Neoliberalism arose in the 1970s as a response to the failure of Keynesianism to deal with the effects of stagflation. But what is Keynesianism—and who is John Maynard Keynes? In this author interview, Goldy learns from the Keynes expert, HuffPost senior reporter Zachary Carter, how Keynes’ idea defined American liberalism for much of the 1900s.
Zachary Carter is a senior reporter at HuffPost, where he covers economic policy and American politics. He is the author of the New York Times bestseller, ‘The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes’.
Twitter: @zachdcarter
The Price of Peace: https://www.indiebound.org/book/9780525509035
Website: https://pitchforkeconomics.com/
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
Goldy:
Hey Pitchfork listeners. Goldy here. We spend a lot of time on the podcasts talking about neoliberalism, where it went wrong, how it started. One of the common narratives is that it arose in the 1970s as a response to the failure of Keynesianism to deal with stagflation, the era in which we had double digit unemployment and double digit inflation at the same time.
But that raises the question, what is Keynesianism? Who is John Maynard Keynes? Well, Keynes was without a doubt, the most influential economist of the first three quarters of the 20th century. It was his ideas that guided the policies of the New Deal and that essentially, defined American liberalism in the 1930s, 40s, 50s, 60s, and into the 70s. While many neoliberal economists continue to try to discredit Keynes, it turns out many of his ideas are as relevant today as they ever were. Well, recently, I had the pleasure of reading the new book, “The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes.” And of course, one of the great benefits of hosting a podcast is that I also get to talk to the author, Zach Carter.
Zach Carter:
I’m Zach Carter. I am the author of, “The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes,” and I am a senior reporter at HuffPost.
Goldy:
I have to admit, I had to put down your book about three quarters of the way through and pause for a couple of days when you started to get into the rise of neoliberalism and how McCarthyism went after the Keynesian economists. I think all of this is relevant to what’s going on today, but that brings me to my, I guess, my first question. What is it that most Americans get wrong about Keynesianism?
Zach Carter:
It’s a big question. I think, unfortunately, the answer is almost everything. Keynes is somebody who most of us encounter in an econ 101 course, at least that’s the way I did. In that econ 101 course, I learned that John Maynard Keynes is the economist who argued that governments should spend money during recessions to help sort of pull the economy out of the doldrums and get employment moving again, and that’s true. That’s one of the things Keynes talked about. But Keynes never really thought of himself as a deficit therapist and certainly would not have wanted to be remembered as one. He was a social thinker. He was a philosopher and a statesman whose project, intellectual project was concerned with the great problems of his day. Those problems in particular were World War II, the great depression and the rise of authoritarianism, particularly in Europe, but also authoritarianism was on the rise all over the world of the 1920s and 1930s. We just didn’t get Hitlers everywhere.
So Keynes is developing these economic ideas in order to prevent war, sort of heal societies that have been torn apart or put under strain by the first world war, and try to create some set of conditions in which the life that he enjoyed at the turn of the 20th century when he was a member of the famous Bloomsbury set, people like E.M. Forster and Lytton Strachey and Virginia Woolf, that that sort of life could be enjoyed by people outside the very high-flying elite circles that he lived in. So he’s concerned with all of these very big ideas about humanity and how to get along. He’s not just a guy who talks about deficits and to try to separate the deficit stuff from the rest of his thinking, I think, certainly got the economics profession into trouble in the 1960s and 1970s. I don’t think it makes a whole lot of sense today when people are talking about big deficits and shouldering big debt loads to deal with the coronavirus. That’s all fine and good, but those deficits, those debts are not ends in themselves. They are part of a broader social agenda.
Goldy:
Right. So the purpose of… I think Keynes would have agreed that the purpose of economics is not to keep unemployment low and inflation low and balance your budgets. It’s actually to lead the good life.
Zach Carter:
Yes, and to prevent social upheaval and social unrest. There’s a sense in which Keynes is a very conservative thinker in that he’s deeply afraid of revolution and deeply afraid of sudden radical change. Though, he’s somebody who is constantly advocating rather slow radical change, I think. But he’s afraid of upheaval because he thinks it could break apart the things that allow for him to enjoy this great life he has in Bloomsbury. He really likes drinking champagne with Virginia Woolf. He likes hearing from his friends who were painters about what Gertrude Stein and Pablo Picasso are up to in Paris. So he thinks that’s great, and he thinks revolution, and particularly right wing authoritarian revolution, will put that sort of lifestyle in jeopardy.
I think when we look today at the way the government has responded to the coronavirus pandemic, certainly there’re all the failures on the pandemic itself from a public health standpoint, but I don’t think Keynes would look at Congress and say, “Well, my goodness, they spent a four and a half trillion, something like that, supporting the economy. Their work has done. Great work, ran up some big numbers there.” He recognized that those big numbers are certainly necessary, but the real test of the program for him would be what’s happening in the streets. I think the fact that we had essentially, social uprisings across every American city just a few weeks ago is a testament to the insufficiency of the response, at least in a Keynesian sense.
Goldy:
It’s fascinating because, of course, you talk in the book about what I’ve always thought was kind of this overblown competition between Hayek and Keynes. I think you present it that way too. It’s not like they interacted that much. Keynes did respond to Hayek, but they both seem to have a similar goal. They were both trying to prevent that road to serfdom, the rise of authoritarianism. They just went in very different directions. Hayek ultimately won ideologically, I guess. It looks to me like that was the road to serfdom. How disappointed would Keynes be if he saw the world today?
Zach Carter:
It’s dangerous to raise the dead and interrogate them, but I think he would be shocked, frankly. I don’t know if disappointment would be the right word. I think he’d just be totally stunned at the changes that have been wrought in conventional wisdom intellectually and in style of governance and public policy making since the 1970s. But your point about the Hayek-Keynes sort of feud being overblown, I think is exactly right. In the 1930s, Hayek and Keynes were both economists, but neither of them were these titanic figures of Western intellectual history. Hayek was an obscure professor. Keynes had written a very famous book. So Keynes was somebody who was well known, but Hayek certainly was not. Even Hayek himself came to sort of regret the economic arguments that he made against Keynes in the early 1930s.
But you’re right, that they are very much concerned with enlightenment liberalism, which they’re both deeply enamored with. It’s a tradition that they both think is very important; these ideas about individual liberty, about freedom of conscience, about the free exchange of ideas and culture across national borders. This matters very much to both of them, but they have very different conceptions about how to achieve those goals. So I think it’s important to understand that Keynes absolutely considered themselves a liberal and in the capital L sense, not just sort of democratic party, vaguely aligned kind of left of center of sense. He takes that tradition very seriously, but he believes that if the economic policies that liberals put forward don’t deliver the goods, if they do not actually produce a harmonious and happy society, then you will have all of those great enlightenment ideals shattered by authoritarian uprisings.
Hayek sees things very differently. He says, “Well, look. If we do social security, for instance, then we have already broken our faith with liberalism. We have shattered individual liberty and freedom of conscience and the like just through the act of those policies.” So it’s a very different approach, but it’s rooted in the same intellectual tradition. So I think today, if you follow online debates among liberals and people who call themselves leftists, there’s this idea that liberalism is what Hayek said it was. Essentially, the neoliberal sort of triumph since the 1970s is true liberalism. The sort of things that Keynes was talking about, those don’t count as liberalism anymore. I think Keynes would be very perplexed by that and very upset by it to see that a lot of his intellectual allies were, in many ways, rejecting his intellectual tradition at the same time.
So not only would he be disheartened by the turn in the way governments sort of deal with inequality, deal with trade, deal with financial markets and all the rest that we’ve seen since the 1970s. He’d be very disheartened by the way that the left has sort of accepted the framework that the Hayek and the sort of intellectual descendants of Hayek have insisted as is the right one.
Goldy:
Right, because for all of the McCarthyite attacks on the Keynesians after World War II, Keynes was no socialist.
Zach Carter:
He’s a tricky figure because the word, “socialism,” it’s a very loaded term for him. He visits Bolshevik, Russia and is just horrified on a couple of occasions. His wife who he married in 1925 is from St. Petersburg. So they go back a couple of times to visit her family there, and Keynes is not a fan of the cultural life in Russia, he doesn’t like the things that the government does, the sort of policy tools they use. But more than that, he doesn’t like the air of sort of, it’s like you’re in a paranoid North thriller. He just feels like he’s being watched all the time and people are whispering about him. And it’s true because people are. It was a surveillance state. He thinks that this is bad for art. This is not just unpleasant to live in, it’s culturally counterproductive to nurturing that kind of lifestyle and artistic and intellectual experience that he found so rewarding in Bloomsbury.
But at the same time, he talks often about something called liberal socialism, which would be a way of conceiving of society as something that had to be taken care of as a whole by the government, but that’s still respected these individual liberties and ideals that come with the liberal tradition. So he is willing to take policy steps that many other people in the liberal tradition at the time were unwilling to. At the most radical, we see around World War II. He’s the financial architect of the national health service and the British welfare states. He does play a role in socializing British medicine, a very significant role, but for much of the 1930s, he’s trying to work with the liberal party and people like David Lloyd George to do things that are a sort of a precursor to the New Deal in the United States.
In many ways, the New Deal, I think, sort of expresses the full of the Keynesian project. But the New Deal is not just social security and deficits. The New Deal is all of these new programs that had just never existed in the United States. It’s a total reworking of the nation state and what it can and ought to do. So whether that constitutes socialism or not, I think Keynes, depending on which audience he’s talking to, would be very cagey and very careful about how you use that word because he was just appalled by socialism as understood in Russia. But if socialism is his social security and the WPA, well, that sounds okay.
Goldy:
Right. I think one of the things that you do beautifully in this book, both through the biographical details and the summarization of his writings, is demonstrating how incredibly intellectually flexible Keynes was, which is kind of unusual with great men. [crosstalk 00:12:50] I mean, great men. I mean, great white men. One they achieve some amount of fame, they stick with it and defend it. Keynes, his thinking changed over time.
Zach Carter:
Yeah, you’re right. It becomes sort of a brand for people. The intellectuals who become known for a particular thing feel like they can never retreat from it because being wrong and having a good brand is more important than being right. Keynes comes out of Bloomsbury where people are constantly arguing about art all the time. So disagreement is not something that is alien to him. And certainly, the Cambridge economics department, it’s really important for people when they think about Keynes and his role as an economist, not to mistake the milieu in Cambridge in the 1920s and thirties for the sort of American business school style education that people get in economics today. This was a place where economists were sort of weirdos. They were kind of, if you studied economics, it was kind of like being a poet or a philosopher. These were things that were a little bit off the beaten path in academia and not necessarily a ticket to a great public policy job or to power in large part because there weren’t jobs for economists in the private sector for the most part.
Most economists were… That kind of role for the profession really arose with the New Deal and that all of the different types of agencies that arose from the expansion of the state that we saw there. But for Keynes, Cambridge is a very collaborative place. There isn’t a whole lot of… People use each other’s ideas, edit each other’s papers, cite each other all the time. There’s not a whole lot of pride of authorship. So in a lot of ways, what we call Keynesian economics, what comes out of Cambridge in the 1930s is a project of several people working together. Some of these people are even graduate students. Some of them don’t even have degrees in economics, but Keynes is just sort of the director of the orchestra. I think it’s fair to say that he’s the sharpest guy in that milieu, but there are also some stone cold geniuses. He’s working with people like Joan Robinson-
Goldy:
Right.
Zach Carter:
… who are major economists in their own right after Keynes has gone.
Goldy:
Who I think by the way, there’s a lot of characters in this book. Obviously, he’s from the Bloomsbury set and so on. But I think Joan Robinson is one of the most fascinating people in this book. I was only peripherally familiar with her. There’s a quote, I don’t have it in front of me, but it’s something to the effect of, she said that the purpose of studying economics is to learn how not to be deceived by economists. But I had no idea how closely she worked with Keynes and really was a silent coauthor on the general theory.
Zach Carter:
Yes. If you go through the collected writings, there’s a 30 volume set of Keynes’s papers and speeches and drafts and letters that are related to economics that Cambridge University has published. When you get to the volume on the general theory, it’s just hundreds and hundreds of pages of stuff being traded back and forth between Robinson and Keynes. It’s very clear that the two of them are working very closely. He’s also working closely with other people at Cambridge who think he’s wrong. So he’ll share drafts with people, and I think that Dennis Robertson’s one of them. They’ll say to you, “I don’t know what you’re on to about here, Maynard. This makes no sense here. That can’t be right.” But Robinson, in a lot of ways, Keynes likes that milieu. He likes the back and forth. He likes the idea that he would put something out there that would stimulate conversation and help the world get to the right answer.
The thing was not to become Keynes the great man and lead the school of thought. It was to help the world get closer to the truth, so that good policies could be made and society could hang together and he could get back to drinking champagne with Virginia Woolf. For Robinson, she sees the project very differently. She really thinks Keynesian thought can be a school of ideas, much the way that Marxism was or the way Buddhism is. She sees this as sort of a discipline and the general theory as being the sort of core text that you have to return to, to understand this school of thought. She’s quite good at teaching students in Cambridge to see the field that way. When they go back to the United States and start trying to be academics or working in the Roosevelt administration, they take that thinking with them.
So she’s enormously influential, even on people who don’t end up coming to see Keynesianism the way that she does, people who ultimately over the decades after Keynes’s death, have sharp disagreements with her about what is significant or important in the general theory. The fact that they feel like they need to talk about it as an important text is something they’re getting from Robinson. There are a lot of books on economics that are published in the 1920s and 1930s saying, “No, no, no, no. The profession’s got it all wrong. We need to change course.” A lot of those books talk about policy ideas that end up being implemented later, but we don’t talk about them the way we talk about Keynesian economics. It’s kind of funny that Robinson, I think more than anyone else is responsible for that and yet, we don’t call it Robinsonian economics. We call it Keynesian economics.
Goldy:
In the book, you talk about a speech she gave late in her life and when she gave the entire economics profession a real tongue lashing.
Zach Carter:
She had a way with words. When she’s writing and talking for the public, it could be wonderful to go through it because she’s so clear. She uses metaphor in a way that makes her ideas very accessible to people who are not professionally trained economists. But when she’s talking to professionally trained economists, she can just be absolutely vicious. This speech, it’s from the meeting of the American Economics Association, I don’t have in front of me. It’s ’71 or ’72. John Kenneth Galbraith had invited her to give the keynote address. Galbraith and Robinson were great friends, and in many ways, I think later in his career, Robinson sort of the most important Robinson disciple in the United States.
But Robinson just says, “Look, the Keynesian approach to economics has been a failure. We have not fixed war. We have not fixed poverty. We have not saved the environment. We’re sitting around here patting ourselves on the back for solving all of the problems that we think economics is tasked with solving. In a sense, we have because we’ve defined economics in such a way that it only answers the questions that don’t need to be asked. All the questions that are important have been sort of shoved off to other areas.” So she’s very disappointed, but she was doing the same thing that Keynes was in important ways.
Keynes believed very deeply that getting it right, that showing people… presenting good ideas and persuading people with them was a way to influence politicians, public policy, politics and the world at large. That was a very controversial thing to believe in the 1930s because the more popular version of sort of social critique against the established order was Marxism, and a very kind of crude form of Marxism, which just held that there was nothing you could do about the problems in the world through the political process, that the state was the executive committee of the bourgeois, that nothing but social revolution would work because vested interests would always protect their territory.
So Robinson whose politics were probably closer to those Marxists than they were to Keynes his own politics, spends much of her life trying to persuade economists that that Keynes is right. She is on this very similar kind of project of using ideas to shape the world, even though she herself often criticizes Keynes for being too naive about the way politics work and the way power is distributed.
Goldy:
Let’s talk a bit about the so-called Keynesianism of the 1970s that Robinson criticized. One of the narratives today is that the neoliberal era we’re in came out of the failure of Keynesianism in the 1970s with stagflation, that the Keynesian economists had no answer to this when we had a high inflation and high unemployment at the same time, and Milton Friedman was ready with an alternative. Lo and behold, we have the past 45 years. Was that Keynesianism? Would Keynes have recognized the economics of the time as Keynesianism?
Zach Carter:
It’s Keynesianism because that’s what people started calling Keynesianism. But Keynes himself, I think would have been a little perplexed. As you were mentioning earlier, Keynes is somebody who’s capable of changing his mind. He was not a doctrinarian, but even had he been a doctrinarian, the type of doctrine that people were pursuing in the Kennedy and Johnson administrations in some ways, was aligned with Kansas thinking, and in some ways, very much was not. The projects that Johnson was concerned with domestically, like the great society, this is a massive expansion of the state. In a lot of ways when we think of the New Deal and its significance, we’re overstating what Roosevelt achieved because many of those programs survived in much more ambitious forms after they were reformed by Johnson and the great society. So these are enormously successful programs, the mention of Medicare, poverty declines drastically after the great society initiatives begin. This includes voting rights, all sorts of civil rights reforms that are also under attack today, many of which have been repealed as well.
But the Vietnam war is not something that Keynes would have been enthusiastic about. He spent his whole life trying to prevent war and he believed that economic policy was a very effective tool, maybe the only effective tool that could be deployed nonviolently to prevent war and the fact that there were Keynesian economists or people who call themselves Keynesian, in both the Kennedy and Johnson administrations, saying the thing we need to do is spend money. It doesn’t really matter so much what we spend it on. We could spend it on napalm and machine guns, or we could spend it on welfare checks. As long as we’re spending, we’re going to get the economy up and moving again. That would have been horrifying to Keynes. [crosstalk 00:23:43]
Goldy:
He said that, but he meant it as metaphor. He didn’t mean it literally. Right? That you could just bury it in the ground and pay people to dig up money, but he wasn’t advocating for that.
Zach Carter:
In Robinson’s speech to the AEA in ’72, she actually says, “You guys are idiots. He didn’t actually want people to bury stuff in the backyard and then pay people to dig it up. That’s not the right idea.”
Goldy:
Build useful stuff.
Zach Carter:
Right. Right. The way that the profession became technical, there are a couple of sides to Keynes. He is very much a technocrat who is good with numbers and capable of devising very detailed and fine tuned policies to address specific problems, but he wasn’t obsessed with creating rigid sort of technical doctrines that had to be followed no matter what the circumstances were. One of the sort of intellectual tools that becomes very, very popular in the fifties and sixties is this thing called the Phillips curve. It’s named after an Australian economist named Phillips, but it really becomes popularized because of the work of Robert Solow and Paul Samuelson in the United States who expand on this initial insight and do a lot more research with American data and then start putting it most importantly, in Samuelson’s economics textbooks.
So the Phillips curve says, ” [inaudible 00:25:07] There’s a trade off between unemployment and inflation that you can have a little more unemployment and a little less inflation or a little more inflation and a little less unemployment, but no matter what you do, it’s those two, when you’re adjusting aggregate demand, those two have to move in opposite directions.” When you get to the late 1960s and the early 1970s, that stops happening. You start seeing unemployment and inflation going up at the same time. Clever people like Milton Friedman point to this and say, “Aha, because Paul Samuelson says this is impossible and Paul Samuelson is a Keynesian, Keynesianism is disproved.” Friedman has a whole story about how the Keynesian project, from really World War II on, got everything wrong. He gives this very famous speech in 1967, which becomes sort of the intellectual foundation for the neoliberal takeover of the American government in the later 1970s, beginning with the Carter administration.
But the thing I remember about that speech is that almost everything Friedman says in that 1967 speech is wrong. His characterization of what Keynes and Keynesian said in World War II is incorrect. We were not experiencing high inflation in 1967. We only really had moderate inflation in the early seventies. So this sort of, “We’re about to go off a cliff and have hyperinflation prediction,” that Friedman has doesn’t hold water either. His historical story is just nonsense, but he’s a very persuasive guy and he does bring together a lot of data. [crosstalk 00:26:36]
Goldy:
Some of which he fudged, actually a lot of what she fudged it turns out.
Zach Carter:
It doesn’t hold up that well in retrospect- [crosstalk 00:26:44]
Goldy:
Yes.
Zach Carter:
Things like that… We don’t have to get into the definition of monetarism here, but he believes that essentially, there’s this thing that exists outside of government that’s called the economy and the only variable that the government needs to worry about is the money supply. But he can’t decide what the money supply is, what constitutes money because once he comes up with a specific definition that none of his story makes any sense. Historically, the trends just don’t hold up. So not only is it not useful, it’s just not intellectually coherent. But doesn’t matter. He’s a persuasive guy. And look, the economy of the 1970s, the mid 1970s is not great. We do have double digit inflation and double digit unemployment. The reasons for that are complicated. Certainly, I think the oil embargo that the United States was living through contributed quite a bit to that because you need oil in everything, to ship everything. So that’s causing prices to go up, but it’s not the only thing that’s causing prices to go up.
Goldy:
Right. We go off the gold standard. There’s good or bad. It’s a shock.
Zach Carter:
Right. Even people like Galbraith say, “Look, all of this military spending has been inflationary. We have to be honest about that.” So I find inflation a very tricky thing and there was a lot going on in the 1970s. I don’t have a clear cut answer for why we had stagflation, but historically, the point that matters is that is that people did pick up on Friedman’s sort of doctrine. They picked up on it, not only because he was a persuasive guy who made arguments that seemed compelling, but because he was closely aligned with politicians on the right who believed they could implement that agenda in ways that would fuel their own social projects, which were very different from the social projects that Keynes and FDR and LBJ would have approved of. So Friedman, most importantly in the 1950 before he was a famous economist, was trying to devise housing policies that would allow wealthy white families to get around Brown vs. The Board of Education and stay in segregated school.
So all of these economists who become famous have very serious and detailed social visions that they are working to implement. They’re not just pursuing the science and the data wherever it takes them and then saying, “Oh, well. I guess we have to privatize all the schools.” Keynes was pretty open about this during his life. I don’t think Friedman was quite as open, but he was open about his politics. He did discuss his worldview, his conception of freedom and in books. He was an advisor to Barry Goldwater and was quite- [crosstalk 00:29:16].
Goldy:
And Pinochet.
Zach Carter:
And authoritarians like Pinochet, who Hayek also advised as well. The idea that the economics profession can be, and that the turn in the sort of consensus about what was reasonable and what was good economics that takes place in the 1970s, the idea that that’s attributable only to science and to looking at the Phillips curve breaking down, I think, is I think a bit naive.
It happens because politicians who are rising stars who are having success because of the bad economic conditions in the 1970s, want to use neoliberal economics to pursue their social project. Look, we know that economists still act like this today and yet, we still allow economists to say, “Well, here’s the data. What can you do?” And I think in certain ways, it’s led to a distrust with the profession among the public and sort of degraded the respect for the expertise in ways that Keynes would have found very troubling.
Goldy:
There should be some disrespect.
Zach Carter:
Look at the world. Right?
Goldy:
Yeah. Economics has failed us. This is the world we have right now, the level of extreme, radical inequality. We had this conversation with Nancy McLean about this, the goal of economists like Buchanan was to destroy democracy. They were fundamentally anti-democratic. You have that quote from Friedman about Pinochet that given the choice between economic liberty and political liberty, he’d choose economic liberty. He was okay with an authoritarian government.
Zach Carter:
I think that’s Hayek, but-
Goldy:
Was it Hayek or Friedman?
Zach Carter:
Look, Friedman might’ve said something very similar. So I don’t want to… Certainly, his politics were similar in that respect. Friedman was a guy who, like Hayek, would say things like a minimum wage is socialism. Progressive taxation is socialism and the choice between socialism and liberty for him, we really are talking about a stage that does not do anything to take care of its people. Friedman is much more radical in this, that Hayek is in the road to serfdom. “The Road to Serfdom,” is a strange book in a lot of ways because much of the narrative just doesn’t match Hayek’s politics.
Goldy:
Well, it’s funny because talking about raising the dead, I’d love to see a debate between 1940s Hayek and 1970s Hayek.
Zach Carter:
Yes, yes. Right. In the 1940s, he’s talking about, “Well, we have to regulate things because otherwise, the environment will fall apart. We have to have some sort of decent minimum standard of living for people because otherwise, they’ll all die and revolt,” and all of these things, which he later is just like, “No, no, no. Let’s advise the guy pushing people out of helicopters.” But that is always happening. It’s always happening and it’s inescapable. The economics profession, it’s an inherently political thing because you can’t have an economy without governing, without social structures that pull levers of power. But also, because the economics profession has become the sort of priesthood that governments turn to to say, “Look, my program is legitimate.”
Without the profession, there’s no sort of independent observer who can say, “Ah, yes. The politicians have it right,” or, “No, the politicians have it wrong.” So the profession just is part of the political process at this point, which was not true in the 1930s when Keynes was writing. If you wanted to get a great job in the British treasury or at the bank of England, you would do just as well to have studied mathematics or poetry or art, and then had a few years working at St. Lloyd’s bank than if you would study economics. That was a peculiar thing to do. It wasn’t seen as the sort of great entree into policymaking.
Goldy:
So I know we’re running out of time. Let try to answer the question I think I almost asked at the beginning. What is Keynesianism? But in a way that Keynes might agree with your answer.
Zach Carter:
I think Keynesianism is more a way of looking at the world than a specific set of policies or policy tools. Keynes was a very great optimist in many ways, I think a delusional optimist, but he always believed that humanity’s problems were made by humanity. They weren’t facts of nature that were unalterable. The world could become a better place if we just made it better. Tomorrow could always be better than today. That spirit of optimism in many ways, I think led him straight politically because he lost most of the political battles during his lifetime. Between World War I and World War II, almost every single major policy fight that he gets into, he loses. He only starts to become really influential during the war and then after the war and after his death. But I think that spirit of optimism is really essential to understanding Keynes and Keynesianism, and I think his belief in the good life, that art and love are these central things that make life worth living and they’re not exclusive goods.
You can enjoy the same painting that I enjoy without diminishing our love of the moment in any way, that there are social things that people can do together and appreciate together that make the world a richer and better place that are not based on making sure that some people have more than others. So I think he’d see it as a project of social harmony. One way of saying that is that it’s a project to… Keynesian is a project designed to reduce inequality. I think that’s the language we use today. I think he would think that language is a little bit narrow. He’d say, “This isn’t just math. This is the way society hang together. This is the way people interact with each other. This is the way societies interact with one another, the way that people who are different come together to do things that they couldn’t do apart.”
That’s a long answer and it’s a complicated one, but I think that spirit is essential to understanding the economics. Without the economics, without that idea, those ideas, the economics don’t make any sense at all. So the fact that we’ve spent so much time trying to make sense of the economics in a vacuum, I think is part of the reason that the project has been so unsuccessful.
Goldy:
Right. I think in economics, they make this distinction between positive economics and normative economics. It looks to me like Keynes didn’t make that distinction.
Zach Carter:
It’s all normative.
Goldy:
It’s all normative, and that this is you should worry about what it should be and not as much what it is. Describing it. Well, that’s great. I really enjoyed the book. Are you working on… It looks like it was a big project. Are you working on anything else?
Zach Carter:
Yes. Yes. Book took forever. I started working on it in a sense, right after the financial crisis of 2008. But when I started writing the proposal to when I finished this, about four years. But the next book is called, “Fields of Fire.” It is also with Random House and my editor over there, Molly Turpin. It’s a look at the populist uprising movement, revolt of the 1880s and 1890s, and told through the eyes of a few key figures who I haven’t quite figured out yet, but it’ll be a couple of years. Then hopefully, I’ll have a great deal to talk to you about when it’s done.
Goldy:
That sounds great. When you’re done with that, you can write a book on the populist uprisings of the 2020s.
Zach Carter:
Yes. Well, I think that’s where we’re headed. [crosstalk 00:37:03].
Goldy:
God, it’s a scary world out there right now.
Zach Carter:
It is, but we can make it better. It’s actually possible.
Goldy:
From Keynes lips to my ears. I don’t know how that works. To God’s ears. There you go.
Zach Carter:
Sounds right to me.
Goldy:
Yeah. Thanks for your time, Zach. I really enjoyed the conversation.
Zach Carter:
Thanks so much. It’s great talking to you.
Goldy:
On the next step episode of Pitchfork Economics, we talk with political philosopher, Elizabeth Anderson about the modern workplace, the communist dictatorships in our midst.
Speaker 3:
Pitchfork Economics is produced by Civic Ventures. If you liked the show, make sure to subscribe, rate and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer. Follow our writing on Medium at Civic Skunkworks and peek behind the podcast scenes on Instagram @PitchforkEconomics. As always, from our team at Civic Ventures, thanks for listening. See you next week.