This was put up at the Societies for the History of Economics discussion thread:
The Wall Street Journal has a review by Ben Steil of Zachary Carter’s upcoming book, The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes:
The review is behind a paywall, but I thought many on this list would be interested and would have access to it through a library or other provider.
And behind a paywall it remains, so this is all I could read, but it was quite enough:
“The more troublous the times, the worse does a laissez-faire system work.” Spoken in London in 1923, these words, among the lesser known of the most quotable economist of the 20th century, are perhaps his most important for these, our most troublous of times. For it is now, in the midst of a global pandemic the likes of which we have not seen since 1918, that the importance to life and livelihood of bold, informed and competent government becomes apparent. And no one wrote as originally and forcefully about what such a government does, faced with the prospect of economic collapse, than did John Maynard Keynes.
So let me draw your attention to a pamphlet published in 1926 by that self-same John Maynard Keynes: The End of Laissez-Faire where we find this passage:
From the time of John Stuart Mill, economists of authority have been in strong reaction against all such ideas. ‘Scarcely a single English economist of repute’, as Professor Cannan has expressed it, ‘will join in a frontal attack upon Socialism in general,’ though, as he also adds, ‘nearly every economist, whether of repute or not, is always ready to pick holes in most socialistic proposals’. (Theories of Production and Distribution, p. 494). Economists no longer have any link with the theological or political philosophies out of which the dogma of social harmony was born, and their scientific analysis leads them to no such conclusions.
Cairnes, in the introductory lecture on ‘Political Economy and Laissez-faire’, which he delivered at University College, London, in 1870, was perhaps the first orthodox economist to deliver a frontal attack upon laissez-faire in general. ‘The maxim of laissez-faire’, he declared, ‘has no scientific basis whatever, but is at best a mere handy rule of practice.’
I have noted before that the least understood grouping of economists in history are the later-classical economists from John Stuart Mill through to the end of the nineteenth century, from around 1848 with the publication of Mill’s Principles of Political Economy till around 1890 with the publication of Marshall’s Principles of Economics. I will just mention here that I hope to have at least in part remedied this major deficiency with a book that will be published by Edward Elgar in June, Classical Economic Theory and the Modern Economy. That an economist can still get away with suggesting that economic theory prior to Keynes was rife with notions of laissez-faire shows so little awareness of the history of economics even among historians of economics is a scandal.
Just to focus on Mill, his Principles runs for almost 1000 pages, with the last 200 on the role of government, at the end of which he declares that the role is so extensive and the circumstances of the world so diverse, that even after those 200 pages he could not cover everything a government might find itself in need of doing so that no definitive limitations can be introduced. The only addition to the scope of economic policy introduced by Keynes was the notion of demand deficiency and with it the utility of public spending during recessions to lower unemployment, a policy universally opposed by classical economists but almost universally endorsed today. The historical record since the publication of The General Theory seems to show that the classics were completely right on that score. I cannot think of a single thing written by Keynes that would provide the slightest insight into how to bring our economies out of the lockdowns we have all experienced across the world.
I will also add that I have read the whole review and I will let you judge the book by this one quote from the review:
Mr. Carter seems to believe that Keynes, were he alive today, would be advising Sen. Bernie Sanders. But if we want to know what Keynes would do, we cannot simply extrapolate from his most radical writings.
If it is not immediately obvious how off the planet such an observation is, then there is no more I can further say. Nothing I have ever written on Keynes is as discrediting as those words, since Keynes, if nothing else, was a serious scholar who tried to make sense of how an economy worked from a small-l liberal perspective, that is, from a classical liberal perspective. I believe Keynes was wrong in his theory of aggregate demand, but I would never have placed Keynes on the far left of the political spectrum, not only in his own time, never mind in today’s.