By Chet Yarbrough
The Price of Peace
By: Zachary D. Carter
Narrated by : Robert Petkoff
Zachary D. Carter (Author, journalist.)
Zachary Carter has written an interesting biography of John Maynard Keynes.
Carter details Keynes’ personal life with an interpretation of Keynesian economics. This is a a history of a man of many parts that explains Keynes economic beliefs and their evolution and interpretation by later economists.
Though Carter is not an economist, his characterization of Keynesian economics has meaning for the world’s recovery from Covid19. Government action in this century would be highly benefited by Keynes’ post WWI and WWII economic policy recommendations.
Carter notes Keynesian economics, though more widely adopted by liberals, springs from the conservative and moral philosophical beliefs of Edmund Burke, an Irish Statesman who lived from 1729-1797.
Burke’s conservative credentials reject the rights of American colonies to claim independence from Britain. Burke abhors the French revolution and French citizens belief that they have a moral right to overthrow a monarchy. In contrast to this conservative view of the world, Burke plays a leading role in arguments against executive authority of a King and rejects support of the slave trade when it is a lucrative source of income for Britain. Though clearly a conservative thinker, Burke joins a liberal group of leading intellectuals and artists in the 18th century, led by Samuel Johnson.
Carter notes Keynes identifies with Burke’s conservative belief in a government that serves the best interest of the people, whether authoritarian or democratic. Keynes never abandons Burke’s conservative belief in national government’s right to rule within the confines of human morality, a morality that relies on betterment of all economic classes of the state.
Interestingly, Carter notes Keynes, like Burke, joins leading intellectuals and artists known as the Bloomsbury Group that formed in the early 1900s.
The 10 core members were Clive and Venessa Bell, E.M. Forster, Roger Fry, Duncan Grant, John Maynard Keynes, Desmond MacCarthy, Lytton Strachey, and Leonard and Virginia Woolf.
The first half of Carter’s book addresses Keynes’ rise to fame. Keynes is called upon by the British government during WWI for advice on how to finance the war against Germany. Keynes role becomes more pronounced with war reparations negotiation after the Kaiser’s defeat in WWI.
Keynes works with J. P. Morgan and the banking industry in the United States to finance much of the Allies needs during and after WWI.
Carter explains Keynes tries to ameliorate the demands of the Allied powers for reparations from the defeated Central Powers. Keynes tries but is unable to gain the cooperation of America as the only country capable of backing such an unreasonable reparation from the war’s estimated cost.
Carter illustrates how the seeds for WWII are sown by Allied powers that unreasonably expect WWI’s defeated nations to pay for all financial costs of a war that Britain, France, and its allies had won. That cost is many times the annual GDP of the Central Powers which were already bankrupted by war.
Keynes is shown by Carter to be an astute economic and political theorist that understood the tenor of his time and the price needed to pay for peace. However, Keynes’ prescient understanding of post WWI economies fails to persuade political leaders in Britain, France, and America to pay that price. The stage is set for the rise of Nazi Germany by the economic intransigence of WWI’s Allied Powers.
The surprising perspective given by Carter’s biography is that Keynes’ economic theory is grounded in the conservatism of Edmund Burke. Today’s view of Keynes is that faltering economies can spend their way out of depression by deficit spending, a highly liberal political and economic theory. What Carter explains is that Keynes argues economic policy should be designed to benefit the general welfare of the public. Keynes looked at economic policy impacts on all classes of citizens when developing his economic theory. If the private sector creates jobs and the general public’s economic health is improving, government that governs least is considered best by Keynes.
However, Keynes argues-when the welfare of the public is harmed, the government must act to regulate unfair practices of the private sector that diminishes the economic health of the public, particularly the poor.
The world economy is in crises because of the effects of Covid19. The private sector is not responding to the consequence of the Covid19′ crises just as it did not adequately respond to the depression in 1929.
Johns Hopkins Resource Center reports that worldwide–there are 4,901,012 citizens dead from Covid19 as of October 2021.
The economic consequence of those deaths and fear of further death feed an economic storm that continues to wreck havoc on nation-state economies.
Carter’s history of Keynes illustrates why Biden’s plan for reinvestment in America is important. The government stepped in with employment programs like WPA that began a recovery for America after the 1929 crash. One may argue that is where America is today. It is not just the aftereffects of Covid19. The world’s recovery depends on a transition from an industrial to a technological economy. The private sector is not investing enough in that transition. Partly because of industries resistance to change, but also because of their inability to privately finance the transition.
Carter notes Keynes insists on free trade and suggests restraint of trade unduly raises prices for commodities for those least likely able to pay.
Tariffs only weaken private sector innovation and reduce the general public’s welfare.
Keynes is channeling Adam Smith (1723-1790) in his belief about free trade.
Carter infers Keynesian theory would allow government to help private industry innovation when harmed by foreign producers that can produce product at a lower cost. To Keynes, government help should not be in the form of tariffs but in investment in change by the industry that is affected. An example is in government investment in transition to work on the environment or service industry at an employee level of investment and training.
Carter notes that Keynes insists that government investment be limited to those areas that are not being addressed by the private sector. The obvious example is public works investments by the government in roads, bridges, water, and sewer services.
Carter explains Keynes argues that when the private sector is benefiting the public through their actions, no government programs should compete. However, when the public is not being served by the private sector in areas of human need, Keynes argues government should intervene. Homelessness is a case in point. How can the richest nation in the world ignore the plight of homelessness?
When the public is not being served by the private sector in areas of human need, Keynes argues government should intervene. Homelessness is a case in point.
The last chapters of Carter’s book reflect on Keynes efforts at Bretton Woods to create an economic system to insure world economic stability. Keynes is mostly unsuccessful in his idea of creating an international banking system that would be a safety valve for nation-state economic crises. With a brief evaluation of economists that distort Keynes ideas in the late twentieth century, Carter completes his history of the price of peace.
Carter concludes with the thought that this is a dark time for Democracy.
He offers a brief evaluation of modern Democratic and Republican Presidents that suggest neither clearly understood Keynesian economics. Carter decries the mismanagement of the economy by Kennedy, Clinton, the Bushes, and Obama because they fail to see the impact of their policies on human inequality.
Keynes fundamental belief is that all governments must evaluate the affect of their administrations on the poor and middle class because they are the engines of prosperity.
It is an investment that would lessen inequality and raise the standard of living for millions of Americans. It is a government policy grounded in Keynesian economics that addresses the fundamental purpose of lifting all boats in a storm driven economy.
President Biden’s 3.5 trillion dollar investment in American Democracies’ future offers some hope.
Carter reminds listener/readers of the history of the 20th century in this excellent biography of Keynes. Carter’s biography reminds one of Keynes’ contributions to economics in the way of Newton’s contributions to physics. Both were geniuses. Both were ahead of their time and laid the groundwork for fundamental understanding of their disciplines.