The History of Economic Thought, 62-2 (January 2021) pp. 88-89
Maria Cristina Marcuzzo, Essays in Keynesian Persuasion
Newcastle upon Tyne: Cambridge Scholars Publishing, 2019, xiv+362pp.
The book reviewed here consists of 15 papers (written between 2002–2018 by a prominent historian of economic thought) divided between “Part I Re-appraising the General Theory,” “II Cambridge Archives,” “III The Return of Keynes,” and “IV Keynes as Speculator, Investor and Reformer.”
A striking feature throughout is the reconstruction through unpublished letters and material of a theoretical and human struggle centered around Keynes. I have selected four topics that I found particularly stimulating for closer consideration.
The first topic is related to the Transition from A Treatise on Money (The Treatise, 1930) to The General Theory (1936). This topic is discussed in Chapters 2, 3, 6, and 7. Chapter 3 discusses it in terms of “natural evolution” or “change of view,” and supports the former. Elsewhere, the role played by Richard Kahn and Joan Robinson in the transition is emphasized.
I would agree on “the role” while I have a different understanding of “natural evolution” or “change of view,” which runs as follows (see my Keynes’s Theoretical Development, 2008, Routledge (KTD)).
Keynes continued to emphasize the dynamic analysis of The Treatise, but in response to the criticism from “the Circus,” he came round to the framework of short-term supply and demand analysis, and greatly transformed the model construction. Emblematic of this turning point is the draft “The Parameters of a Monetary Economy” (The Collected Writings of John Maynard Keynes XIII, Macmillan, 1973 (JMK. 13), pp. 397-405), in which five equations are put forward (KTD, p. 89).
The Treatise revolves around three mechanisms. Mechanism 1, which determines the price level and profit of consumer goods, and Mechanism 2, which determines the price level and profit of investment goods. These mechanisms deal with the determination of variables in each period. Mechanism 3, which determines the output in the next period based on the profit in the current period, deals with determination between the two periods. That is, the difference equation system (KTD, p. 59).
On the other hand, The General Theory is formulated as a model determining the volume of employment based on the aggregate demand function and the aggregate supply function. That is, the model of underemployment equilibrium in the short period (KTD, Ch. 13).
The second topic deals with Keynes as Speculator/Investor. I would evaluate the theme of Part IV (four chapters coauthored) most highly. His activities as a speculator and investor are investigated in great detail, making full use of his ledgers, letters [exchanged with Kahn], letters relating to trade directives, and so on.
Keynes was long involved in speculative activities on commodities (wheat, cotton, etc.), combining futures contracts, options, buyer’s option to double, seller’s option to double, and so on. Part IV evaluates his performance, showing that Keynes conducted activities based on meticulous forecasting and collection of mass of information.
The behavior of refining forecasting for speculation would always follow from the “money making” motive. In “A Short View of Russia” (1925), The End of Laissez-Faire (1926) and others, he scathingly censures the “love of money” deeply rooted in capitalist society. The question I might wish to address is how to reach a compromise in this state of affairs.
The third topic deals with Keynes as International Negotiator. This is discussed in Chapter 4, which covers Keynes’s negotiations with the United States in 1941–1946: the Lend Lease, and the IMF-IBRD establishment. The chapter aims at clarifying “his style of rhetoric and strategy of communication” through the Joint Statement (1944), Stage III (1945), and the Appeal in the House of Lords (1946). Here I would like to focus on “justice.”
During WWII, Keynes had the challenging position, among various others, of endeavoring to maintain the British Empire. In the negotiations on the international monetary system, he presented the Keynes Plan (the UK Plan), but through negotiations, he eventually accepted the White Plan (the US Plan) at Bretton Woods, and even worked to persuade the House of Lords to endorse the US Plan.
The fourth topic is related to The Economic Consequences of the Peace (The ECP, 1919). The ECP is discussed in Chapter 8. The main theme there is that the arguments Keynes used to persuade the public and governments were based on the principle of “reasonableness,” which ran through his subsequent writings. Reasonableness stands as his moral criterion, in opposition to “reason.”
I would rather see The ECP as evoking the dawn of “social justice,” a component of Keynes’s social philosophy (“New Liberalism”).
He held an important post representing the UK at the Paris Peace Conference and advanced a major proposal for the reconstruction of Europe , but in vain. He then determined to resign the post. He not only published The ECP but also newly brought out the magazine, “The Nation and Athenaeum,” which he continued to use as a platform to make critical analyses of the turbulent political and economic situation in Europe. In this regard, “The Peace of Versailles” (Everybody’s Magazine, September 1920 (JMK. 17, pp. 51-77) is noteworthy, particular stress being placed on “social justice.”
While continuing these activities, Keynes also went on with formulation of his social philosophy, summed up as “New Liberalism.” It comprises three main pillars: “economic efficiency, social justice, and individual liberty” (JMK. 9, p. 311). The proposals he advanced showed constant preoccupation with “social justice.”
This book clearly demonstrates the author’s wide range of intellectual interests together with keen exploration of unpublished letters and materials. I would thank the author for providing some new and very welcome food for thought.
（Toshiaki Hirai: Emeritus Professor, Sophia University)
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