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The Shaky Foundation Of Keynesian Economics

The “new economics” of John Maynard Keynes and his legions of academic acolytes was sold to the world on the basis of being a scientific advance over the outmoded dogma of classical economics. Keynes even titled his magnum opus The General Theory of Employment, Interest and Money in order to be reminiscent of Einstein’s General Theory of Relativity.

John Maynard Keynes

John Maynard Keynes

As Forbes columnist Paul Johnson points out in the beginning of Modern Times, Einstein’s scientific discoveries were widely popular and various ideological movements attempted to tap into that popularity, portraying themselves as being like Einstein, heroically following the empirical evidence into the future, leaving superstition and primitive theory behind.

The problem, as Johnson also points out, is that the new ideologies were nothing like Einstein’s theory: They were based on pseudo-science; they ignored, or even suppressed, contrary empirical evidence; and Einstein’s well-grounded theory that space was relative in no way vindicated fads that said truth, reason, foundational principles or morality were likewise negative.

The great ideologues of the Victorian era, Marx and Freud, saw all human action as either disguised economic self-interest (Marx) or sublimated incestuous sexual desire (Freud and…ick!). Keynes chose Freud, mostly, and saw economies as essentially being driven by unconscious, pre-human impulses (animal spirits).

None of the three men, however, were what they represented themselves as being: scientists ignoring outdated modes of philosophical reasoning, following the evidence wherever it might lead. Keynes, as Marx before him, chose his foundational worldview. He didn’t induce it from the data, nor deduce according to the laws of logic, he adduced it. He chose the worldview which allowed him to be the kind of man he wanted to be.

Much has been made about Keynes’ homosexuality by both admirers and detractors. The admirers held that his androgynous complexity allowed him to tap into a masculine rationality and simultaneously a feminine creativity. Some of his detractors, for example on the religious right, used his lifestyle as a kind of ad hominum attack, arguing thus:

Gay is bad (which doesn’t have quite as much traction as it did in the 1980s)

Keynes was gay

Keynes is bad

Therefore Keynesian economics is bad.

The fallacies in this reasoning are obvious.

A more nuanced version of this argument has been made by other critics — for example the supply-side pioneer Lewis Lehrman, who said, “I have five children. I have a vision of the future. Keynes had no children and no interest in getting involved in any relationship which might make possible their procreation. He was inherently short-run in his viewpoint.” Some Austrian economists have made the same argument.

But I think that there is a bigger issue here than guilt-by-sexual-association or even the ways in which marriage and family connect us with the future. Keynes’ sexual ethic was just a small part of an overall life orientation.

He and his fellow members of the Cambridge Apostles were firmly committed to an agenda of overthrowing every element of the Victorian society from which they had sprung. The rejection of thrift, or of any economic principles at all were of a piece with the rejection of any system of objective truth, any objective moral code, any form of theism and old-fashioned notions about standing up to the Germans, whether under the Kaiser or later under the Führer. In other words, the whole societal order was to be overturned.

G.E. Moore attacked traditional philosophy and theology, Lyton Strachey’s job was to use literature to debunk Victorian principles of self-restraint, and Keynes was to demolish classical economics, sound money and the virtue of thrift. The sex was only a part of it, and probably a subordinate part of it as well.

The apostles were committed to an ideology of the superiority of male intimacy over male/female intimacy not because they were born gay (many of them lapsed into heterosexuality once they were away from the club, some members having feigned homosexuality in order to be included in the group,) but because they saw all of Victorian society, which they hated, as a coherent whole. The salient point here is that they were not men who spent their professional lives following the evidence wherever it led: They had decided where it was all going to lead by their sophomore year of college! They chose the men they would be early in life and went about justifying that decision for the rest of their lives.

Read the entire article on the >Forbes website (new window will open). Reprinted with permission of the author.

Published: June 24, 2011

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