What Would Keynes Do?

This election has been about everything but the economy, stupid (according to John Harwood of The New York Times). Americans are split right down the middle—48 to 48—on which candidate will handle money matters better; instead the wedge issues are tolerance, territory, immigration, constitutional rights, political (and factual) correctness. Why is that?

There are a lot of theories bouncing around this week, and we imagine them all overlooked by John Maynard Keynes, the economic wizard behind the Bretton Woods world order and the boom years between 1930 and 1970. He may have been the last genius of economics who also understood human life, in all its excesses and “animal spirits.” What would his keen mind have brought to a moment with so much ambiguity? 

1. We’re on the comeback.

Harwood argued last Thursday that the lukewarm economy gives neither side an advantage: the Obama recovery was neither strong enough to gloat over nor weak enough to attack.  

But early this week, a Census survey of economic indicators revealed that in fact, 2015 looked like a historic uptick: median household income rose 5.2%, the biggest jump since 1967. 3.5 million Americans climbed out of poverty; unemployment dropped to 4.9%, half its post-crash high. All three stock indexes have hit record highs, and more than half of Americans say the economy seems “good”—there’s genuine relief in the air.

2. But we’re still a long way from “morning in America.”

Yet 60% of Americans still think the country’s headed in the wrong direction. The median wage may be up this year, but it’s still below its balmy 1999 high. The body is recovering, but the collective psychology is still anxious and depressed. When people look in their wallets—or toward their futures—they feel shortchanged and blame Washington. 

Our guest, the protest journalist Sarah Jaffe, calls attention to the people who are really still feeling the squeeze—of anti-Keynesian austerity and casino capitalism, for example—in her new book, Necessary Trouble. It’s a chronicle of people on the march against punitive student debt, foreclosures, and slashed public budgets—and for moving the conversation forward.


Protestors in the Wisconsin State House in Madison, 2011 (Andy Manis/AP).

3. Growth may be ending.

Heavy-hitting economists like Larry Summers have started to worry aloud about “secular stagnation”: a period in which growth itself may slow—or stop—in our Energizer-bunny economy. What would that mean for the American dream, which depends on rising wages buying more and better goods at cheaper prices?

4. But our minds are changing, too.

A radical shift that the new bipartisan consensus emerging in the candidates: that signing onto NAFTA, letting infrastructure languish, and cutting spending was a mistake—in short, that the government still has a stimulating role to play in the American economy. 

To make the case, our good friend Mark Blyth—the Brown University political economist whose magisterial book Austerity: The History of a Dangerous Idea lowered the hammer on the false promise of cut budgets. Mike Konczal, one of the big-thinking financial reformers and fellows at the Roosevelt Institute, will make the case that this fraught election might be concealing a new and healthy economic consensus.


Finally, Lord Robert Skidelsky paints us a portrait of Keynes himself, as a cosmopolitan elite who nonetheless empathized with those out of work and on the dole. Keynes is the kind of economist we wish we still had around, offering not only timely economic prescriptions (extend global financial regulation, double down on government infrastructure spending, experiment with basic income plans), but also a model—of a holistic, cross-disciplinary, concerned mind:

The master-economist must possess a rare combination of gifts …. He must be mathematician, historian, statesman, philosopher—in some degree. He must understand symbols and speak in words. He must contemplate the particular, in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must be entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood, as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.



Guest List
Mark Blyth
Brown University economist and author of Austerity: The History of a Dangerous Idea.
Sarah Jaffe
Nation Institute Fellow,  independent journalist, and author of Necessary Trouble: Americans in Revolt.
Mike Konczal
fellow at the Roosevelt Institute, economic commentator, and blogger at Rortybomb.
Dani Rodrik
globalization economist and author of Economics Rules.

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  • Pete Crangle

    The Eschatological Class Struggle Blues or: Groundhog Day Redux

    “The little crash of 2008 was a reminder that unregulated capitalism is its own worst enemy: sooner or later it must fall prey to its own excesses and turn again to the state for rescue. But if we do no more than pick up the pieces and carry on as before, we can look forward to greater upheavals in years to come.” Tony Judt, “Ill Fairs the Land”

    “If Steiner attacks, everything will be alright.” — Adolf Hitler, from the film “Der Untergang (Downfall)” 2004

    The US political-economy casts an eclipsing shadow across a multipolar world and global events. It is an Empire that wraps its Imperial Project around itself. Its Imperial Project is its de facto junkyard dog; a junkyard dog that kills itself at alarming rates when trying to re-domesticate itself. The US political-economy, floated by debt, serves up a disproportionate amount of per capita misery. It is host to corporate power that makes its moves using an oligarchic approach (Libor 2015, anyone?), enabled to some extent by the opacity of its ugly twin, corporate plutocracy. This is part of a business philosophy that considers lawlessness the cost of doing business. Too Big Too Fail, means Too Big Too Jail. Too Big Too Jail means excessive and rapacious behavior with little to no internal restraint. A lack of restraint begins to exhibit cancerous behavior patterns writ into the culture.

    The courtier press, and the political class, are fully embedded through socialization, conformity, and opportunistic financial reward. We overhear them report to themselves a constant stream of indifference that borders on raw propaganda and mass psychological control. In a consideration of the current state of things, and the possibility of a tabula rosa corrective, it seems prudent to mention the real and serious import at this time of political and cultural dysphoria. We are observing and contributing to a slow moving apocalypse of our moment.

    The US working class, fragmented and declining (2015 an anomaly?), is in a state of restless, angry tentativeness. There is a mood of frustrated urgency tethered to an uncommitted path out of the fury — an inchoate interregnum of sorts. The situation is larger than deindustrialization, though this is an important trajectory to observe within the US. After several jobless recoveries due to improvements in productive capacity, expanding deregulation, fast-track ‘trade’ deals, and globalization, there has been simultaneously a series of bubble economies fostered by over-leveraged markets without any restraint or commitment to the common good. The working class finds itself struggling to not only find its purpose for existence, but its survival legs in the wake of massive economic jolts and upheaval.

    Adding insult to injury, the jobless recovery economy watches elite forces thriving by virtue of their predominance, and through the protections of a paycheck-to-paycheck, taxpayer funded backstop, as well as, a Praetorian Guard that materializes as a permanent war and domestic security and surveillance apparatus. It’s never been better to own a piece of the state security and war machine, and conglomerate media ownership reports the spectacle of the ups-and-downs carnage without much critical thought or commitment to enable a citizenry. How many advocates for the Iraq war have been held accountable? ROS has done excellent work on this question. Thank you Chris and Mary!

    It is plain and clear that elites hope to maintain uni-polar, global supremacy in a world of growing multi-polar centers of power. It explains a couple of things: Why the DOD and the joint chiefs are woven into strategy and tactics of the current trade agreements of TPP, TISA, TTIP. Why political parties are structurally tied to both the deep state and neoliberal economic policy. And also, why we observe the collective flourishes of irreality from the status quo mouthpieces and communication organs — both Sanders and Drumpf campaigns were surprises to the Op-Ed, pundit, and polling class.

    Events are in the driver seat, and it is events that are shaping opinion, not so much corporate mouthpieces, not so much political operations, not so much public relations — the focus group engineers are scurrying to catch up, and hope to co-opt the fury; it’s worked before. Focus group social engineering tends to shape and architect, not lag. As such, I think it possible to infer there is a widening gap, an increasing estrangement from reality that has taken hold of the mainstream, conformity demographic within the US political-economy.

    To the contrary, within the consumer laity, there seems to be a critical mass of general consensus about where we are at now. We are at a dark moment in human history, with increasing pressures on arrangements that previously insured not only survival, but a hopeful future. This is not a time for happy talk or PR bromides. We are well past that; at least for the time being. Morning in America is a hang-over, not a gleeful first step into the journey of manifest destiny. Americans are feeling its trials of Job.

    Self-governance can be dangerous and untidy. You can see this tenor displayed at Candidate Drumpf rallies, and you could observe it in a more optimistic version displayed at Candidate Sanders rallies. This has generally been reported by corporate media using the encapsulating terminology: populism. Some pundits have blistered the working class, the working poor, with tone deaf tongue lashings suggesting the wage slave class needs to come up to speed and accept its migrant bridle, and get in touch with the U-Haul, gig economy. This is an example of how out-of-touch the elite pundit class has become. It is that kind of rhetoric that will reap backlash.

    I see it as moral energy searching for renewal; in the case of Drumpf, renewal made by ethnic, cultural, and religious cleansing, which all serves and paves the way to a grand economy where the whole of the world is laid out like a Las Vegas strip. In the case of Sanders, a return to government as a reliable partner for self-governance; that is, participatory government as arbitrator and the means to prioritize societal problems, and the means to distribute resources for repair and redress.

    Candidate Clinton is, IMO, a reactionary candidate given the downward pressures on the working class, though it is the reaction against amassing forces of discontent. Her campaign, and historical rhetoric, are an argument for status quo policy machinations of incrementalism based upon American exceptionalism; an exceptionalism controlled by elites and technocratic wonks. Candidate Clinton is in my opinion, the Janus candidate of this election — made so not by personality, but by cultural context. Show me any professional politician, and I can probably find at least two ways they’ve split the policy baby. Only fanatics and nincompoops are fueled by a moral consistency.

    It would appear we are at the bottom of saddle point of Beckettian proportion: We can’t go on, we must go on. Fail again, fail better, etc. The discontent is palpable, and it is real. Voting is probably not going to assuage the discontent. At such a point, it maybe wise to look behind us, to understand where we are at. It is prudent to look to the arts and humanities, for they give voice to times of demonic inertia that wish to drive us mute by madness.

    As a coping mechanism, I recommend listening to the blues to understand the joy in the act of endurance; even when that endurance is in the face of conclusion. Listening to the blues, a deep and close listening, is an act of political resistance. It always has been. Blues is the expression of resistance that reaches out beyond the constraints of time and space. The blues is eternal, because the condition it finds itself in, is eternal.

    The 1850s were a hothouse for rhetorical mavericks. As Chris reminds us, Emerson was one of its amazing forces. Frederick Douglass was another, perhaps his key a bit towards the minor of Emerson. As an example of political resistance, let us commune with some rhetorical blues from a blues master, and as you read these words, consider where we are, and what the candidates and market forces are offering as a way out of the stinging truth of our current crisis. It is as if both Emerson’s and Douglass’ words, were pitched to us across space and time, just for us, with little variation necessary to understand in our moment:

    “This struggle may be a moral one, or it may be a physical one, and it may be both moral and physical, but it must be a struggle. Power concedes nothing without a demand. It never did and it never will. Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them, and these will continue till they are resisted with either words or blows, or with both. The limits of tyrants are prescribed by the endurance of those whom they oppress. In the light of these ideas, Negroes will be hunted at the North and held and flogged at the South so long as they submit to those devilish outrages and make no resistance, either moral or physical. Men may not get all they pay for in this world, but they must certainly pay for all they get. If we ever get free from the oppressions and wrongs heaped upon us, we must pay for their removal. We must do this by labor, by suffering, by sacrifice, and if needs be, by our lives and the lives of others.” — Frederick Douglass, “If There Is No Struggle, There Is No Progress” (1857)

    Yes, this is the blues. Clear eyed. Unblinking. Courageous. Full of a state of grace that the blues can arouse within a state of nature. I rejoice in its honesty. One person’s polemics, is another person’s analysis and call to action.

  • christopherlydon

    From our friend Parminder Bhachu at Clark University:

    Your Keynes program – where were the women, my friend? I have read the 3 volume set in by Robert Skidelsky – with Keynes’s wonderful passionate letters to Duncan Grant in them. They are memorable. However, the women you left out completely : Lydia Lapokova the Russian Ballet dancer, whom he married and who brought out the most innovative creative side of him intellectually, culturally etc a time during which time he did his most innovative work. This most un-English woman took him away from the Bloomsbury women who had a complete inability to get on with anyone other than the tiny English class fraction they were part of as Francophile Anglo-Saxons – and who hated Lydia Lopokova and tried to oust her from Keynes’s life with all their might, whose artistic enterprise Keynes with his considerable wealth supported for many years till he married Lydia. Go see Charleston in Sussex –perhaps you have already seen it — close to Virginia Woolf’s home that was funded by Keynes and where his lover Duncan Grant lived who also had a relationship with the artist Vanessa Bell. Lydia Lopokova freed Keynes of his English inhibitions and from his constricting upper class English literati/artistic social circuits – and much more. His economic theories were a facet of his relationship with a “foreign’ woman who had none of the English inhibitions he was socialized to … I have much more to say about this. And read the book Bloomsbury Ballerina – can’t remember the author now.

    Here is a Guardian article on their marriage by the author of Bloomsbury Ballerina: https://www.theguardian.com/stage/2013/may/06/niall-ferguson-keynes-marriage-sex?CMP=share_btn_link
    Niall Ferguson got it wrong. Read the book. I liked it a lot.

    So I got a bit bored during the program even though Skidelsky did a good job of Keynes’s polymath-ness. You could have framed your program in a way which was both about the increasing relevance of Keynes to contemporary life and why and the men and women who made an impact on his sexual and professional life and influenced his economic theories – that would have been a more enticing, smart, seductive program to be drawn into. Perhaps that’s too much to ask for. So there- my two cents!! or is it four cents?

  • Pete Crangle

    Found some time to listen to this late yesterday from the ROS archive. Excellent conversation.Superb guests, all of them; Professor Blyth is always superb.

    I ponder how Keynes would reconcile a *permanent* war economy? Would he find this somehow orthogonal to capital markets, or a logical part of their existence, or something else entirely, more psycho-philosophical in nature? Modern, industrial war has always been tightly coupled to the investor, speculator class. War is not merely an instrument of death in an existential arena, it creates investment opportunity that can generate monumental revenue streams. Of course, this requires the exploitation of the general population on all sides of a conflict, endless stream of victims, and it requires a permanent enemy list that is never reconciled. Permanent war is a highly incentivized disequilibrium (morally and physically).

    Thank you Mr. Larkin for all of your good works. I wish you safe travels, good fortune, satisfying work, inspiring intangibles, the fullest of life’s offerings … take care.

  • Joe Herosy

    In the public sphere, the discussion of big economic theory is spun as government repression vs. individual freedom. The conversation here reveals a more complicated (not by much in itself but only in comparison with the mainstream media spin) and interactive relationship between government and the economy. In the current post Kenyan economy that began in the late 70’s, the freedom of individuals has been reduced drastically as our economy has become in fact far more centralized due the many changes outlined in this program. These changes may not have the outward appearance of a government economy but they have been enhanced and even created by government policy due to the huge increase in legalized corruption (campaign finance, lobbying ect).

    It seems implied by the thoughts expressed by John Harwood and Sarah Jaffe (and Chris Lydon) that this idea of a true economic freedom for all is accepted, but I’m not sure because I don’t quite hear it expressed in these terms. Any thoughts on this are welcome! As long as the phony but compelling narrative of freedom from government is allowed to dominate, then any attempts at changing in economic policy seem bound to fail.

    It all goes back the relationship between community and individual freedom. Even though these are often seen as conflicting principles (especially enforced by the cold war an again by the post Regan conservative revolution ), many of us are becoming more aware of the idea that we need a strong community to allow our individual freedom to thrive. It seems we need to not only expose how the community interacts with individuals but to create a narrative that reflects this anaylisis in order to make our democracy succeed.

  • Hope there’ll be room for the other side of the “Battle of the Century”. Here in rap form:

    There could even be a crossover with Russ Roberts’s EconTalk podcast.

    Many of us dislike either neoliberalism (Hayek) or social liberalism (Keynes). Even then, we may find some insight in what Steven Berlin Johnson has called “Peer Progressives” as well as in the way Global Inequalities have been shaped through the so-called “Washington Consensus” (from Keynes to Thatcher, Roosevelt to Reagan, IMF to World Bank).

    In other words, please bring some of the other sides of the story. One step could be to move from macroeconomics to microeconomics. Another could be to look at the growing importance of non-market exchange (say, with Yochai Benkler). And, of course, you’ll dig deeper in the “Future of Work” angle from transhumanism and Blockchain to Neo-Luddism and pre-/post-/para-industrial leisure societies.

  • Floyd C. Wilkes

    Paraphrasing Mr. Blyth: yes in the long run we’re all dead, but the key to curing our current economic ills hinges upon understanding the adverse consequences and imbalances engendered due to too highly-concentrated, ill-employed reservoirs of accumulated capital (hyper-financialization) all accompanied by severe income-wealth inequality i.e. how large pools of capital become increasingly financialized rather than recirculated as wages and into new, innovative means of production; meanwhile meager wages diminish household incomes leading to a decline in purchasing power and subsequent decay in aggregate demand; consequently engendering disincentives to, and weariness towards investment in production. A deflationary, vicious cycle of stagnation ensues. In this round, the Fed responds by prescribes Quantitative Easing but with little real-positive impact and result in terms of addressing the core issue (meager wages and subsequent decay in demand). In fact one could argue that QE serves to inflame the problem and further amplify distortions. In short, the key issue is severe income-wealth inequality and hoarding and the myopic pursuit of ROI. The commonwealth rots while the capitalist cries more!

  • Floyd C. Wilkes

    How about this Sarah for starters as prescription for our woes:

    1) Reduce inefficient discretionary public spending (military) and repurpose a portion of those funds into investments in education and improved infrastructure without compromising our qualitative military advantage and readiness?

    2) Rather than using Quantitative Easing to enrich the firms, architects, engineers and shareholders of the ’08 collapse, let’s use QE to eliminate all publicly-held student debt in a single stroke? Liberate the millenials!

    3) Discard our egregiously expensive and inefficient healthcare system in favor of a single-payer system (medicare for all), thus reducing costs and improving outcomes while increasing the amount of household income currently available for consuming locally-produced goods from locally-owned firms paying a living wage?

    4) Vote with one’s dollars for the change one wishes to see in the world! Move your money into a local credit union and help end ‘too-big-to-fail’ by refusing to transact with mega-corporations that dominate and manipulate markets (a market that can be manipulated is not “free” i.e. competitive) such as the ExxonMobils, Walmarts, McDonalds, and Wells Fargos of the world? The same mega-firms that also co-opt our political sphere to their further advantage. Let’s put the demos back in the democracy at the root of our federal republic.

  • Floyd C. Wilkes

    Perhaps if CEOs ascend the throne of their fiefdoms with a deep sense first and foremost of fiduciary responsibility to the commonwealth blazing in their corazón, and only a secondary sense of responsibility to enrich shareholders, the well-being of all-beings and the ecological coherency that sustains life on the planet would fare far better?

  • Potter

    This Keynes show is a nourishing meal, a contrast to the junk food floating around during this perilous season. Thank you Chris for how prepared you always are, for every first class guest here: the inimitable and lovable Mark Blyth, Ms. Jaffe, M. Konczal, the biographer R. Skidelsky, and Dani Roderick (with whom I agree). Skidelsky on Keynes impressed me. Keynes view of the future was particularly interesting. Perhaps a system that allows people to have their leisure with security, enough leisure plus some satisfying work, would be ideal for the “general welfare” and, as well, it would or could promote education, innovation, and creativity, including efforts towards solving critical problems.

    Thank you Max Larkin, including for your interesting emails; always something to explore from them. Best wishes in everything you do.

  • Potter


    We were at Mechanics Hall the other night. Patti Lupone was appearing, she sang from the great American songbook…. but the hall itself is something to contemplate. It’s one of our great concert halls. And we almost lost it after the postwar period, when the decline of the middle class began. There was a time though when culture belonged to everyone, was important even to workers.

    from Wikipedia

    Workers in Worcester formed the Mechanics Association in 1842 to help members develop the knowledge and skills to manufacture and run machinery in the mills. In 1857 they built Mechanics Hall to house educational and cultural activities. Mechanics Hall featured a large concert hall on the third floor. Its acoustics enabled audiences to hear speakers’ voices and music distinctly without benefit of the as-yet-not-invented electronic amplifier…..

    I like this quote from Adam Smith via Corey Robin:

  • Potter