The Crisis of Capitalism: Keynes versus Marx

Return of the Master John Maynard Keynes keeps returning, like the ageing diva who goes on giving farewell performances. What does this tell us? First, it tells us that in economics there are no final victories and defeats. Rather, economic doctrines ebb and flow, obedient to changes in consciousness and in the world. But, secondly, it tells us that as the world changes, so do its structures of power. The rise and fall of different schools of economics is related to shifts in the balance of social and economic power. Marx understood this, hence his place in my title. My purpose here is not to make the case for Keynes, but to consider the passage of his ideas from acceptance to rejection in the context of changing preoccupations and conditions. In this I follow the lead of the eminent Indian economist Amir Kumar Dasgupta, who wrote 'A system of economic theory evolves in response to questions that are provoked by a given set of circumstances in the economy. As circumstances change, or people's attitude to them changes, questions are revised, and a new system springs up' (Dasgupta 1985:4). Dasgupta is right to distinguish between changes in circumstances and changes in people's attitudes to these changes. There is a large gap between the two. This approach will give us some sense of how durable the modest resurgence of Keynes's economics today will prove to be. Keynes ended The General Theory of Employment, Interest, and Money with the famous words: 'But soon or late, it is ideas, not vested interests which are dangerous for good or evil' (Keynes 1936: 383-4). Anyone involved in the production of ideas has to believe this, unless he is being paid by someone to produce the ideas. In today's world, the chief manufactory of ideas is the Academy. Pure research has long been recognised as an independent intellectual pursuit; its hallmark, disinterestedness. Its purpose is the search for truth. The pecuniary interest of scholars is not directly involved in either the direction of their enquiry or its results (Collini 2009). Sociology of Success At the same time, there is what Schumpeter called the 'sociology of success. ' Put crudely, why are some ideas acceptable, and others rejected or marginalised? In the natural sciences this question is relatively easy to answer: newer ideas bring us closer to reality than the older ones. For this reason, quantum physics replaced classical physics (Cartwright 1999:2). Reality is unchanging, only the theory changes as it improves our understanding of reality. Predictive power is the ultimate test of the truth of a scientific hypothesis. (1) In social sciences this is much less true. The natural world does not interfere with one's observation of it; the social world does. It is the changeability of the object being studied which demarcates social sciences from natural sciences. Social reality is constantly shifting, problems crucial at one time become irrelevant at another. As a result, propositions in social science do not satisfy the 'universality criterion'. They are limited in time and place. As Dasgupta (1985:1-2) points out, theories in economics are independent of each other, they do not supersede each other. Theories in the social sciences can rarely be successfully confirmed or falsified, except briefly. Progress in economics consists of greater precision in stating ideas, not the greater explanatory power of the ideas themselves; and the precision may be at the expense of the explanation. In economics, much more than in physics, the research agenda and structure of power within the profession reflect the structure of power outside it. They have the character of ideologies. And this, of course, was precisely Marx's contention, when he wrote "What else does the history of ideas prove, than that intellectual production changes in proportion as material production is changed? The ruling ideas of each age have ever been the ideas of its ruling class. …