MY TOP SHELF: 33 – Keynes


[These are serialised extracts of all the fifty books referred to in a book published in 2015 called ‘The Top Shelf, or What Used to be Called a Liberal Education’.  The extracts are as originally published, and they come in the same order.]



John Maynard Keynes (1919)

Reprint Macmillan and Co., 1920; rebound in quarter vellum with cloth boards, and red label with gold letters.

The glory of the nation you love is a desirable end, – but generally to be obtained at your neighbour’s expense.

Even those who do not believe that economics is no more than voodoo with figures complain that economists are much longer on explanation after the event than they were on prediction before the event.  These complaints were very loud in the Great Financial Crisis.  But you could not sustain that charge against John Maynard Keynes.

Keynes was educated at Eton and King’s College Cambridge.  He was very, very bright.  He went through the apparently required gay phase while he was a member of that frightfully precious crowd called ‘The Apostles.’  Later he settled down completely and for life with a distinguished Russian ballerina.  She could divert the dons with her views on homosexuality.  She said it was okay with boys – they have something to hang on to; but how could you have an affair between two insides?

Keynes was coming toward his prime at the age of 35 when he went to Paris as part of the British delegation to negotiate the peace to end the Great War.  He was revolted by the meanness and short-sightedness of France and Britain, and the weakness and ineptness of President Wilson. He left the delegation and went home to write The Economic Consequences of the Peace in something like white heat.  It is a beautifully composed polemic that was an instant smash hit.  But those in charge – not one of whom had the intellectual horsepower of Keynes – did not want to listen, and we are still paying the price.

Keynes set out to show that the Treaty was aimed at the ‘systematic destruction of all three’ pillars of the German economy and that this would lead to hyper-inflation, German bankruptcy, and German revenge.  He was dead right, and about 20 million would die.  France wanted to go back to 1870, but this ‘Carthaginian peace’ was neither ‘right nor possible’.

Keynes gives brief portraits of the main players.  Clemenceau, ‘dry of soul and empty of hope, very old and tired’ just sat there on his brocade chair with his grey suede gloves.  ‘He had one illusion – France; and one disillusion – mankind, including Frenchmen, and his colleagues not least…’His guiding star was that Germans only understood intimidation.  You must not negotiate with a German – you just dictate to him.

Lloyd George had ‘an unerring, almost medium-like, sensibility’ to everyone around him; he had ‘six or seven senses not available to ordinary men.’  He was the best of ‘the subtle and dangerous spellbinders’.  What chance had the aging Presbyterian Wilson against him?  When Lloyd George was speaking, he would go over to nobble the President while it was being translated.  Wilson lacked ‘that dominating intellectual equipment’ and his collapse was ‘one of the most decisive moral events of history.’

The point of the book is to demonstrate that the Treaty was economically misconceived, but Keynes does not withhold moral judgment.  ‘The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness, should be abhorrent and detestable – abhorrent and detestable even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe.  Some preach it in the name of justice.  In the great events of man’s history, in the unwinding of the complex fates of nations, Justice is not so simple.  And if it were, nations are not authorized, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.’  These are not small notions.

Keynes said that the leaders in Paris knew that they could not deliver and had lied to their own peoples back home about their capacity to extract money from a bankrupt Germany in the future.  He says that the want of sincerity was palpable.  ‘Then began the weaving of that web of sophistry and Jesuitical exegesis that was finally to clothe with insincerity the language and substance of the whole treaty.’  It was worse than that – the Treaty was negotiated in bad faith and outside the terms on which Germany had laid down its arms.  ‘There are few episodes in history which posterity will have less reason to condone – a war ostensibly waged in defence of the sanctity of international engagements ending in a definite breach of one of the most sacred possible of such engagements on the part of the victorious champions of these ideals.’  Elsewhere, Keynes brands the Treaty ‘one of the most outrageous acts of a cruel victor in civilized history.’

The hottest invective is reserved for his own Prime Minister.  On no grounds of public interest, the ‘popular victor’ allowed ‘the claims of private ambition’ to have him call an election.  This cranked up the rhetoric against Germany and made a decent peace even harder to get.  The diagnosis of Keynes is alarmingly recognizable to those governed by no principle past the last opinion poll.  ‘The progress of the General Election of 1918 affords a sad, dramatic history of the essential weakness of one who draws his chief inspiration not from his own true impulses, but from the grosser effluxions of the atmosphere which momentarily surrounds him.’  The book is worth reading just for that one line.

Did the victors really think that they could screw the Germans for the sweat of their brow for a generation?  How did they answer this proposition?  ‘The entrepreneur and the inventor will not contrive, the trader and shopkeeper will not save, the labourer will not toil, if the fruits of their industry are set aside, not for the benefit of their children, their old age, their pride, or their position, but for the enjoyment of a foreign conqueror.’

Why, asks Keynes, ‘has the world been so credulous of the unveracities of politicians’?  The French would acknowledge his logic but they would always come back to the position:  ‘But Germany must pay; otherwise, what is to happen to France?’  It was not a convenient time for the truth.

Lenin said that the best way to destroy capitalism was by debauching the currency.  He was right.  Inflation involves a secret confiscation of wealth.  ‘Perhaps it is historically true that no order of society ever perishes save by its own hand.’

Where would it all end?  ‘If we aim deliberately at the impoverishment of Central Europe, vengeance, I dare predict, will not limp.  Nothing can then delay for very long that final civil war between the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the late German war will fade into nothing, and which will destroy, whoever is victor, the civilization and progress of our generation.’

The fulfilment of that prophecy would be a ghastly tragedy.  Because a few small-minded power crazed men in Paris wanted to punish the children of the vanquished, they paved the way for a worse war to punish their own children.

This book holds many lessons about not putting your trust in princes, and about not understanding that if you drive too hard on a deal, you may wind up with worse than nothing.  Agreements are only as good as the wishes of their parties.  The attack in this book was brought home by a 35 year-old economist from King’s College, Cambridge against his own government and the other victors in Europe.  It is a remarkable testament not just to the intellect but to the courage of one man.

Keynes would later go on to serve his country further by helping it to finance the war he foresaw, and then work out how to make repayment.  The effort was finally two much for him.  It is because of what Keynes did rather than what he said that this book is on this shelf.  It is not too much to say that John Maynard Keynes, like Dietrich Bonhoeffer, gave his life for his country.

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