Ninety years ago, John Maynard Keynes wrote about what he called the Political Economist’s Religion. Reaching back to the mid-Nineteenth Century, he criticized the culturally prominent views of laissez-faire advocates Frederic Bastiat and Richard Whatley, then the Anglican Arch Bishop. Each preached that economic-related natural laws must be obeyed to avoid society’s ruin. The morality they advocated was a mix of individualism and restraint on government’s size and role.
Then, as now, laissez-faire prescriptions about how the world is perceived to work, lean toward advocacy for self-interested private behavior, as opposed to more communitarian-oriented public behavior. Indeed, Republican contenders in the run up to the 2016 presidential election operate considerably out of Bastiat and Whatley-type perspectives from two centuries ago.
For Keynes, there existed in the faulty logic they championed, a thread extending all the way through Adam Smith, back to Isaac Newton. It is a religion-like thread connecting to a perceived economic vision anchored in orderliness. Disaster is certain if their prescriptions on how society must be organized are not heeded, they believe.
Saving plans of households must be harmonized with the investment plans of businesses, fundamentalists remind. If government intervention in the economy occurs, they believe equilibrium becomes frustrated, there by moving the business community further from fulfillment of its role and destiny. It is a destiny—decreed by God and by nature—in which the private sector absorbs all saving and then invests sufficiently to create full employment. No government needed or wanted in this religion-like tableau.
Keynes, of course, challenged economic fundamentalism, not only as a roadblock to ending depression, but also as a contributor to dysfunction’s rise. Economic healing for Keynes, then, begins with rejection of the laissez-faire mindset.
Indeed, Keynes played an Einstein-like role. The connection is Einstein’s path-breaking 1905 paper on the Special Theory of Relativity. It includes a challenge to Newton’s perceived universal orderliness. Keynes, similarly, sought to undermine the orderliness crutch upon which economic fundamentalism leans.
Opting out of their laissez-faire religion, he claimed, would in no way lead to society’s ruin. Religious piety—favoring individualism and government minimalism—therefore emerges merely as a political preference. In no way is it validated as a requirement for how actual economies must behave.
One could imagine a scenario with Keynes and Einstein juxtaposed against Bastiat and Whatley. The Bastiat-Whatley point of view might be portrayed by a god-like wizard—such as the one from Oz—who pushes buttons and pulls levers to keep the economic system from slipping off track. If the wizard fails, the economy is doomed. Surely his requirements for the orderly way in which his kingdom must be organized, cannot go unheeded. Viewed from the Keynes-Einstein perspective, however, the wizard’s role becomes not one of stabilizer, but rather, merely one of hapless curmudgeon, fumbling through a much-loved childhood fairy tale.
More, later, on how economics has been turned into religion. Until then, check out Capitalism in Crisis. Org.
From Boulder, Colorado, for Capitalism in Crisis, this is Jim Sawyer.