Policy Research in Macroeconomics

Mr Keynes’ Revolution

Book Review, Mr Keynes’ Revolution: A Novel, E. J. Barnes, 2020, Greyfire publishing.

In Mr Keynes’ Revolution, Emma Barnes makes Keynes the subject of a novel, and does so brilliantly. I cannot recommend the book highly enough to anyone interested in Keynes and wanting to get a sense of what he – and his economics – is about.

I am no literary critic, but found the story-telling dramatic, highly engaging and touching. Above all (for me) Barnes has a powerful and sophisticated sense of the political and social backdrop against which Keynes began to formulate his economics, and portrays (or imagines) very effectively establishment efforts to rein him in.

Covering seven years from the end of the First World War, the central economic theme is Britain’s return to the gold standard. Great that Barnes does not fall for the too-high-sterling-parity line: Keynes objected to the system as a whole.

I hope it’s not a spoiler to identify as pivotal a famous dinner with the then Chancellor of the Exchequer Winston Churchill and various other players.  Unlike his Labour predecessor (Philip Snowden), Churchill at least wants to understand the argument against a return to the gold standard. Barnes rightly puts these works into Keynes’ mouth:   

“You are selling out workers in the heavy industries, who have already suffered enormously since the war, for the sake of financiers and the owners of capital. If there is such a thing as a social contract, you are breaking it, and those workers will feel betrayed”.

Concluding the discussion at the table, Churchill finds “something that trumps any issues of fairness between mere groups, and that is the national interest”. Nonetheless, afterwards in a nicely done private exchange, we see Churchill at one with Keynes’s warning that the real threat of revolution comes from economic dysfunction caused by failed economics.

With this focus Barnes does the great service of reminding us that the central aim of Keynes’s initiatives – throughout his life – was to prevent crisis. No matter how widely believed, it is wrong that his main concern was fiscal policy to resolve crisis.

Illustrating the many facets of his life, the cast of supporting characters is so well chosen:  in particular, Oswald Falk, business associate, Sebastian Sprott, thwarted ex-lover, Otto Niemeyer, rival and Treasury mandarin, and a nice touch with Keynes’s servants (interestingly the original motivation for Barnes’s work).

Above all I like Barnes’s Keynes, and I think it right that we like him. I was greatly touched by the story throughout of his love for the famous ballerina Lydia Lopokova, and really moved by the end. Against this, some of Keynes’s Bloomsbury friends are set in a harsh light.

I should declare an interest: I have spent much of my adult life studying Keynes and want to convince others that his work is no less relevant today. Inevitably I have quibbles but very minor ones. Barnes follows convention and treats harshly ex-chancellor, and then Chairman of Midland Bank, Reginald McKenna, but I sense McKenna is a greater figure and his relationship with Keynes much stronger. (I recall that the civil servant Percy Grigg – who also attended the dinner with Churchill – is the only source here, and suspect him as not disinterested).  Alarm bells rang when Keynes ponders “the stickiness of the real economy” (not my emphasis) – please, please in future instalments can we not have a ‘Keynesian’ Keynes?! In a similar way I am sceptical that Keynes came to regard as invalid the whole of the analysis in his Treatise on Probability following his Cambridge colleague Frank Ramsey’s critique – not being alone in regarding the thinking here as precursor of his later treatment of uncertainty.  And while Bloomsbury’s treatment of Lydia was certainly not their finest hour, my sense was always that they came to regret this.

But these should not detract from a valuable contribution to an immense and very much unresolved literature. My favourite episode comes when Keynes goes to visit a dying Alfred Marshall, his mentor. Marshall asks him of “the powerful”: “Do you really think they’ll let you win?”.  An excellent question.

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