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Keynes's VisionA New Political Economy$

Athol Fitzgibbons

Print publication date: 1990

Print ISBN-13: 9780198283201

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0198283202.001.0001

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The Political Ideals

The Political Ideals

(p.163) 9 The Political Ideals
Keynes's Vision

Athol Fitzgibbons

Oxford University Press

Abstract and Keywords

Keynes's views concerning capital, liberalism, and democracy are analysed in Ch. 9, which draws on the study of his political philosophy in Ch. 4.

Keywords:   capitalism, democracy, laissez‐faire, liberalism, Karl Marx, Plato, socialism

All kinds of Government which suppose great reformation in the manner of mankind are plainly imaginary. Of this nature are Plato's Republic and the Utopia of Sir Thomas More.

David Hume in ‘Idea of a Perfect Commonwealth’,

Essays, Moral and Political

Keynes's economics of transition implied that the state should have a large role in the regulation of economic life. His theories were therefore embraced by socialists as a route to socialism that could be justified on purely practical grounds. Likewise Keynes was rejected by the right; and Keynesian economic theory will probably remain suspect to the right, so long as it is used to rationalize increasing intervention by the state in economic life. But Keynes's political theory has been even more misunderstood than his economics.

It is true that Keynes did not think that there was necessarily a conflict between liberty and a strong state, but neither did he think that a strong state, led by a moral vision to intervene in economic life, implied socialism. He stepped away from Adam Smith, not towards Marx but towards Burke. The first principle of his politics was idealism, and a great deal which seems puzzling or contradictory only falls into a pattern when this is recognized. Indeed his political idealism lacks the balance which appears in his economics, because the rational ideal had to manifest in politics.

Keynes was neither a liberal nor a socialist, at least in the first instance, because his politics began from his epistemology. Who should rule depends on the abstract question of what we can know. He believed that the state should exercise a practical wisdom in its affairs, meaning a commitment to truth combined (p.164) with familiarity with all the details of a case. Beyond this his political beliefs would depend on circumstances rather than political dogma.

Liberalism Was not Keynes's Ideal

By traditional liberalism, Keynes meant individualism, which was liberty against the powers of despots, the compact, and toleration rather than the divine right of the Church.

At the end of the seventeenth century the divine right of monarchs gave place to natural liberty and to the compact, and the divine right of the Church to the principle of toleration. . . . In the hands of Locke and Hume these doctrines founded Individualism. (IX:272)

Kings and Church no longer rule, and liberalism is a changing doctrine. Yet although Keynes is almost always described as a liberal, there is no agreement as to what sort of liberal he was. Keynes had the simple liberalism of Locke, says Cranston (1978:110–12); he was an Edwardian liberal, says Clark (1983: 175). Keynes's liberalism was conservative, says Dillard (1946);1 he was the founder of a new liberalism at the leftward end of the scale, says Lambert (1963).2 At least we know that Keynes was a member of the Liberal Party; but this did not imply an intellectual commitment, because Keynes also said that ‘political Liberalism must die to be borne again with firmer features and a clearer will’ (IX:319), and he expressed dissatisfaction with the Liberal Party platform.

The difficulty of defining Keynes as a liberal is analogous to the problem of what sort of dolphin an ichthyosaurus might be. There is a close resemblance externally, but the lines of his intellectual physiognomy were drawn in an older age of the world. His liberalism is difficult to categorize because his attitude to traditional liberalism was deeply ambiguous, the reverse image of his attitude to the politics of expediency. In the past liberalism had been good in its consequences because it ‘furnished a satisfactory intellectual foundation . . . to liberty . . . [and] was one of the contributions of the eighteenth century to the air we still breathe’ (IX:273). Nevertheless, the new doctrine was wrong in its logic, because, being based upon ideas of Locke and (p.165) Hume, it ‘placed the individual at the centre’ and was never able to define a satisfactory relationship between the individual and society. ‘It was not long before the claims of society raised themselves anew against the individual’ (IX:273). Liberalism could not reconcile the individual and society because it was no more than an arbitrarily claimed set of rights, favouring one side or the other, the social or the personal. By comparison, the doctrine of expediency had been correct in its logic, but in Burke's hands wrong in its assumptions and consequences.

Laissez‐faire stands for negative liberty from government; socialism stands for positive liberty from economic oppression. Keynes did not opt for the former rather than the latter idea of liberty, but he accepted neither version of liberty as absolute. Socialism and laissez‐faire ‘equally laid all their stress on freedom, the one negatively to avoid limitations on existing freedom, the other positively to destroy natural or acquired monopolies’. Keynes believed that their conflicting principles could only be resolved by a higher principle applied according to the circumstances. For example, the General Theory considered the general circumstances of a conflict between macroeconomic regulation and liberty: individualism was a good principle, but it should be somewhat qualified in the circumstances in the interests of full employment.

Keynes ranked the doctrines of liberalism as only means and not as principles, and therefore as never absolutely good and always subject to qualification or rejection. He acknowledged no unqualified case even for religious and intellectual toleration, for although the case for toleration is close to the case for truth, it falls short of it. There is no reason to tolerate error and evil, except that on practical grounds freedom‐loving and liberal men have been mistaken when deciding what error and evil might be. Locke, Keynes said, was intolerant of papists, Rousseau excluded atheists from his social contract, and Burke declared them to be the natural enemies of mankind:

It is only during the last century that the notion has got abroad that toleration is an abstract rule, always and everywhere applicable. Erroneous as the notion probably is, it is not without its compensations; so generally is it true that too great a tendency to seek out the exceptions is equally dangerous to the causes of peace and truth. (‘Political Principles of Edmund Burke’:74)


Toleration is in no sense a universal doctrine, but it would be a good thing for the world if it were always treated as if it were. (‘Toleration’)

The case for liberty from the state was still a further step away from the truth, and Burkean principles appear more clearly beneath the liberal facade. Keynes did not disagree when Burke described liberty, ‘without virtue and without wisdom’, as the greatest of all possible evils, although he put a liberal interpretation upon virtue and wisdom. He responded as follows:

It is the old distinction between liberty and license—the same strong principle acting under two aspects that cannot be distinguished internally, but only by reference to the circumstances in which they appear. It is a question on which there is no need for any man to be inconsistent; we all love liberty and revile license, and these are sentiments which commit us to nothing whatever. (‘Burke’:7)

Keynes followed the Burkean notion that liberty selects and preserves the products of excellence as guideposts for the cultural continuity of the community. Individual liberty ‘prefers above everything, to give unhindered opportunity to the exceptional and aspiring’ (IX:311). In the General Theory liberty is said ‘to preserve the traditions which embody the most secure and successful choice of former generations’ (p. 380) and to transmit them into the future. Yet the selection and transmission of the choices of former generations justifies not only liberty but also the active state; the ‘same strong principle’ appears under the two aspects of liberty and the state, the balance depending on the circumstances in which they appear. Keynes's argument for liberty in the General Theory is almost identical to his argument for the organic state in ‘My Early Beliefs’ written only one year later. ‘There are many objects of valuable contemplation and communion beyond those we knew of—those concerned with the order and pattern of life among communities and the emotions which they can inspire’ (X:449). In the details of the balance between liberty and the state, Keynes departed from Burke, but the principle of a balance was accepted.

The contrast between Keynes's élitist liberalism and the more usual utilitarian liberalism should be stressed, particularly since the modern liberalism associated with monetarism is a return to the Benthamite tradition. That tradition believes that the individual should be free to pursue his own values, and that (p.167) government is a hindrance and money a help in the pursuit. Whereas Keynes began from a hierarchy of values, utilitarian liberalism begins from the equality of values; and whereas Keynes wanted more economic equality (see below), the utilitarian liberals opposed measures to redistribute incomes. Keynes was well aware of the differences, as for instance when he quoted Archbishop Whately: ‘True liberty “is that every man should be left free to dispose of his own property, his own time, and strength, and skill, in whatever way he may himself think fit, provided he does no wrong to his neighbours”.’ Whately wrote this in his Easy Lessons for the Use of Young People, so Keynes commented as follows: ‘The political philosophy, which the seventeenth and eighteenth centuries had forged in order to be able to throw down kings and prelates, had been made milk for babes, and had literally entered the nursery’ (IX:280).

Keynes believed that the utilitarian notions of liberty were degenerate now that their original good effect had passed, because the underlying idea had been wrongly expressed, the point of liberty being the expression of excellence rather than a moral equality.

Laissez‐Faire Was not an Ideal

As Keynes became more sceptical and his utopia faded, his moral objections to capitalism receded, and he stressed that capitalism meant liberty. The following comments illustrate a drift:

  1. 1925 Modern capitalism is absolutely irreligious, without internal union, without much public spirit, often though not always, a mere congeries of possessors and pursuers. Such a system has to be immensely, not merely moderately, successful to survive. . . . Today it is only moderately successful. (IX:267)

  2. 1933 The decadent international but individualist capitalism, in the hands of which we found ourselves after the war, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous—and it doesn't deliver the goods. In short, we dislike it and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed. (XXI:239)

  3. (p.168)
  4. 1939 [There is] a profound connection between personal and political liberty and the rights of private property and private enterprise. . . . In all ages private property has been an essential element in liberalism—a bulwark against the State and a stimulus to comfort and culture. (XXI:500)

Nevertheless, laissez‐faire was neither a moral absolute nor an ideal economic system. Laissez‐faire could not be an ideal in Keynes's system of thought, and since therefore it was only a means to a higher moral end, it was subject to qualification. He wanted to use laissez‐faire to reach an economic state of plenty which was not laissez‐faire. Far from it being the best conceivable state, he believed that laissez‐faire had been idealized to reconcile conflicting strands in the ethical theory of Bentham and Hume, the doctrine that he opposed and held responsible for ‘the moral decay of civilization’.

Although Bentham and Hume had both rejected Natural Law metaphysics in favour of rational egoism and utility, they had interpreted their doctrine differently. Hume meant to destroy the old ethical metaphysics rather than substitute another in its place—reason being the slave of the passions, a social philosophy would be a contradiction in Hume's terms. Bentham, however, formulated a new ethic for society, the aim of policy being to pursue the greatest happiness for the greatest number regardless of the effect on the individual. Therefore, while the consequence of Hume's philosophy was to buttress property and individualism, the effect of Bentham's was, to the contrary, to promote equality and altruism. ‘Bentham accepted utilitarian hedonism from the hands of Hume and his predecessors, but enlarged it into social utility’ (IX:273).

The idealization of laissez‐faire was a ‘miraculous union’ which reconciled equality of opportunity with individualism:

The principle of laissez‐faire had arrived to harmonize individualism and socialism, and to make at one Hume's egoism with the greatest good of the greatest number. The political philosopher could retire in favour of the businessman—for the latter could attain the philosopher's summum bonum by just pursuing his own private profit. (IX:275)

Laissez‐faire had been idealized not by economists but by political philosophers, and it had ‘no scientific basis whatever’. For, while Keynes conceded that laissez‐faire in abstract theory is (p.169) the most efficient way to allocate resources, the theory assumes away what Keynes regarded as the dominant features of economic life. It assumes that the processes of production and consumption are ‘in no way organic’; it assumes away imperfect foresight; and it assumes away the complexities of the economic system, including monopoly, adjustment over time, externalities and joint costs. Regarded as a moral system, it assumes that the ends of life will be adequately pursued by individuals on the make. Laissez‐faire is the economic norm only if our political and ethical theories have already established a presumption in its favour, and Keynes had no such presumption:

many of those who recognize that the simplified hypothesis does not accurately correspond to fact conclude nevertheless that it does represent what is ‘natural’ and therefore ideal. They regard the simplified hypothesis as health, and the further complications as disease. (IX:285)

Keynes did not. Historically, and despite popular prejudice to the contrary, he said, the idealization of laissez‐faire had not been accepted by the best minds among the economists, by neither Mill nor Marshall, but by ‘secondary economic authorities’ with suspect political and moral objectives, such as Mrs Marcel, Miss Martineau, Bastiat, Archbishop Whateley, the Manchester School and the Benthamite Utilitarians. Their arguments had been greatly advanced by the manifest corruption and incompetence of eighteenth‐century government, by the unpalatability of mercantilism and later by the nonsensical turgidity of Marxism; but merely to be familiar with these arguments is to reject them.

We have not read these authors; we would consider their arguments preposterous if they were to fall into our hands. Nevertheless we should not, I fancy, think as we do, if Hobbes, Locke, Hume, Rousseau, Paley, Adam Smith, Bentham, and Miss Martineau had not thought and written as they did. A study of the history of opinion is a necessary preliminary to the emancipation of the mind. I do not know which makes a man more conservative—to know nothing but the present, or nothing but the past. (IX:277)

Capitalism was amoral and materialistic. Its only recognized object in life was to ‘crop the leaves of the branches up to the greatest possible height’, which meant eliminating the shorter‐necked (p.170) giraffes, the results of the competitive struggle being (wrongly) assumed to be permanent. The real case against capitalism was that its false moral theory put business and religion in separate compartments of the soul; the case for capitalism was that by doing so it harnessed rational egoism and so brought closer the rational moral state in which capitalist values could be discarded. For, unlike the followers of Hume and Bentham, Keynes regarded the purpose of the economic system as moral. ‘If there is no moral objective in economic progress, then it follows that we must not sacrifice, even for a day, moral to material advantage’ (IX:268). As we have seen, however, he believed that there was a strong connection between economic progress and morals which required the sacrifice of moral progress to economic progress for the present.

When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo‐moral principles which have hagridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money‐motive at its true value. (IX:329)

In summary, Keynes was not committed to laissez‐faire as a philosophy but he found it useful as a method. He did not believe that it necessarily gave the best result either in one national economy or in the world, and even when he thought it was economically the best he was prepared to forgo material benefit, at times and to an extent, to advance other goals.


Keynes agreed in principle with Burke that there is no right to universal suffrage, and that the people only have a right to good, but not necessarily representative, government. The people have an ultimate right to assume power only if the government is not good and just. Having accepted the theory, Keynes subverted its effect, by adding that a good government might also be one which gave its citizens the benefits of political power:

The matter could not be put better [than by Burke] and the only (p.171) possible reply is the assertion that no good which the government can provide compares in intrinsic excellence with the mere possession of direct political power.

Burke nowhere discusses the possibility . . . of the moral power of self‐government. (‘Burke’:52, 58)

However, these quotes do not capture Keynes's ambivalence to democracy. In ‘Burke’ Keynes opted only conditionally for democracy; the case for or against democracy was a balance of considerations, a choice between the tyranny of a minority and the transient will of a majority. ‘There must be no tyrannical power in the State capable of forcing into operation measures hateful to the people’, Keynes said; but: ‘It is most dangerous that the people should, under normal conditions, be in a position to put into effect their transient will and their uncertain judgement on every question of policy that occurs’ (‘Burke’:53). ‘It is to be doubted whether any rational and unprejudiced body of men, who were not, to some extent, under the influence of a fallacious notion concerning natural political rights, would ever have dared the experiment of a suffrage little short of universal’ (p.57); but again, ‘The disasters foretold by its opponents have not yet come to pass. Democracy is still on trial, but so far it has not disgraced itself’ (p. 58).

Democracy had not disgraced itself in 1906 only because, according to Keynes, it had not had time to disgrace itself, and was still led by the old political élites. Twelve years later Keynes concluded, in the Economic Consequences of the Peace, that democracy did indeed disgrace itself when Lloyd George was able to put his return to power above ideals. He appealed to the lower and stronger feelings in the postwar electorate, which wanted revenge against Germany, and he was re‐elected on the revenge platform. Keynes's argument was that Lloyd George was irresolute rather than vengeful himself, that Lloyd George did not think the electorate would remain vengeful, but thought that, for the purpose of gaining power, anything could be said now, and that various expedients could be adopted later to mitigate the vengefulness that had been temporarily forced upon him. Lloyd George thought that democracy was politically irresolute, so he did not choose, as Keynes believed the old liberals would have chosen, political extinction rather than political injustice (II:91). (p.172) Lloyd George, Keynes said, ‘is rooted in nothing; he is void and without content’.

In A Revision of the Treaty Keynes reconsidered; it may be democracy that is void and without content, that has no serious relation to the truth. Lloyd George, he concluded, could reply to Keynes that he was partly captive to the demands of the mob, that nevertheless he acted for the good where he could, and that the best prospect for a democracy is to be lied to and deceived along the right road. Lloyd George may have brought home the best possible result for a democracy, ‘seldom expressing the truth, but often acting under its influence’, because in a democracy it may not be possible to opt for ‘truth or for sincerity as a method’ (IX:34). If so, we may conclude from the logic of the argument, Burke was right and democracy should be only a backstop against injustice; there is no moral power of self‐government. But Keynes considered that Lloyd George's hypothetical reply may have been in error, that the electorate may have been debauched, and that in time it would learn that it had been systematically lied to—the matter was left open.

In his political essays in the mid‐1920s, Keynes's politics turned from liberal democracy back to Burkean democracy. The political parties should retain an élitist structure, in which decision‐making is confined to the top echelon. Democracy should be retained, but only as a power of last resort and ‘until the ambit of men's altruism grows wider’. Keynes had concluded that the democratic state is neither resolute nor just.

Keynes opposed political equality because he opposed the equality of values. Economic equality led to the rational moral state, but political equality, one of the rights of man opposed by Burke, was based on a false materialistic morality, and was arbitrary in origin and tyrannical in effect. I have run some sentences together from the End of Laissez‐Faire which show how Keynes identified political equality with the (fallacious) rights of man:

Bentham accepted utilitarian hedonism from the hands of Hume and his predecessors, but enlarged it into social utility. Rousseau took the Social Contract from Locke but enlarged it and drew out of it the General Will. In each case the transition was made by virtue of the new emphasis laid on [political] equality.


Rousseau derived equality from the state of nature, Paley from the will of God, Bentham from a mathematical law of indifference. Equality and altruism had thus entered political philosophy, and from Rousseau and Bentham in conjunction sprang both democracy and utilitarian socialism.

This is the second current [apart from Individualism]—sprung from long‐dead controversies, and carried on its way by long‐exploded sophistries—which still permeates our atmosphere of thought. (IX:273–4)

The only argument for political equality that Keynes recognized as valid was expediency, understanding that word is both its higher and lower senses, which required only that the people should have the Burkean veto power. The possible moral advantage of the exercise of power, Keynes had concluded, was not an advantage at all.

The Guardians

It has often been said that Keynes's political élitism expressed a bias in favour of his own upper middle class. That may well have been its effect, but it was not his intention, which was to retain the method of Burke while modifying his conservatism by purifying his ideals. It is true that we must take seriously a statement such as this:

How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeois and the intelligentsia who, with whatever faults, are the quality in life and surely carry the seeds of all human advancement?(IX:258)

But this quote was a defensive step in an argument, not towards the rule of the intelligentsia and the bourgeoisie, who were still only fish, but towards the classless rule of inspiration. It should be juxtaposed against statements such as this:

His [Burke's] dream of a representative class can never be fulfilled. . . all experience goes to show that no one class can ever adequately represent either the feelings or the interests of the whole. (‘Burke’:58)

Keynes did not advocate the rule of a social class, but he did advocate the rule of truth and ideas. He objected to materialism (p.174) of all kinds because it failed to appreciate the epistemological priority of ideas, the primacy of the faculty of the mind. He also objected to religious doctrines such as communism and Christianity because they failed alike to appreciate the fact or significance of the inequality of powers of insight, creativity and reason. All people were potentially capable of entering into the land of reason, but some were much closer to its borders.

A genuine political rule of ideas and values over force and deception would require that people in authority be receptive to the subtler inner qualities which are violated by participation in injustice. They would exercise their offices, if necessary past the point where survival was a reasonable prospect, aware of the need to subordinate the self‐aggrandizing tendencies of the ego. The rule of ideas requires that public affairs would spring out of a commitment to a spiritual attitude, whether or not it was recognized as such, as in the Platonic state.

There are two distinct sublimations of materialistic egoism—one in which the ego is merged in the nameless mystic union, another in which it is merged in the pursuit of an ideal life for the whole community of men. . . . It has been the peculiarity of some great religious leaders that they have belonged to both classes at once. (IX:254)

Keynes wanted to bring something like this psychology into the service of the state, and initially, in the Economic Consequences, he wrote of a Platonic philosopher‐king, who would have combined clear ideas and a wide knowledge with a ‘lofty and powerful imagination’, and who would have been practical and moral at once.

Even in the General Theory, there remain suggestive structural similarities between Keynes's political philosophy and Plato; and in certain respects the political philosophy of Keynes can be regarded as a free‐form adaptation of Plato to a commercial Republic. Keynes rejected Plato's authoritarian politics, but he accepted Plato's political ideal. In particular, he implied that the political solution was a guardian class unswayed by the venal passions of humanity.

Though in the ideal commonwealth men may have been taught or inspired or bred to take no interest in the stakes, it may still be wide and prudent statesmanship to allow the game to be played, subject to rules and limitations, so long as the average man, or even a significant section (p.175) of the community, is in fact strongly addicted to the money‐making passion. (GT:374)

In Plato's Republic, a doctrine of motives is presented as the necessary foundation for the political structure of the state. Plato intended to show that the ideal commonwealth required a class of guardians whose exercise of power was a byproduct of their own spiritual quest. The guardians were free to leave their posts and join the commercial class, but Plato indicates that to do so would be to suppress other motives and sensibilities offering a greater prospect of fulfilment. They were to be defenders of the Greek polis in war, but they were also to limit the commercial excesses which would otherwise threaten civil stability. They were prohibited from the love of money or the abuse of power. Indeed, one of the reasons for attributing ‘animal spirits’ to the guardians is that animal spirits were necessary for political action without apparent reward.

One seeming difference between Keynes and Plato in fact shows a close analogy. In the Republic, the guardians were to be prohibited from owning property because ‘gold and silver they had within, from God’. Keynes believed that the creative energy of his society had been mostly expressed through commerce and science, but he denounced the love of money. At various times he declared it to be semi‐criminal and semi‐pathological (IX:329), and ‘the most destructive vice in modern society’. Elsewhere he also described it as one of the most useful vices; but the point is that the investors who had become rational economic men had forfeited their powers of creation and intuitive insight.

Keynes's historical context was England in process from Adam Smith's élitist commercial republic to mass democratic capitalism. He accepted Alfred Marshall's view that the greater part of the ‘higher imagination’ of the age had previously been employed in business or science. The creative commercial talents of England had developed the nation's exemplary capital structure and productive skills and techniques. Keynes did not believe that England had developed because of the division of labour, or because the market generated the static conditions for economic efficiency. Nor was the force Max Weber's Protestant ethic, according to which capitalism was developed by anxious ascetics who were alienated from a natural life. According to (p.176) Marshall and Keynes, England had progressed because of entrepreneurial excellence, because individualists had by an unconscious moral philosophy reconciled in commerce the public and private good.

However, both in the economy and in the political parties, these values were changing and degenerating under the pressure of growing population and scale. In the economy, the attitudes associated with large‐scale production and high finance were no longer consistent with the creative and disciplined mind. The new forces included the growing liquidity of investment, the decline of the family company and the short‐run profit pressures associated with large capital conglomerations. Worst of all was the manifestation of mass market psychology. In the eyes of the average opinion which now commanded the financial heights, a longer‐run view had come to seem ‘eccentric, unconventional and rash’. In his Economic Consequences, the change in values was the first cause of the ‘extraordinary weakness on the part of the great capitalist class, which . . . seemed a very few years ago our all powerful master’ (II:150).

Keynes envisaged a politics of virtue which transcended class interests. His programme was to express in the public sphere those virtues that hitherto had been expressed in commerce and science and art. It was to transfer the qualities of a virtual social guardianship from commerce, where they were dying, and where anyway the power of compound interest was now adequate by itself, to the control of commerce, where new opportunities for the expression of the same values could be developed and brought out.

The Labour Movement is represented as an immense and dangerous force of destruction, led by sentimentalists and pseudo‐intellectuals, who have ‘feelings in the place of ideas’. A constructive revolution cannot possibly be contrived by these folk. The creative intellect of mankind is not to be found in these quarters but amongst the scientists and the great modern business men. Unless we can harness to the job this type of mind and character and temperament, it can never be put through—for it is a task of immense practical complexity and intellectual difficulty. We must recruit our revolutionaries, therefore, from the Right, not from the Left. We must persuade the type of man whom it now amuses to create a great business, that there lie waiting for him yet bigger things which will amuse him more. This is Clissold's (p.177) ‘open conspiracy’. Clissold's direction is to the Left—far, far to the Left; but he seeks to summon from the Right the creative force and the constructive will which is to carry him there. (IX:318–19)

[We need] a reformed and remodelled Liberalism, which above all, shall not, if my ideal is realized, be a class party. (XIX:441)

This is a politics of creativity, in which the Burkean class structure, which implies injustice, was to be replaced by the class that cannot be a self‐interested class, the only class that cannot be purposive. The difficulty is that if this class is not feasible, and in Plato it is only an ideal, then Keynes had not expressed the quintessential opposite to Burke after all. He would, despite his intention, and despite his proposed democratic back‐stop, have only changed the character of an unrepresentative ruling class.

This picture must be qualified by Keynes's liberalism. Plato's Republic was a poetical analysis of the parallels and relationships between the political element and the human. His image of the ideal state was meant to be the integrated person writ large, but it made no concessions to individualism. Common fears and hopes and desires were its ordinary folk, the aspirations of the human quest were its guardians, and wisdom or the awe of the good corresponded to its philosopher‐king. The point is that if Plato's analogy were real then truth and reason, and not vested interests, would always rule.

In practice, most people do not willingly accept the laws of the holy state, and with good reason. Any claim to a special receptivity to a moral or visionary truth can be perverted, and few political virtues are not capable of being imitated and outdone by the worst of vices. Plato assumed the philosopher‐king would be willingly obeyed, which is a solution with totalitarian implications. The difference between such totalitarianism and Keynes's liberal version of the Platonic state was that, unlike the totalitarians, he did not want a moral transformation to be directly effected through political control. ‘The task of transmuting human nature must not be confused with the task of managing it’ (GT:374). The role of the state was to manage an environment of prosperity and liberty, and (towards the end) of tradition, within which the individual could hopefully transmute himself.

(p.178) The Letter to Hayek

A famous letter that Keynes wrote to F. von Hayek throws more light on how Keynes's ethics underlay his attitude to liberal capitalism. Hayek had argued in his book The Road to Serfdom, which is still a minor classic, that any economic planning was a step on the road to serfdom because of the powers that planning conceded to the planners (Hayek 1944:esp. Ch. 6). Instead of regarding the economy as an instrument to achieve certain ends, Hayek proposed that the government should only maintain a rule of law, a virtual economic constitution, within which people would pursue individual ends. He was less concerned with what the particular laws might be than with the fact of the laws, believing that the discriminatory effects of any law on a particular class or group would cancel out in the very long run. Keynes's response to the Road to Serfdom began as follows:

The voyage has given me the chance to read your book properly. In my opinion it is a grand book. We all have the greatest reason to be grateful to you for saying so well what needs so much to be said. You will not expect me to accept quite all the economic dicta in it. But morally and philosophically I find myself in agreement with virtually the whole of it; and not only in agreement with it, but in a deeply moved agreement. (J. M. Keynes to Professor F.A. Hayek, 28 June 1944, in XXVII:385) (my emphasis)

Although this letter to Hayek has often been quoted, to my knowledge it has not ever been analysed. It remains a puzzle until Keynes's moral philosophy is recognized, whereupon its meaning falls simply into place. If my interpretation of Keynes is correct, then he was in moral and philosophical agreement with Hayek because Keynes agreed that the rule of law—an emphasis on process rather than purposiveness—should prevail. However, Keynes also believed, in opposition to Hayek, that the way to disseminate the moral and philosophical state of purposelessness was not via unfettered capitalism: it would be advanced by planning the economy in such a way that more people could be released from the most immediate economic pressures. And so Keynes's letter proceeded:

I should therefore conclude your theme rather differently. I should say (p.179) that what we want is not no planning, or even less planning; indeed, I should say that we almost certainly want more. But the planning should take place in a community in which as many people as possible, both leaders and followers, wholly share your own moral position. Moderate planning will be safe if those carrying it out are rightly orientated in their own minds and hearts to the moral issue. (XXVII:387)

If the psychology of purposelessness could prevail, there would be no road to serfdom because dictatorial actions would by definition be constrained by the moral priority of means over ends. By trying to bring purposelessness into the economic system, which was only a means to a mind‐state, Hayek had confused a state of mind with what could advance that state of mind, which is to say that Hayek had confused the economic and moral issues:

I accuse you of perhaps confusing a little bit the moral and the material issues. Dangerous acts can be done safely in a community which thinks and feels rightly, which would be the way to hell if they were executed by those who think and feel wrongly. (XXVII:387–8)

Keynes did not deny that in the abstract economic planning would add to the powers of dictators, but he nevertheless wanted more planning, because beyond a point the turbulence of laissez‐faire would weaken the very moral philosophy that was the greatest barrier to dictatorship. By bringing in the principle of purposelessness at too low a level, Hayek had confused the means with the end and so lacked a principle of balance. Consequently, the danger was that his principle would be implemented in an extreme way, leading to intolerable social and economic results, and to the disrepute of the very principle—the absence of purposiveness—which was the real guarantee of freedom.

What we need, therefore, in my opinion, is not a change in our economic programmes, which would only lead in practice to disillusion with the results of your philosophy; but perhaps even the contrary, namely, an enlargement of them. Your greatest danger ahead is the probable practical failure of the application of your philosophy in the US in a fairly extreme form. No, what we need is the restoration of right moral thinking—a return to proper moral values in our social philosophy. (XXVII:387)

To anticipate the next chapter, Keynes's relationship to socialism was highly ambiguous. He was on the same economic (p.180) path as the socialists who naturally wanted more planning, but he was on the opposite moral path, because they were antagonistic to the rational ethics that alone gave planning validity. The socialists too lacked a principle of balance because they regarded planning as an end rather than a means:

But the curse is that there is also an important section who could almost be said to want planning not in order to enjoy its fruits but because morally they hold ideas exactly the opposite of yours, and wish to serve not God but the devil. Reading the New Statesman and Nation one sometimes feels that those who write there, while they cannot safely oppose moderate planning, are really hoping in their hearts that it will not succeed; and so prejudice more violent action. They fear that if moderate measures are sufficiently successful, this will allow a reaction in what you think the right and they think the wrong moral direction. (XXVII:387)

In sum, Hayek was morally right and practically wrong; whereas the socialists were practically right, but they went too far because they had the wrong morals. But Keynes did not just want a different point of balance to the socialists. A different moral system meant a different economic structure.

Notes to Chapter 9

(1.) ‘[Keynes's] work in this sense is essentially conservative and oriented towards a preservation of the status quo’ (Dillard 1946/1983:230).

(2.) ‘Keynes was an extremely left‐wing neo‐liberal with beliefs approximating those of socialism’ (Lambert 1963/1983:362).


(1.) ‘[Keynes's] work in this sense is essentially conservative and oriented towards a preservation of the status quo’ (Dillard 1946/1983:230).

(2.) ‘Keynes was an extremely left‐wing neo‐liberal with beliefs approximating those of socialism’ (Lambert 1963/1983:362).