Robert Skidelsky Quotes

The reason why economics has given such a poor account of the origins of the crisis is that there is something essentially incompatible between the economist's view of individual rationality and systemic collapse. Without adding qualifications which strain their logic, economists cannot readily get from their picture of the the individual maximizing his utilities to booms and slumps and the persistence of depressions.

To understand the crisis we need to get beyond the blame game. For at the root of the crisis was not failures of character or competence, but a failure of ideas.

Keynes's economic philosophy is thus made up of three interdependent parts: his technical macroeconomics, his embattled political philosophy and his ultimate ethical purpose.

Born in 1883 and dying in 1946, the bulk of Keynes's professional life was framed by two world wars. At the beginning, he was an Edwardian optimist, convinced that automatic progress was steadily enlarging opportunities for more and more people to live the 'good life', as identified by his mentor, G. E. Moore, and his friends of the Bloomsbury Group. He ended his life bequeathing the world a theory, policies and two international institutions (the International Monetary Fund and the International Bank for Reconstruction and Development) designed to strengthen the foundations of free economy, so as to make it possible again for people to indulge the hopes with which he had grown up. In between, there was catastrophe and retrogression, starting in Europe and spreading to most of the rest of the world.

All epoch-defining events are the result of conjunctures - the correlation of normally unconnected happenings which jolts humanity out of its existing rut and sets it on a new course.

Maynard Keynes was born into a certain civilisation at a particular moment of history, and was one of its foremost products. He inherited both its aspirations and its tensions. He grew up in the shadow of its great figures, notably Henry Sidgwick and Alfred Marshall, the teachers and colleagues of his father. His style of thought and way of life both bear Cambridge's unmistakable imprint.

A work of genius is a complex object and there is light to be shed about what went into the making of it. Even in the case of scientific and mathematical achievement we can say a great deal about the existing state of knowledge, the problems it failed to address, why those problems were or had become interesting, the particular capacities which the solver brought to their solution. At the other extreme is a work of art which seems to have much more immediate roots in the personal life of the artist or writer. In between is the area in which Keynes worked, which was partly scientific, partly artistic. This gives a wide justification for a biographical approach. As I put it in the introduction to my first volume: 'If underlying Keynesian theory was Keynes's vision of his age, knowledge of his state of mind and the circumstances which formed it is essential, not only in order to understand how he came to see the world as he did, but also in order to pass judgement on the theory itself.'

The question remains: to what extent were the successes and failures of the golden age the result of Keynesian theory, however bastardized? The quick answer is: to a much greater extent in the former than in the latter. Keynesianism provided an analytical framework for organizing policy choices. It also provided ad hoc rationalizations for what governments wanted to do for other reasons. At the rhetorical level, these were important. They created the expectation that full employment would be maintained by policy. This reinforced the favourable background for business investment. To a more limited extent, Keynesian policy as practised in the 1 9 6os brought the golden age into crisis: but there were more profound reasons relating to the drift of social policy (sometimes called the 'revolution in entitlements'), the role of the United States in the world, and the weakness of the Bretton Woods system of international institutions. So the old coach did make a difference.

It was his sense of the precariousness of capitalist civilisation which drew Keynes to monetary policy. Instability in the value of money was undermining the social contract on which capitalism was based.

Keynes is not just for the foxhole, but for the emerging world order.

The General Theory of Employment, Interest and Money is a work of enduring fascination. It is simple and subtle, obscure and profound. It offered a systematic way of thinking not just about the behaviour of contemporary economies, but about the pitfalls in the quest for greater wealth at all times. It combined a vision of the future with a rigorous demonstration of the possibility of underemployment equilibrium. Although young economists of speculative bent were drawn to it as a storehouse of suggestive ideas, it was its practical usefulness which chiefly attracted them in a world poised between decaying democracy and rampaging dictatorship.
At its core is a 'theory of output and employment as a whole', to distinguish it from the orthodox theory of what causes 'the rewards and distribution between different uses of a given quantity of resources' to be what they are. Keynes was the first economist to visualise the economy as an aggregate quantity of output resulting from an aggregate stream of expenditure. This new way of seeing the architecture of an economy is the General Theory's most enduring legacy.

Keynes's politics of the Middle Way in the 1920s can be interpreted in two senses. It can be seen as an expression of an Aristotelian sense of balance, with both nineteenth-century individualism and twentieth-century communism being viewed as excesses of their virtues. Or Keynes can be seen as a prophet of individualism on the defensive. The institutions of society had become like rocks which required the most skillful circumnavigation if the ship of state were not to be smashed up. There was no margin left for stupidity, silliness or obsolete ideas in government. Only the most generous and disinterested spirit, equipped with high intelligence and scientific policies, could save the social order from shipwreck.

Like Odysseus, Keynes was a successful, not a tragic, hero. He heard the beautiful singing of the Sirens, but took precautions against being shipwrecked, keeping to the course for which his talents and the state of the world predestined him. Artfully, he strove for the best of all worlds, in his life and his work, and miraculously, came close to achieving it.

The Economic Consequences of the Peace has a claim to be regarded as Keynes's best book. In none of his others did he succeed so well in bringing all his gifts to bear on the subject in hand. Although the heart of the book was a lucid account of the reparation problem, the book was no mere technical treatise. The torrid mise-en-scène at Paris is vividly recreated; the failings of Clemenceau, Wilson and Lloyd George are displayed with cruel precision. The writing is angry, scornful and, rarely for Keynes, passionate: never again were his denunciations of bungling and lying, or his moral indignation, to ring so loud and clear. Giving shape to the whole is a brooding sense of menace; a sense of the impending downfall of a civilisation; of the mindless mob waiting to usurp the collapsing inheritance; of the futility and frivolity of statesmanship. The result is a personal statement unique in twentieth-century literature. Keynes was staking the claim of the economist to be Prince. All other forms of rule were bankrupt. The economist's vision of welfare, conjoined to a new standard of technical excellence, were the last barriers to chaos, madness and retrogression.

Having said this, it is easy to see that he might have been deluding himself. He envisaged a modern capitalist economy governed by a Platonic ideal, and gentlemanly codes of behaviour. But once the capitalist genie is let out of the bottle it cannot be pressed into the service of a pre-modern ethics of the good life and pre-modern codes of behaviour. The good life in the classical sense presupposes that human desire has some ultimate end, or telos, whereas modern economic theory and life presuppose that it is insatiable. As regards behaviour, he took for granted a class-based system of values which economic progress was undermining. These were contradictions which Keynes never fully faced.