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2024 | OriginalPaper | Buchkapitel

11. Keynes’s “New Liberalism” Re-examined: From a Wide Perspective

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Abstract

This chapter deals with Keynes’s social philosophy. Through the General Theory he is too well-known for the “Keynesian Revolution” in the history of economics. And yet his activity as an economist occupies a small—albeit crucial—part of his career. He was a remarkable philosopher at a young age, and in his mid-thirties was a core member of the Treasury [of the British Empire] at the Paris Peace Conference, which negotiated over how devastated Europe after World War I should be rebuilt. Keynes resigned from his post, however, impeaching the Treaty of Versailles thus concluded. Thereafter, as an intellectual leader of the Liberal Party, he came to seek and advocate “New Liberalism” in the 1920s, energetically pursuing “persuasive activities” through his own bulletin and the mass media. A distinctive feature of these activities was that he actively and consciously interacted with European as well as American policymakers, consciously aiming to influence the public opinion. And most notably, Keynes’s major works of economics were written in parallel with such activities.

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Fußnoten
1
See JMK.16, p.415. During the War what Keynes tackled with as the top official at the Treasury was the finance problem to the Allies, the foreign exchange crisis, and the financial negotiation with the US. For this, e.g., see (i) “Note on the Financial Arrangements between the United Kingdom and the Allies” (April 1917. JMK.16, pp.226–38), which shows how the UK has so far made loans to the Allies and hopes that the US (Associated Power) should assume them, and (ii) “Telegram approved by War Cabinet for dispatch to British Ambassador at Washington” (July 1917. JMK.16, pp.255–63), which reveals critical situations: “unless the United States government can meet in full our expenses in America, including exchange, the whole financial fabric of the alliance will collapse. This conclusion will be a matter, not of months, but of days” (p.255).
 
2
See JMK.16, p.415.
 
3
This idea is incorporated in Section III “An International Loan” (JMK.2, pp.179–83), Chapter 7 of the ECP.
 
4
See JMK.16, p.419.
 
5
See JMK.16, pp.428–29.
 
6
See JMK.16, pp.440–41.
 
7
Orlando, Italian prime minister, had been absent due to the frustration with the Paris Conference.
 
8
See JMK.16, pp.452–53.
 
9
See ECP, p.166.
 
10
See ECP, p.171.This is basically the same as the first proposal mentioned in Sect. 2.1.
 
11
See ECP, pp.167–68.
 
12
See ECP, pp.186–87.
 
13
Dulles took “a major part in framing the reparation and financial sections of the Treaty” (JMK.17, p.24).
 
14
This seems to correspond, respectively, to “(social) justice” and “economic efficiency” referred to below.
 
15
Keynes judges that the above-mentioned social reforms are now “obsolete”. (The Liberal Party has successfully achieved these, but now it is “the common ground of all parties alike” [JMK.9, p.297]. The Liberal Party needs a new theme.) Keynes wants something different from Hobson’s egalitarian “New Liberalism” which will be explained in Sect. 5.1.
 
16
Through the influence of Moore and the discussions in the “Society” [at Cambridge], Keynes was persistently very critical of utilitarianism (see JMK.10, p.445). In “F. Y. Edgeworth” (1926d. JMK.10), Keynes describes that he asked an interesting question to Edgeworth of how much the initial assumptions of the marginal theory of economics would stand or fall with utilitarian ethics and utilitarian psychology. See JMK.10, pp.259–60.
 
17
See JMK.9, pp.287–88.
 
18
See JMK.9, pp.282–83, 285.
 
19
See JMK.9, pp.286–90.
 
20
This refers to the “economic efficiency” mentioned below.
 
21
This position is different from Hayek’s social philosophy which regards capitalism essentially as a system that guarantees the political and economic freedom of individuals, so sees capitalism based on individualism as an ideal system. See Hayek (1945).
 
22
It should be noted that individual liberty here is different from what is usually meant by this, for it is argued in favor of the exceptional. It might have something to do with Perfectionism.
 
23
See JMK.9, p.331 (in Keynes [1930b]).
 
24
See JMK.9, pp.259–61 (in Keynes [1925a]).
 
25
See JMK.9, pp.291–92 (in Keynes [1926b]).
 
26
See JMK.9, p.292 (in Keynes [1926b]).
 
27
Speaking of the other two of his economic trilogy, A Tract on Monetary Reform [1923. JMK.4] and A Treatise on Money [1930. JMK.5 and 6], there is no space for something like social philosophy, so they purely belong to economic theory/economic policy.
 
28
And yet one problem remains: Keynes did not bring down a book on New Liberalism, which put one in a difficult position to grasp his idea correctly and coherently.
 
29
In Chapter 24, the emergence of excessive income inequality is mentioned. Keynes admits the phenomenon of inequality in income and wealth. But what he is concerned about here is the “excessive” inequality seen today. He then describes the correction of “excessive inequality”. It should be noted, however, that his thought should originate not in “egalitarianism” but in “social justice”.
 
30
As will be seen in section B below, which deals with after the GT, Keynes does not pay attention to “liberty (or individualism)”. He seems to take it for granted throughout.
 
31
There are several changes in his view worth noting, although they are not related to “New Liberalism”.
(1)
In Chapter 24, considerable concessions to the “pseudo-morality” are recognizable in contrast with Keynes in the 1920s. Even if people are strongly poisoned by the motives for making money, he overlooks that a society based on it is preferable to the ongoing dictatorship. These concessions reflect the dramatic changes that the European world experienced in the 1930s.
 
(2)
There is also a tone in Chapter 24 that emphasizes the role to be played by the state more than in the 1920s. The vast territory should remain left to individual initiative, but as the only way that capitalist societies could be saved from collapse he emphasizes the importance of expanding the functions of government to achieve full employment through increased effective demand—specifically, (i) partly through the taxation method and partly through the interest rate to influence the propensity to consume, and (ii) the comprehensive socialization of investment.
 
 
32
This gave a huge impact on an economic policy in the UK through the budget plan in 1941 and The White Paper [The Treasury 1941].
 
33
And yet, very briefly. We would add the following: Keynes, in Chapter 23 “Notes on Mercantilism, the Usury Laws, Stamped Money and Theories of Under-Consumption” of the General Theory, appreciates Hobson and Mummery for their theory of underconsumption, but in Chapter 24 does not refer to Hobson as the leader of NL1.
Interestingly enough, Hobson (1938, p.194) takes up the GT, pp.364–71(in which his “over-saving heresy” is highly appreciated), expressing “handsome tribute”, and the GT, pp.378–80 (in which the theory of interest, “socialization of investment”, and so forth are argued), making his remark which highly evaluates the tendency of (Keynes’s) “Liberal Socialism”.
 
34
Besides NL1 and Fabianism, “Free Imperialism” (E.Grey, H.H. Asquith), “Social Imperialism” (J. Chamberlain), and “New Unionism” (B. Tillett) were also great movements, which are not treated here.
 
35
See Mummery = Hobson (1889) p.121.
 
36
See Hobson (1938) p.171.
 
37
See Hobson (1938) pp.64, 69–70, 80–81.
 
38
He published a book on Ruskin (Hobson [1898]).
 
39
See Hobson (1938) p.55.
 
40
See Hobson (1938) p.82.
 
41
See Hobson (1938) pp.60, 65.
 
42
See Hobson (1938) pp.60, 85.
 
43
See Hobson (1938) p.185.
 
44
See Hobson (1938) p.180.
 
45
See Hobson (1938) p.183.We should bear in mind that Hobson (1938) was published in 1938, meaning by this that thinking described in the present form indicates his thinking as of 1938—which sees the rising powers of Hitler’s Germany and Stalin’s Soviet.
 
46
“Socialism” here is closely related to his fundamental concept, “social property”, as will be seen below.
 
47
See Hobhouse (1911) p.74.
 
48
See Hobhouse (1911) p.81.
 
49
Hobhouse states that “economic justice” differs from “social justice”. Social justice is referred to in relation to “the principle of proportionate equality in the Common Good”. See Hobhouse (1922) p.117.
 
50
See Hobhouse (1911) p.82.
 
51
See Hobhouse (1911) p.99.
 
52
He was the chief founder of the London School of Economics (in 1895).
 
53
See Webb (1901) p.15.
 
54
See pp.12–14, 128–29, 171–72.
 
55
See Chap. 4, esp. pp.13–14,78–80.
 
56
See Chap.7 “Keynes’s Middle Way”.
 
57
See Chap.18 “Industry and Politics”.
 
58
See p.5.
 
59
Looking at JMK.30, for reference, the number of “equality” and “egalitarianism” is zero, while “justice” over 16 and “social justice” over 40.
 
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Metadaten
Titel
Keynes’s “New Liberalism” Re-examined: From a Wide Perspective
verfasst von
Toshiaki Hirai
Copyright-Jahr
2024
DOI
https://doi.org/10.1007/978-3-031-40135-0_11