suitable today? Such measures, whatever they imply, do not emerge from a concrete analysis of the situation in any country or from a human-centred program arising from the reality of the class struggle taking place today.

Global neo-liberalism using electronic and other means to control entire economies under the aegis of U.S. military and economic hegemony is not the same world of the 1930s. Also, to introduce the prescription "Keynesian measures" sidesteps the issue of what those measures were in the 1930s and what they accomplished. They certainly did not put an end to the crisis or prevent the big powers of Europe, the United States and Japan from preparing for war to re-divide the world.

The fact that neo-liberals beginning in the 1970s attacked public spending on big projects and social programs, which they called Keynesian measures, does not clarify what those measures may be in the present circumstances or lend them any credibility as a program of action that is human-centred and which can bring positive relief for the people in the current circumstances. Some commentators called the Bush/Obama Troubled Asset Relief Program (TARP) bailouts of the financial sector a Keynesian measure while others disputed that assertion. Others in the U.S. speak of the need for "military Keynesianism," a program of pouring money into war preparations, militarization of social and cultural life and war. In this sense, Canada is undergoing "military Keynesianism" where every facet of life is being militarized as one price to be paid for deeper annexation into the U.S. Empire.

For the U.S. economy where much of what is called the military industrial complex is spread out over many states, public spending on war preparations and war does "stimulate employment and strengthen the domestic market." Do proponents of "Keynesian measures" approve of public war spending as a positive program? Certain economists say war spending is Keynesian but that it is only about half as effective as similar public spending outside the military sector. Much of the war material does not circulate as means of production and consumption within the domestic economy, especially in predatory wars in poor countries such as Iraq and Afghanistan, where spending is concentrated in the war theatre.

When thinking about Keynes and his rise to prominence, it should be remembered that public spending of any kind in significant quantities is a feature of monopoly capitalism, which had just come into being at the turn of the century when he was being groomed as an intellectual to defend the British Empire. Public spending was not a feature of nascent capitalism of the nineteenth century.

Two momentous events marked the consciousness of all intellectuals of the first two decades of the twentieth century: World War I and the Great October Socialist Revolution in Russia. All intellectuals from that time, of which Keynes was one, were products of a new era that had burst on the scene with such thunder and drama: the era of imperialism and the proletarian revolution. Keynes in his personal and public life came down squarely on the side of defending monopoly capitalism and opposing the working class from gaining political power. His intellectual skills were much appreciated by the ruling elite of Britain and he was richly rewarded. Monopoly capitalism posed new problems for the class in power and Keynes provided theoretical guidance in dealing with those problems. The rise to power of the monopolies meant that the capitalist state itself had undergone momentous changes. The cost of WWI meant new forms of taxation were introduced of which the personal income tax was the most important. Personal income tax provided the imperialist state with enormous amounts of public funds. How to use these public funds to defend the monopoly capitalist system and assist particular monopolies to defeat competitors in the global marketplace and who was to exercise control over those funds became practical and theoretical problems for the ruling elite of which Keynes was an important member.

Keynes himself was not only an ardent promoter and theoretician of the capitalist system and the British Empire; he was an active participant in the 1920s stock market frenzy. He lost a sizeable fortune with the 1929-30 stock market collapse; however, he recovered all of it and more by the end of WWII. First Baron Keynes' personal fortune upon death was equivalent to $16.5 million.

Large public spending to help certain monopolies or sectors and more generally to defend the system from collapse or takeover by the working class through revolution is a feature of monopoly capitalism. Little academic literature was available in the early years of monopoly capitalism to support such activity and give it theoretical guidance. Keynes and other intellectuals provided practical and theoretical guidance to the state during a period of economic crisis and global revolutionary upheaval within the British Empire and elsewhere.

Keynes' theoretical works were widely used to argue both for a liberal social welfare state and militarized fascist state according to the conditions and needs of a particular imperialist bourgeoisie. Theoreticians of German National Socialism within Hitler's Nazi Party used Keynes' promotion of public spending to provide theoretical justification for using public money to help particular monopolies and to underwrite the rearmament of Germany. These theories can now be said to underpin the arguments that workers and people generally should rally behind their own monopolies so that they become competitive and successful in the global marketplace. In a similar manner, people are taught one-nation politics of rallying behind U.S., Britain, German, French or Japanese empire-building. In Europe his theories were used to bolster European socialism (against "oriental despotism") and in North America, U.S. exceptionalism. Both contend that monopoly capitalism does not contain within itself contradictions that need to be resolved through revolution led by the working class.

Keynes was one of the leading intellectuals of the 1944 international monetary system called Bretton-Woods, which U.S. imperialism with the acknowledgement if not full agreement of Britain, imposed on its allies and colonies. Bretton-Woods established the International Monetary Fund and the precursor to the World Bank. Importantly, Bretton-Woods created the institutional conditions for U.S. financial hegemony over the capitalist world and the modern system of international usury to bind the former colonies to the imperialist states in perpetual indebtedness. Bretton-Woods marks a turning point from nation-building within the capitalist countries to an imperialist system of states dominated first by two superpowers and today by a single superpower striving for sole domination. It positioned the U.S., even before the end of WWII, to lead the imperialist world to encircle and smash the Soviet Union and its allies around the world and to transform old colonial rule over the developing countries into imperialist rule and domination. It prepared the economic conditions for the nuclear blackmail of the peoples of the world and the series of predatory U.S. wars against Korea, Vietnam and others that continue today with the war and occupation of Afghanistan and Iraq, the economic blockades against Cuba, the DPRK, Zimbabwe and others, threats of aggression against the DPRK, Iran, Lebanon, Somalia, Sudan, Syria, Venezuela and many more countries striving for independence, and the maintenance of hundreds of U.S. military bases throughout the world.

Keynes became a prominent economist of the twentieth century fully educated and imbued with the direct experience of monopoly capitalism and serving its needs. This means his ideas are marked with the necessity to serve the monopolies in the era of imperialism and the proletarian revolution. They are a clear departure from the economists of the nineteenth century, the period of nascent capitalism, who would engage and argue with Karl Marx and his concrete analysis of capitalism. Keynes simply dismissed Marxist economics as wrong and would not argue out his differences. His role was to serve monopoly capitalism and oppose the necessity of moving capitalism forward to socialism to resolve the basic contradictions within the capitalist system, a system that has outlived its transitory role in transforming petty production of the mediaeval era into mass industrial production. Keynes held the working class in complete contempt as not capable of leading itself or society. In this sense politically, he was completely opposed to the concept and practice of democracy where the people directly participate in governing themselves. This contempt for the people and democracy was inculcated into him at Eton and Cambridge where he was constantly praised as brilliant and superior to all other human beings and deserving of wealth, prestige, power and privilege. The British educational system does not accept that workers are capable of thinking at a level sufficient to govern themselves, manage society and its socialized economy, and resolve its contradictions. This means that any attempt or even talk of nation-building led by the working class, which vests sovereignty in the people and puts at the centre the human factor/social consciousness, is denounced and ridiculed by the ruling elite of Britain and the United States and all their institutions.

This article was published in

Volume 50 Number 34 - September 12, 2020

Article Link:
From the TML Archives: Invoking the Ghost of Keynesianism to Derail the Workers' Movement - K.C. Adams


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