Keynes Against Capitalism

The global financial crisis and the ensuing recession in many countries ended a period starting with the fall of the Soviet Union in 1989 in which laissez-faire capitalism was seen as the only game in town. Since 2008, discussions of the role of the state vs. the market, of socialism, and of inequality and power have become much more common in both academic and public discourse. The platforms of progressive political parties in several advanced economies now question capitalism’s legitimacy. Some leading politicians no longer describe themselves as Social Democrats, as was the case after World War II, but rather as Democratic Socialists (e.g. Bernie Sanders in the U.S. and Jeremy Corbyn in the U.K.). This label contrasts sharply with the ‘third way’ of the left in the 1990s—exemplified by Bill Clinton, Tony Blair and Gerhard Schröder—which sought to combine market-friendly policies with post-market distribution. It also contrasts with state socialism or communism of the Soviet or Chinese types. Common wisdom identifies the ideas of John Maynard Keynes—both in theory and policy—with either social democracy or, in its mainstream version (“bastard Keynesianism,” to use Joan Robinson’s term [Foley 2014]) with the “third way” or progressive liberalism. James Crotty’s new book Keynes Against Capitalism (2019) begs to differ. Using a painstaking analysis of Keynes’s own writings from the 1920s to his death in 1946, Crotty argues that Keynes belongs in the same category as Sanders and Corbyn, a position described by Keynes as “liberal socialism.”