Keynes and his Battles. By Gilles Dostaler. Cheltenham (UK) and Northampton (USA): Edward Elgar Publishing Ltd., 2007. vi; 374 pp. Toshiaki Hirai (Sophia University)

Keynes and his Battles. By Gilles Dostaler. Cheltenham (UK) and Northampton (USA):

Edward Elgar Publishing Ltd., 2007. vi; 374 pp.

Toshiaki Hirai

(Sophia University)

So far no economist has emerged to surpass Keynes in the impact he has had not only in economics but in other fields as well. That phenomenon of powerful economic theory and social philosophy that came to be called the “Keynesian Revolution” is the most widely-recognized aspect of his extraordinary reach, but it does not stand alone as his only major achievement.

              As a young economist Keynes contributed to the development of philosophy and logic under the influence of G.E. Moore and Bertrand Russell. He was an intellectual leader in the Liberal party and a central figure in the Bloomsbury Group. He was, moreover, an eloquent and inexhaustible debater, celebrated, among other rhetorical coups, for his denunciation of the Versailles Treaty. His wide-ranging activities included patronizing the arts in earnest, managing insurance companies, and taking on responsibility for the financial management of King’s College. He also played a leading part in designing the new world order after the Second World War. And, surprisingly enough, he was able to pursue many of these activities simultaneously. His interests seemed to extend in every direction, and his brain worked at an extraordinary rate.

              This book brilliantly analyzes and describes Keynes the human, bringing light to bear on his manifold activities and looking at Keynes’s life in terms of persistence and continuity rather than inconsistency and discontinuity. A list of the chapter headings provides some idea of the scope of this volume: ch..2 Ethics; ch.3 Knowledge; ch.4 Politics; ch.5 War and Peace; ch.6 Money; ch.7 Labour; ch.8 Gold; ch.9 Art. In this space, however, I can only discuss a few of the many thought-provoking topics that are included.  

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The so-called “secret” society of the Apostles and later the Bloomsbury Group had a profound influence on Keynes’s way of thinking and, indeed, on many aspects of his way of life. First, like his friends Lytton Strachey and Leonard Woolf, among others, he was greatly impressed by the ethics of G.E. Moore. That influence can be seen in the two areas of Keynes’s ethics and his work on probability. Starting his study on probalility with  his critique of chapter 5, “Ethics in Relation to Conduct”, of Moore’s Principia Ethica, Keynes wrote a dissertation for his King’s College fellowship, and that work was finally published in 1921 as A Treatise on Probability. The author places emphasis on uncertainty as immeasurable. (He is right, and yet, in my perspective, Keynes defines probability as a degree of rational belief between propositions which should be objective, and tries to prove induction in terms of pure logic.)

              Second, Keynes was deeply involved in the Bloomsbury Group, which generated a new culture in literature, painting, and beyond. The members shared Moore’s “religion,” were anti-utilitarian, and rejected the discrimination against women that still prevailed at the time. It was a group that fused the Apostles’ mindset with the artistic values of Post-Impressionism and the new movement in literature. The members were, in essence, individualistic liberals, exalting human relations and beauty and disregarding social conventions. This spirit of the Group was deep enough to support a miraculously enduring friendship in spite of its extremely complicated relationship, which is vividly and brilliantly described in the book.

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From his early youth Keynes showed a great interest in politics, as demonstrated, for example, by his stance on the Boer War. When the First World War broke out, Keynes was asked to join the Treasury. He accepted, despite the fact that at the time he was very busy trying to get his Probability published, with the help of Russell and Broad. He ended up suspending that effort, and consequently he had to wait eight more years to see his book published.

              The war, which was to change the world fundamentally, caused a severe tension between Keynes and the rest of the Bloomsbury group. And yet he demonstrated his ability and showing confidence as a high official, leading the UK through the tough negotiation with the USA in finance. But finally he was deeply disappointed with the development of the Paris Peace Conference, and made proposals for reconstructing Europe along lines of the “Grand Scheme”.

              In the 1920s Keynes was heavily involved in the Liberal Party through management of the Nation and Athenaeum, the Liberal Summer School, and so forth. He advocated “New Liberalism” – the mid-way path between liberalism and socialism. However, his political activities took a convoluted path, reflecting the political situation then reigning in the UK. He belonged to the Asquith camp, but later turned toward Lloyd-George. After the fatal defeat of the Liberal Party, Keynes moved toward the Labour Party, and indeed his socio-philosophical and economic ideas were to show up in the thinking of young Labour Party politicians such as Dalton and Gaitskell. Eventually, however, he became a Liberal Party member in the House of Lords. These activities and the complicated political changes Keynes experienced are brilliantly portrayed in this book.

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In my view The General Theory sees the market economy as possessing two contrasting aspects: (1) stability, certainty, and simplicity; and (2) instability, uncertainty, and complexity. Keynes’s fundamental perception of the market economy can be summarized as: The market society is stable in the sense that it can remain in “underemployment equilibrium”, but if it goes beyond a certain limit, it becomes unstable.

              In the book reviewed aspect (2) is stressed, while aspect (1) is somewhat overlooked (The author argues that aspect (2) can be traced to The Probability). The author is correct to some degree, and yet I would add that The General Theory would never have won such success had it been lacking in aspect (1). In fact Keynes brought aspect (1) to the fore whenever he expressed his view in the field of economic policy.

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              This volume might have more benefited by referring to Keynes’s colleagues, such as Robertson and Hawtrey, for they were not classified by Keynes as “classical economists.” But this might be a task for another volume. The book is very readable, and it is a valuable and contribution to understanding Keynes as a human being endowed with extraordinary and multifaceted talents.

Keynes as a planner and negotiator Toshiaki Hirai (Sophia University)

　

Keynes as a planner and negotiator 　　　　　　　　　　　　　　　　　　　　　　　　Toshiaki Hirai (Sophia University) 1. The starting point 2. The International Clearing Union (the Keynes plan) 　　2.1. The process up until the Keynes plan 　　2.2. Principal features of the Keynes plan 3. The International Stabilization Fund (the White Plan) 　　3.1. UNSF: White Plan [Ia] 　　3.2. BRD: White Plan [Ib] 4. The two plans compared 　　 　　4.1. Awkward relationship 　　4.2. The ICU plan as publicized 　　4.3. The two plans reviewed 5. The integration process between the two plans 　　5.1. Monetisation of unitas 　　5.2. The final phase of the negotiations 6. The Atlantic City, Bretton Woods and Savannah conferences 7. Keynes’s stance shown in the international monetary system 8. Addenda 　　8.1. Relief and reconstruction 　　8.2. Commodity problem