John Maynard Keynes: Fighting for Freedom, 1937-1946

Rating:
Summary: In the short run we are still alive
Review: The last part of Robert Skidelsky's magnificent biography of J.M. Keynes is a tale about the fall of the British Empire with Keynes as one of its most clairvoyant and active go-betweens trying to avoid the disaster. Great-Britain had won the war but it was bankrupt, crushed by its debt contracted to buy US weapons.
This book shows clearly through its analysis of the Bretton-Woods negotiations and the discussions about the conversion of British debt, that the ultimate goal of the US Administration was to get Great-Britain on its knees and to take its place as world leader.
The US preferred an alliance with te Soviet Union against Britain. Their most important negotiator H.D. White was a convinced Soviet spy.
Keynes defended exhaustingly Britain's role in world matters by begging time for a reconversion of the British industry from a war to a civilian economy and for safeguarding its Commomwealth with its preferential tariff and pound sterling payment system.
The humiliatig conditions for its debt conversion imposed by the US would cripple the British economy for years. The suicidal internecine European wars created a new world hegemon: the US.

Before the war, Keynes defended his 'Treatise' policies, but saw them applied in Germany by a very clever economist, Hjalmar Schacht, who also saved the German economy internationally by creating a bilateral trade system.
Prof. Skidelsky shows us also pregnantly the deterioration of Keynes's physical condition, aggravated by his exhausting travels, difficult (empty handed) negotiations and even hard opposition at home when he was in the US.

One could perhaps slightly criticize the exhaustive excerpts of letters or the extremely detailed evolution of the negotiations in Bretton-Woods or about British debt relief. But, all in all, this is a fascinating read.

Rating:
Summary: Large enough to offer details
Review: There was a time when John Maynard Keynes was not the most famous living economist. Then he was. Then, after he died, he seemed to be more useful than Karl Marx to anyone who was interested in how modern economies actually operate in the best times, when statistics actually reflect the level of some real activities. Two earlier biographies by Robert Skidelsky cover the years in which Keynes gained in stature and wrote his General Theory of Employment, Interest and Money (1936), described by Joseph Schumpeter as "the dying voice of the bourgeois crying in the wilderness for the profits it dare not fight for." (FIGHTING FOR FREEDOM 1937-1946, p. 4). This final volume starts with the problems with his heart that, after ten years of making Keynes an invalid, deprived the world of his advice at a time when situations continued to change at a pace which needed someone to keep applying different aspects of the General Theory in time to keep most elements of society from feeling that they were being swindled. He never had enough power to make a miraculous demonstration of anything, but the spread of American wealth after World War Two made many professionals think that it was possible, if not already proved, that happy days could keep reappearing here again far more optimistically than Joseph Schumpeter's dour statement.

Economics has become a science which is widely taught at a college level. Robert Skidelsky seems comfortable with writing about the political struggles involved, the nature of intellectual controversies in the field, and he is generous in his comments about Friedrich von Hayek, author of THE ROAD TO SERFDOM, and Milton Friedman, who emphasized other aspects of political economy. The years 1937-1946 had major problems of their own, and there is far more attention in FIGHTING FOR FREEDOM paid to the people that Keynes had contact with and responsibilities to. The Preface to the American Edition is dated 6 October, 2001. Already the author was prepared to apply a lesson of this book to our life and times:

"To be reminded of the realities of alliance politics, even in the case of such close partners as Britain and the United States, is timely in the aftermath of the tragic events of 11 September, when the United States is working to construct a global coalition against terrorism. In 1940, it was British vulnerability which threw it into the arms of the United States. America did not fail its fellow-democracy; but also used the occasion to settle old scores, and secure pole position in the post-war international order." (p. xv).

A major episode in this book recounts how an economic genius approaches the United States of America on behalf of a bankrupt country at the end of a big war to get debts pushed far enough into the future to be able to convince himself `If we don't make it by then, we're sunk anyway,' only to be asked why he didn't bring along the trade representatives. Countries which did not get involved in the current endless war might have leaders who read the British edition, which was published in 2000. Even at the beginning of this book, Keynes thought a government was foolish to commit itself to a war before the overwhelming mass of its people were convinced that the war was absolutely necessary, even after he felt that the Munich Agreement had been a pathetic trick.

This book describes Keynes as being conservative, and the picture it paints of his legacy continues the tradition of maintaining a bias in favor of economic stability. The Truman-Eisenhower years had a durable mix. "Setting tax rates to achieve an employment target consistent with a low rate of inflation was properly Keynesian; . . . It was to keep inflation under control by methods which did not bring about the collapse of the secular boom." (p. 505).

"However, U.S. fiscal restraint broke down in the 1960s. In 1962, the second-generation Keynesian economists who came in to office with President Kennedy were convinced that the long-predicted slump was at hand. A further stimulus to action was the quite unwarranted fear that the Soviet Union would win the Cold War economically and politically, without any need for a hot war. So the scene was set for the big Kennedy-Johnson tax cuts and `Great Society' programmes." (p. 505).

Economists might be familiar with the description of what followed, but the attempt to maintain a coherent theory is admirable when we get to: "Friedman's own attacks were launched from within Keynes's own macroeconomic citadel, but, by ruthlessly applying the maximizing logic to individual behavior, he gave two of the Keynesian `functions' -- the consumption function and the demand for money function -- properties of stability which they had lacked in their Keynesian form." (p. 506).

The picture of the doctor responsible for treating Keynes's heart, James Plesch, is labeled "the doctor who brought JMK `back to life', and whom he called `the Ogre'." (facing page 166). This is a typically British nickname for a Jewish Hungarian who left Germany in 1933 and settled in England. (p. 40). The author and I suspect that he was more thorough than British doctors. "There is no reason to doubt Keynes's own view that it was Prontosil which had brought about his dramatic improvement. Unfortunately, it was subsequently discovered that Prontosil was effective against the green streptococci lodged in the throat but not against those already firmly established in the valves of his heart." (p. 43). He lived through World War Two. He was losing money in the stock market before the war, as some people must have realized that weird things were about to happen to the economy. Keynes died before some of the big changes that were afoot. The American dream in this book: "Henry Wallace, who had fallen asleep, woke up to ask why Britain could not trade Indian independence for a write-down of Indian debt." (p. 414).

Rating:
Summary: Large enough to offer details
Review: There was a time when John Maynard Keynes was not the most famous living economist. Then he was. Then, after he died, he seemed to be more useful than Karl Marx to anyone who was interested in how modern economies actually operate in the best times, when statistics actually reflect the level of some real activities. Two earlier biographies by Robert Skidelsky cover the years in which Keynes gained in stature and wrote his General Theory of Employment, Interest and Money (1936), described by Joseph Schumpeter as "the dying voice of the bourgeois crying in the wilderness for the profits it dare not fight for." (FIGHTING FOR FREEDOM 1937-1946, p. 4). This final volume starts with the problems with his heart that, after ten years of making Keynes an invalid, deprived the world of his advice at a time when situations continued to change at a pace which needed someone to keep applying different aspects of the General Theory in time to keep most elements of society from feeling that they were being swindled. He never had enough power to make a miraculous demonstration of anything, but the spread of American wealth after World War Two made many professionals think that it was possible, if not already proved, that happy days could keep reappearing here again far more optimistically than Joseph Schumpeter's dour statement.

Economics has become a science which is widely taught at a college level. Robert Skidelsky seems comfortable with writing about the political struggles involved, the nature of intellectual controversies in the field, and he is generous in his comments about Friedrich von Hayek, author of THE ROAD TO SERFDOM, and Milton Friedman, who emphasized other aspects of political economy. The years 1937-1946 had major problems of their own, and there is far more attention in FIGHTING FOR FREEDOM paid to the people that Keynes had contact with and responsibilities to. The Preface to the American Edition is dated 6 October, 2001. Already the author was prepared to apply a lesson of this book to our life and times:

"To be reminded of the realities of alliance politics, even in the case of such close partners as Britain and the United States, is timely in the aftermath of the tragic events of 11 September, when the United States is working to construct a global coalition against terrorism. In 1940, it was British vulnerability which threw it into the arms of the United States. America did not fail its fellow-democracy; but also used the occasion to settle old scores, and secure pole position in the post-war international order." (p. xv).

A major episode in this book recounts how an economic genius approaches the United States of America on behalf of a bankrupt country at the end of a big war to get debts pushed far enough into the future to be able to convince himself `If we don't make it by then, we're sunk anyway,' only to be asked why he didn't bring along the trade representatives. Countries which did not get involved in the current endless war might have leaders who read the British edition, which was published in 2000. Even at the beginning of this book, Keynes thought a government was foolish to commit itself to a war before the overwhelming mass of its people were convinced that the war was absolutely necessary, even after he felt that the Munich Agreement had been a pathetic trick.

This book describes Keynes as being conservative, and the picture it paints of his legacy continues the tradition of maintaining a bias in favor of economic stability. The Truman-Eisenhower years had a durable mix. "Setting tax rates to achieve an employment target consistent with a low rate of inflation was properly Keynesian; . . . It was to keep inflation under control by methods which did not bring about the collapse of the secular boom." (p. 505).

"However, U.S. fiscal restraint broke down in the 1960s. In 1962, the second-generation Keynesian economists who came in to office with President Kennedy were convinced that the long-predicted slump was at hand. A further stimulus to action was the quite unwarranted fear that the Soviet Union would win the Cold War economically and politically, without any need for a hot war. So the scene was set for the big Kennedy-Johnson tax cuts and `Great Society' programmes." (p. 505).

Economists might be familiar with the description of what followed, but the attempt to maintain a coherent theory is admirable when we get to: "Friedman's own attacks were launched from within Keynes's own macroeconomic citadel, but, by ruthlessly applying the maximizing logic to individual behavior, he gave two of the Keynesian `functions' -- the consumption function and the demand for money function -- properties of stability which they had lacked in their Keynesian form." (p. 506).

The picture of the doctor responsible for treating Keynes's heart, James Plesch, is labeled "the doctor who brought JMK `back to life', and whom he called `the Ogre'." (facing page 166). This is a typically British nickname for a Jewish Hungarian who left Germany in 1933 and settled in England. (p. 40). The author and I suspect that he was more thorough than British doctors. "There is no reason to doubt Keynes's own view that it was Prontosil which had brought about his dramatic improvement. Unfortunately, it was subsequently discovered that Prontosil was effective against the green streptococci lodged in the throat but not against those already firmly established in the valves of his heart." (p. 43). He lived through World War Two. He was losing money in the stock market before the war, as some people must have realized that weird things were about to happen to the economy. Keynes died before some of the big changes that were afoot. The American dream in this book: "Henry Wallace, who had fallen asleep, woke up to ask why Britain could not trade Indian independence for a write-down of Indian debt." (p. 414).