Keynes and Philosophy: Essays on the Origin of Keynes's Thought.

Anyone with an interest in the history of economic ideas, or more narrowly in the ideas of John Maynard Keynes, has by now noticed the explosion of literature in recent years preoccupied with Keynes's philosophical views. The aim and motivation of this scholarship has been centered on the contention that understanding these philosophical aspects of Keynes will both round out the distorted view of Keynes's thought emphasized by a strictly economistic viewpoint, and further our understanding of economics (his and ours). As I have commented at length on these two propositions in an earlier review in this journal [2], I have no wish to tackle them again. It is sufficient to note that the volume under review, which usefully collects together shorter essays from most of the major contenders in this literature, also falls into this tradition. In fact it seems to represent some more advanced stage of evolution for this literature in the evident diversity of opinions on Keynes's philosophical views themselves, and the sometimes conscious attempts to differentiate theories of Keynes's philosophy by the authors (as in the debate that rages across the footnotes appended to O'Donnell's and Carabelli's pieces in this volume).

Of the many selections I wish to treat three in particular, those by Bateman, Helburn and Davis, as space does not allow a fuller accounting here. But I first offer a brief indication of the issues involved in the others and how they connect to the general themes of the Keynes and Philosophy literature.

Yuichi Shionoya tackles the issue of continuity in Keynes philosophical outlook over his career, and the related problem of the extent to which his "My Early Beliefs" memoir constitutes a rejection, as of 1938, of some of his earlier positions. The importance of the 1938 essay, one commented on by almost all participants in this literature, is that by different interpretations it represents either the key to understanding how Keynes took G.E. Moore's idealistic ethical notions into the arena of economics and politics, or the rejection of Moore's "religion" altogether by the later Keynes. This issue is probably of little interest to those outside the Keynes and Philosophy literature proper, and, it must be said, the issue only grows in obscurity at Shionoya's hands. Rod O'Donnell offers an essay on the importance of Keynes's concept of "weight" as it bears on his views of rationality and uncertainty. The treatment is substantially the same as that in O'Donnell's book [3], and the uninitiated reader would be advised to go there first. Anna Carabelli argues that the methodological basis for Keynes's critique of the Classical Theory in 1936 was his longstanding philosophical interest in organic interdependence. Macroeconomics becomes, on this view, a philosophically motivated attempt to model relationships that are not analyzable by reduction to their constituent parts alone.

All of the essays provide glimpses into the Keynes and Philosophy literature that might spur readers further onto the more extensive efforts of some of these authors. In that event, the extensive bibliography compiled here will be a great aid. Three essays, though, taken together, also raise a still little known aspect of Keynes which merits further comment: what were the motivations and aims of Keynes's political views? The fact that this is a still little understood issue is raised by the very subject of Suzanne Helburn's spirited and interesting essay "Burke and Keynes." As she puts it, "how is it possible that Edmund Burke, the prophet of twentieth-century conservatism, also profoundly influenced this century's quintessential liberal economist?" (Reference is clearly to the contemporary U.S. meaning of "liberal" and "conservative" here.) Her answer, convincingly argued and supported, is that Keynes drew from Burke a philosophy of politics while rejecting much of the specific content of Burke's views. Most importantly they shared the view that politics was largely a matter of practical expediency, that its goals were based on ethical presuppositions of the good and of general happiness (for Burke, derived from Christianity; for Keynes from Moore's ethics), and that this pragmatic use of political power was largely the domain of a disinterested elite. Keynes major critique of Burke was that he underestimated the potential for good in capitalist economic development - and thus his politics was driven by the fear of change. Keynes argued against this his more optimistic view of the possibilities of society through a properly managed economy - but note managed by his own preferred elite, presumably Cambridge-trained economist-philosophers.

To focus more narrowly on Keynes's economic policy views, Bradley Bateman's essay explicitly addresses their philosophical basis. His main point is that Keynes's long interest in providing a rational basis to the pursuit of ethical policies in an uncertain world - the very source of his interest in probability - gave him a very complex view of the possibilities and limits of economic policy. In particular, if uncertain situations called for decisions to be made without the benefit of good information, as in asset markets for example, then certain conventional rules would tend to influence agents' behavior. In this context the policy maker faces constraints and opportunities not normally ascribed to him by the modern poles of "rules versus discretion." Keynes clearly saw a role for discretion in economic policy making, but, and note the Burkean voice emerging here, he also recognized that expediency demanded recognition of the reactions of economic actors. If a policy was perceived as outside the bounds of convention, it could be self-defeating. An example explicitly referred to in the General Theory is the attempt by the monetary authorities to "manage" investment by manipulation of the interest rate. If long-term expectations are adversely effected by the actions of the central bank the policy can be self-defeating. "Thus a monetary policy which strikes public opinion as being experimental in character or easily liable to change may fail in its objective [ 1, 203]."

Finally, John Davis's essay on "Keynes's View of Economics as a Moral Science" makes it quite clear that this philosophically-minded approach to political economy dominated Keynes's method of doing economics. This is most forcefully brought out in Davis's discussion of the exchange between Keynes and Lionel Robbins over the method proper to economics. Explicitly contrasting his view with what he saw as too conscious an aping of the physical sciences by Robbins, Keynes claimed that the subject of economics required a moral science approach "that deals with introspection and with values . . . with motives, expectations, psychological uncertainties," where "one has to be constantly on guard against treating the material as constant and homogeneous" (quoted by Davis on page 94).

To fit this view in with the issues of political economy raised by Helburn and by Bateman, note that the underlying view of man and society is again that of the rationalist probability philosopher in optimistic pursuit of Moorite good through the public arena. Like the policy maker, the economist is thus forced to create inexact, nondeterministic theoretical models which are only determined in the last instance by the uncertain psychological judgements of the economic actors. As these judgements cannot be predicted a priority economic forecasting and empirical analysis are given less of a role by Keynes than is currently ascribed to them. Consequently judgement and intuition are called upon by the economist in building theories and applying them. Success at this required a feel for the conventions of society, and, as all intuitionist arguments must eventually fall back on, a confidence in the superior judgement of the investigator. Political elitism in policy moves in tandem, for Keynes, with an intellectual elitism in theory.

References

[1.] Keynes, J. M. The General Theory of Employment, Interest and Money. New York: Macmillan, 1936. [2.] Lawlor, M. S., review of "Keynes: Philosophy, Economics and Politics - The Philosophical Foundations of Keynes's Thought and Their Influence on His Economics and Politics, by R. M. O'Donnell." Southern Economic Journal, October 1990, 567-69. [3.] O'Donnell, R. M. Keynes: Philosophy Economics and Politics. New York: St. Martin's Press, 1989.