printThe following is an excerpt from “John Maynard Keynes: Where’s The Genius?! (Part 2),” the conclusion of my conversation with Benn Steil. (Read part 1. ) Dr. Steil is senior fellow and director of international economics at the Council on Foreign Relations. His latest book is “The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order.”
ILANA MERCER: After reading a negative review of your book in The Times Literary Supplement, I decided to go cold turkey on what had been a guilty pleasure for over a decade. I did not renew my TLS subscription. The TLS had stupidly assigned the review to one Eric Rauchway, a left-coast history teacher. Rauchway would not let an argument favorable to the gold standard—yours—stand. Your case against the Bretton Woods system of “managed currencies” he turned on its head. Rauchway credited Harry Dexter White, one of Bretton Woods’ architects, with helping to lift the “cross of gold” from the shoulders of the world’s working classes. Since White was also a Soviet spy, Rauchway quickly concluded that the Soviets saved capitalism (an “unknown ideal” for a very long time). Sound money is suspect, but a Soviet spy is capitalism’s savior. How do you unpack that!?
BENN STEIL: You can’t get blood from a stone, and you can’t get logic from Rauchway’s review, just gobs of nonsense and libel (as I documented on on my blog ). The review’s title, “How the Soviets saved capitalism,” is so inane that the only explanation for it is that Rauchway, or his TLS editors, fell in love with the sheer childish cheekiness of it. It certainly bears no relation to Rauchway’s account of Bretton Woods, nor that of anyone who can actually claim to know anything about it.
Rauchway would no doubt mock the economist who wrote the following of the 19th century classical gold standard: “[t]he various currencies, which were all maintained on a stable basis in relation to gold and to one another, facilitated the easy flow of capital and of trade to an extent the full value of which we only realize now, when we are deprived of its advantages.”
Unless, that is, Rauchway knew who it was – none other than J. M. Keynes.
MERCER: We can both agree that John Maynard Keynes’ opposition to WWI and his “bitterness over the terms of the peace” were admirable. Priceless too was John Maynard Keynes description of President Woodrow Wilson as “slowminded and bewildered”; a “blind and deaf Don Quixote.” (pages 70-71) On the other hand, also quite admirable was the following unflattering description of Keynes’ “General Theory of Employment, Interest and Money.” It comes courtesy not of Keynes, but of our author: “It is only slightly outlandish to liken the book to the Bible: powerful in its message, full of memorable, mellifluous passages; at times obscure, tedious, tendentious, and contradictory; a work of passion driven by intuition, with tenuous logic and observation offered as placeholders until disciples could be summoned to supply the proofs.” (page 88) Have Keynes’ disciples really delivered? It would appear that the Keynesian faithful have foisted on free-market capitalists an unfalsifiable theory. Evidence that contradicts it, Keynesian kooks enlist as evidence for the correctness of their theory.
STEIL: Yes, if the economy sinks, then Paul Krugman was right about the need for massive stimulus; if it recovers in the face of plunging deficits, from spending cuts and tax increases, then Krugman was right that deficits were not a problem. Heads he wins, tails you lose.
MERCER: Keynes assessed Karl Marx’s “economic value” as “nil… apart from occasional flashes of insight.” (page 87) I would venture that in the United States, Marxism has been far less destructive to free-market capitalism than Keynesianism. Marxists honestly wish for capitalism’s demise and say as much. We can fight such an enemy. Conversely, Keynesians have redefined capitalism and banished our definition therefrom. The Keynesians then proceeded to cripple capitalism so as to ostensibly save it. Positively Orwellian.
STEIL:
The conclusion of the Steil-Mercer conversation about Keynes is now on WND. Read “John Maynard Keynes: Where’s The Genius?! (Part 2).”
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