Keynes’s
fundamental motive for undertaking
the entire theoretical project of the General
Theory is made quite explicit in chapter 24 of the work. The immediate and
pressing need is to avoid the implosion and collapse of the liberal
parliamentary democracies that seem now on an unavoidable course of conflict
against the totalitarian dictatorships that have sprouted across Europe as a direct result of the human hecatomb,
destruction and economic upheaval during and in the aftermath of the Great War.
Keynes’s chief target is to maintain as near full employment as is possible for
a liberal democracy with a State that safeguards the private property rights of
its citizens, for he is convinced that it is the hopelessness and fear inspired
by mass unemployment that foments the racial hatred and imperialist aggression
that these regimes – whether fascist or communist – exploit to secure their
supremacy. The aim is noble and admirable. But we must point out its
fundamental flaws in the interpretation of the basic historical categories of
the capitalist economy and therefore also the analysis of its operation.
The
General Theory is remarkable at least in one respect as the first monumental
attempt to conceptualise the capitalist economy as a Monetary Economy in which the overall co-ordination of the system
of production based on the wage relation affects every aspect of social life
and indeed the very reproduction of
society. In other words, Keynes takes conscience of the fact that we have
passed from a capitalist stage in which industrial capital is only a part of
social reproduction to one in which capital has finally assumed the role of “social
capital” through the real subsumption of all or most relevant and vital aspects
of social reproduction. The passage from the “competitive capitalism” of the
First Industrial Revolution from 1640 to the early 19th century to
the phase of what Schumpeter calls “trustified capitalism” or “social capital”
(prophesied by Marx, but note Schumpeter’s gracious acknowledgement of his
astounding foresight) with the Second Industrial Revolution starting in the
1870’s after the Great Crisis – this “trans-formation” of capitalist industry
and society as a direct of a Great “Crisis” is what inspired Schumpeter to
write his own Theorie, and has been
accepted almost universally by historians as a clear “periodisation” of the
development of global capitalism.
Keynes
takes conscience of this “trans-formation” of capitalist society, but unlike
Schumpeter (who called Keynes “the father of stagnation”) he does not see the “innovative”
side of capitalism, its revolutionary and trans-formational meta-morphoses:
Keynes sees only this growing “discrepancy” or dislocation between the
immediate productive decisions and “choices”
of “free individuals”, on the one hand, and the growing and vital dependence of
economic activity – or “output and employment”, as he calls them – on the “monetary”
considerations of a vast and fast-growing intense network of financial intermediation between bankers
and financiers and brokers and investors, and then finally “savers”, whose
vital functioning depends almost entirely not just on the “expectations” of
future income streams or “yields” from present investments, but also on the
absolute need to ensure that these “expectations” do not turn “negative” and
then, given the financial pyramid of “projections” on “expected yields or
profits”, do not trigger a financial “implosion”, a panic that Irving Fisher
had already described (1930) as a “debt-deflation” to describe the Great Crash
of 1929.
Thus,
Keynes notices a great dis-connection, a dis-location and dis-crepancy – a disintermediation
– possible between the present and the future caused by the imponent
overwhelming growth of finance capital (what Schumpeter called “the control
room of capitalism”, and a subject that had already attracted works by
Hilferding and Lenin [“Imperialism”]). Of course, money and finance themselves
are a “bridge between the present and the future” (ch.21 of GT), but this does
not prevent them also from being the
reason for their own existence! Put differently, although money and finance
are instruments that allow the capitalist to seek to plan the future by “abstracting”,
by “divorcing” himself from the present act of physical production, at the same
time money and finance catastrophically “separate” the activity of human beings
from their “investment decisions”. Social
capital, as it were, “connects” every aspect of social life to the expanded
reproduction of capital – but at the same time it subjects the “sociability” of
human existence to the terrific threat of possible collapse by making social
reproduction dependent on the antagonism of the wage relation, by substituting
the “investment decision” based on “future profitability” for the “productive
decision” based on the organic projection of democratically-agreed future needs
of a non-antagonistic society!
To
sum up, what Keynes is first to realize in the General Theory is that the very
survival of capitalism depends on bridging
the gap or chasm or hiatus introduced by money and finance between present
production and future profitability! This is the awesome task of the
General Theory: - first, to show theoretically the “need” for the decisive
seizure of the future by the bourgeoisie through the State-Plan, and second to
lay out a strategy of political transformation of capitalist institutions that
reflect the “political” transformation occasioned by the transition from
private or competitive or “mercantile” capitalism – to the much more imponent
and ominous surge of social capital into finance capital and into “the society
of capital”. The role of the State-Plan will be decisive in all this. Of
course, Keynes the Treasury official, Bursar of King’s College, Cambridge , cannot say this
in so plain a fashion. He needs to disguise his language; camouflage his
ideological tools; sell his strategy. Thus, he casts his discourse, he
mimetises his concepts with the old leopard-skin of Neoclassical Theory:
nowhere more so than where “the wage” is concerned. Next, we will see how he
does this.
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