You would think that there is not a lot left to say about John Maynard Keynes. After all, he has been the subject of any number of door-stopping biographies, including Robert Skidelsky's marvelous three-volume treatment, plus his shorter, more recent summation of why Keynes matters in 2008. There are books about his marriage, about his friends in the Bloomsbury group, about his probability theories. He has been explicated, interpreted, recast, rethought, attacked, buried, exhumed and shaken to life again. His own prodigious output (he was, after all, a prolific journalist and best-selling author) has been republished, reintroduced, rethought. He has been approached directly and indirectly. We have collections of Friedrich Hayek's correspondence about Keynes and, just recently, a new book by Nicholas Wapshott on the shifting relationship between Keynes and Hayek. There is, of course, a vast corpus of economic monographs on Keynes' work -- pro and con -- that has been accumulating for half a century.
And yet the combination of Keynes' protean and sometimes elusive genius -- and even in an age of inflationary genius, he deserves that description -- filtered through a vast literature and then distorted for a myriad of political and economic purposes since his death in 1946, still leaves room for some reflection on what the man really said and did. That seems to be what the University of Birmingham's Roger Backhouse and Denison University's Bradley Bateman undertook in this thin, but elegantly written and extremely thoughtful volume, Capitalist Revolutionary: John Maynard Keynes. This is not a technical economic tract; this is a book for someone who wants to understand how Keynes' ideas and habits of thought fit together (it includes a useful bibliographic essay to the Keynes industry at the end). While it deals with the broad outline of Keynes' economic ideas, particularly in the '30s when he published his masterpiece, The General Theory of Employment, Interest and Money, it also tackles the philosophical contexts that shaped his thinking and what the authors call "Keynes' ambiguous revolution," that is, how those ideas were revised and reshaped after World War II into a kind of orthodoxy, then rejected in the stagflation '70s, then embraced, debated and reinterpreted up to our own deeply confusing era. This is extremely useful, particularly in an age where we are once again hearing from movements like Occupy Wall Street that capitalism needs to be renovated or eliminated, or when, in a time of often-vicious partisanship, Keynes and Keynesianism is tossed around as a term of blackest opprobrium or unassailable wisdom.
As Backhouse and Bateman point out, there is a considerable difference between Keynesianism, the formalized expression in mathematical models of some of Keynes' ideas in The General Theory, and the man himself, who, despite academic training as a mathematician, did not advocate models (their description of how he uses algebra and language in The General Theory is superb) and certainly did not believe that any policy, or any prescription for economic health, would work at all times and in every circumstance. Keynes was a profound pragmatist; Backhouse and Bateman refer to him again and again as a diagnostician, responding to changing conditions in the economic body. As early as his best-selling Economic Consequences of the Peace, Keynes recognized how fundamentally different the global economy of the Edwardian age of his youth and early adulthood was from the post-World War I economy. This agile ability to recognize, discriminate and accept new economic realities requiring new economic "cures" led him not only to foresee the damage wreaked by the Versailles Treaty, but to argue against the reimposition of the gold standard in the early '20s and then to begin to reimagine key tenets of economic thinking associated with his own Cambridge elders, Alfred Marshall and A.C. Pigou. As Wapshott points out in "Keynes Hayek," and as Backhouse and Bateman elaborate, he was an enthusiastic debater and polemicist -- so knowledgeable and so articulate he scared people (including, famously, Bertrand Russell and Hayek). But he also had the rare ability to recognize a bad case -- and to change his mind. The General Theory resulted in great measure from what he viewed as the inadequacies of his earlier The Treatise on Money, with its mechanical "magic formula mentality."
As Backhouse and Bateman make clear, this attitude was deeply rooted in sophisticated moral and epistemological views that he had immersed himself in during his undergraduate days, through his association with the now-famous Cambridge Apostles and with philosopher G.E. Moore and later, art critic Roger Fry. (Skidelsky is particularly good in volume one of his biography in outlining the intellectual currents shaping Cambridge in those late-Edwardian days.) One aspect of this thought emerged in his first book, written as a thesis at Cambridge, on probability. Keynes argued, simply put, that it was impossible to generate any sense of the future, no matter the probabilities produced by the past. What's important here is less the details of that argument and more how they informed his central view of economic and market matters, notably what he saw as their profound uncertainty. Keynes later became a skillful and formidable speculator -- as the authors write, he made three fortunes and lost two -- but he never confused that game with a hard science and never doubted that accurate prediction, particularly in complex systems, was impossible. His ideas were contingent, fluid and flexible depending on conditions. Like other denizens of Bloomsbury, he didn't believe in eternal truths, and he was skeptical of tradition, beyond the virtues of art and friendship that were such a key aspect of Moore's thought; Backhouse and Bateman persuasively argue that Keynes saw himself as an artist, not exactly common in economic circles these days. It was more important for Keynes to act -- or rather for Keynes to urge government intervention -- to help those in distress, rather than remain passive to preserve some eventual theoretical purity. This empirical bent, this belief in action to alleviate distress and this skepticism about eternal laws and long-term equilibrium are what set him at odds with adherents of classical economics, from Hayek to Milton Friedman to the rational-expectations crowd. That flexibility, that willingness to change, made Keynes easy to caricature as a supremely articulate, fast-talking operator -- an apostate from the necessities of natural laws.
Today, Keynes's greatest divergence with latter-day thinking may lie in his view of economic thinking. He did not believe in the primacy it receives, politically and socially, though he recognized that people needed to live and work. In retrospect, one of the great differences between Keynes and the classical economists arises over how he viewed himself and the rest of humanity. Keynes had a complex view of men and women, born not just at those hothouse Apostles sessions but from his experience observing investment and speculation in the City. He did not believe that all men and women were, or should be, utility-maximizing automatons, behaving in eternal patterns that lurked beneath the noise of the markets. Keynes, particularly in the General Theory was a seminal psychologist of the markets; and Backhouse and Bateman argue persuasively that it was that combination of uncertainty and the recognition of how shifting moods and expectations can shape economic outcomes that allowed him to break free from the "magic formula mentality" and into the more open-ended theories and speculations that characterized The General Theory, and which proved so confusing to later, mathematically oriented economists, both "Keynesian" and non-Keynesian.
There's a lot packed in this small volume. Keynes' ambition, his worldly views and his diagnostic tendencies all lie behind the book's seemingly contradictory title: Capitalist Revolutionary. Backhouse and Bateman dwell on a large subject I've not seen linked to Keynes: thoughts, particularly during the Great Depression, on capitalism itself. Again, Keynes brings to bear on such a subject all the weight of his theoretical and moral considerations and all his considerable realism. Keynes, a longstanding (if occasionally heterodox) member of the fading Liberal Party, clearly recognized both the strengths and weaknesses of capitalism. He was, on some issues, closer to the Hayek of The Road to Serfdom than later caricatures suggested. But he did not believe that there were eternal laws and truths associated with free markets (or at least none that men could comprehend). Capitalism was unstable and he came to view his own role as saving capitalism from itself. Moreover, he did not believe that the end of all economic policy was the simple accumulation of material goods. Capitalism required, he wrote, a kind of "psychological equilibrium" to remain healthy. Backhouse and Bateman quote Keynes:
No man of spirit will consent to remain poor if he believes his betters to have gained more goods by lucky gambling. To convert the business man into the profiteer is to strike a blow at capitalism, because it destroys the psychological equilibrium which permits the perpetuance of unequal rewards. The economic doctrine of normal profits, vaguely apprehended by everyone, is a necessary condition for the justification of capitalism.
Writing about someone like Keynes who personally wrote so much, so well, must be a daunting task. Backhouse and Bateman more than keep up, not by competing with Keynes, but by letting him speak, in all his many voices. Their Keynes is not a secret socialist, or closet communist; not an apostate from classical economics; not some avatar of permissiveness and inflation. As they make clear in their discussion of Keynesianism after Keynes, his relationship with his own legacy is complex and ambiguous. He was not a man to be pinned down because he recognized that the world, which includes matters of economics as well as so much more, is neither simple, straightforward nor apprehensible by time-bound men armed with doctrines and dogmas. That alone is a lesson well worth revisiting regularly.
Robert Teitelman is editor in chief of The Deal magazine.