Let us now turn to
his view of the justice of capitalism. It doesn’t figure in Moore’s list of
ultimate ethical goods, though he implies that it is good as a means to such
goods. This is its role in Keynes’s thought. But what does he mean by a just
economic system? Keynes was not a socialist, he hated Marxism, loved liberty,
and regarded state ownership of the economy, or any important chunk of it, as a
monstrosity. Nor was he an egalitarian, or even a serious redistributionist;
the phrase “social justice” rarely crossed his lips, and he frequently
expressed his disgust at the politics of envy. These positions were all based
on a conception of justice which is worth recalling. Keynes accepted the
classic view of justice that desert or reward should be proportioned to merit
or contribution, with its Aristotelian corollary that “nothing is more unjust than to treat unequals equally.” Justice is associated with equity, and not equality, and
just prices are those which correctly value economic contributions. Keynes
feels no acute moral discomfort at the reward structure of the market system of
his day, though he did remark once that “the
game can be played for lower stakes.” Certainly
no one who could write as he did of the pre-1914 world that “escape was possible for any man of capacity or character at
all exceeding the average, into the middle and upper classes,” or could announce before a socialist audience that “man for man the middle and even the upper class is very
much superior to the working-class,” can be
said to possess a deep sense of social injustice. Keynes was a meritocratic
elitist. Nevertheless, he accepted that the economic system of his day lacked
important elements of justice. It was a corollary of his position that, to be
justified, wealth should be earned, and so he favored taxing inherited wealth
higher than earned wealth, contrary to the modern trend to cut or even
abolish inheritance tax. But this, too, was a standard nineteenth-century
liberal argument. More importantly, in his General Theory he argued that
over-saving in relation to investment opportunities was the important cause of
slumps and that if money was redistributed from those with a high to those with
a low propensity to save, that is, from the rich to the poor, the economy would
be more stable. But, he explains, this is only one possible application of an
intellectual theorem. He prefers a full employment policy by means of
investment at least until wants are sufficiently satiated.
Keynes’s ethics has
a valuable message for today. To begin with, his approach brings out the
relevance of philosophy for economics. He was not an economic liberal, in
today’s sense, but a philosophical liberal: he constantly pondered on the
relationship between economic and non-economic aims and behavior. One of the
greatest shortcomings of economics today is that it has become a branch of
applied mathematics. This is reflected in the way students are taught. Keynes
thought of economics as part of the human discourse.
Secondly, although
Keynes’s belief in the rationality of ends and the homogeneity of values may
not now be accepted, he does force us to consider the question of what economic
activity is for: material progress will increase the goodness of the
universe--- up to the point, when it starts to diminish the quantity of ethical
goodness. When it does so, is a matter of judgment. Thus he provides an ethical
argument for public action to influence the composition, as well as the level
of demand.
Thirdly, Keynes
provides a continually interesting perspective on what is meant by the justice
of economic arrangements.
Fourthly, he makes
the point that private property is not a natural right but has to be
justified by reference to duty. Here his ideas link up with the modem theory of
corporate responsibility, but from a very different angle.
Finally, he reminds
us that it is not enough for an economic system to pass the test of success.
It must also conform to our sense of whether it is good.
And now, lastly here is some criticism of
Keynes’s view on the culprit of the Great Depression, coming out of the Chicago School of Economics.
The Chicago School of
Economics is best known for its free market advocacy and monetarist ideas. In
the view of Milton Friedman and the monetarists, market economies are
inherently stable if left to themselves, and depressions result only from
government intervention. Friedman, for instance, argued that the Great
Depression was the result of a contraction of the money supply, controlled by
the Federal Reserve, and not by the lack of investment, as Keynes had
argued. (Chairman of the Fed Ben Bernanke later acknowledged that Friedman was
right to blame Federal Reserve for the Great Depression.)
Regarding this last point, let me ask, who, in
Mr. Bernanke’s view, was responsible for the current global economic crisis--
was it the Fed again?
The End.
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