Monday, February 22, 2010

John Maynard Keynes - In his own words.

Bertrand Russel said "There are still many people in America who regard depressions as acts of God. I think Keynes proved that the responsibility for these occurrences does not rest with Providence.... Keynes's intellect was the sharpest and clearest that I have ever known. When I argued with him, I felt that I took my life in my hands, and I seldom emerged without feeling something of a fool. I was sometimes inclined to feel that so much cleverness must be incompatible with depth, but I do not think that this feeling was justified."

Mention the name of John Maynard Keynes to a conservative, and something close to an epileptic fit will ensue. Yet in reality, I suggest it was Keynes and his out of the box thinking, along with that other fellow whose name elicits rabid foam from the mouths of conservatives; Franklin Delano Roosevelt (who implemented many of Keynes economic ideas), that saved capitalism by taming it, regulating it, and molding it. (Had they not done this, communism or fascism would have likely been implemented to escape the Great Depression. Many of America's wealthy believed in Fascism and supported Hitler both in ideology and in financial arrangements). And frankly, if Keynesian economics and the Roosevelt controls on capitalism hadn't been overthrown in favor of a return to deregulated "Lazy Fairy" markets, (which caused the great depression), today's economic collapse could not have occurred. Keynes was essentially about full employment and the belief that capital was a means to an end...not and end in itself.
Deficit spending as investment in the future. Not to give wealthy tax cuts. Not to wage wars of choice for corporate imperialism. We can rest assured that his view of deficit spending for these purposes during times of relative prosperity would be a dim one. I for one, raise a glass in honor of his wisdom, courage, and indeed his wit which is in evidence in this small collection of my favorite quotes of his. Speaking of which, here they are!

One reason FDR was able to pass his ambitious agenda was he had massive support in the Legislature.

“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”

“It is better to be vaguely right than precisely wrong”

"The disruptive powers of excessive national fecundity may have played a greater part in bursting the bonds of convention than either the power of ideas or the errors of autocracy."

“The difficulty lies not so much in developing new ideas as in escaping from old ones.”

"Newton was not the first of the age of reason. He was the last of the magicians, the last of the Babylonians and Sumerians, the last great mind that looked out on the visible and intellectual world with the same eyes as those who began to build our intellectual inheritance rather less than 10 000 years ago. "

"They offer me neither food nor drink — intellectual nor spiritual consolation... Conservatism leads nowhere; it satisfies no ideal; it conforms to no intellectual standard, it is not safe, or calculated to preserve from the spoilers that degree of civilisation which we have already attained. "

“The love of money as a possession - as distinguished from the love of money as a means to the enjoyments and realities of life - will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propens”

"Perhaps a day might come when there would be at last be enough to go round, and when posterity could enter into the enjoyment of our labors."

FDR Fireside Chats

"This is a nightmare, which will pass away with the morning. For the resources of nature and men's devices are just as fertile and productive as they were. The rate of our progress towards solving the material problems of life is not less rapid. We are as capable as before of affording for everyone a high standard of life...and will soon learn to afford a standard higher still. We were not previously deceived. But to-day we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time—perhaps for a long time." -(1930), Essays in Persuasion

"The decadent international but individualistic 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. "

The Keynesian Cross

“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose..” - The Economic Consequences of Peace

“The power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas”

"The classical theorists resemble Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight—as the only remedy for the unfortunate collisions which are occurring. Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. "

"The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems - the problems of life and of human relations, of creation and behavior and religion."

“The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelope our future.”

“Regarded as a means, (the businessman) is tolerable; as an end, he is not so satisfactory”

“Most men love money and security more, and creation and construction less, as they get older”

"When the facts change, I change my mind. What do you do, sir?" -Reply to a criticism during the Great Depression of having changed his position on monetary policy

“For at least another hundred years we must pre­tend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still.”

“The engine which drives enterprise is not thrift, but profit”

"We reach a condition where there is a shortage of houses, but where nevertheless no one can afford to live in the houses that there are."

"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 hag-ridden 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".

“The importance of money flows from it being a link between the present and the future.”

“It would not be foolish to contemplate the possibility of a far greater progress still.”

“Words ought to be a little wild, for they are the assaults of thoughts on the unthinking.”

“Americans are apt to be unduly interested in discovering what average opinion believes average opinion to be...”

"For my part I think that capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself it is in many ways extremely objectionable."

"If I am right in supposing it to be comparatively easy to make capital-goods so abundant that the marginal efficiency of capital is zero, this may be the most sensible way of gradually getting rid of many of the objectionable features of capitalism."

"The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes."

"In the long run, we're all dead."

John Maynard Keynes (1883 – 1946)

"I should have drunk more champagne." These were his last words. (according to Ben Trovato's Art of Survival (2007) by Ben Trovato, p. 196)