In The Long Run: Keynes and the Legacy of British Liberalism

Walter Russell Mead

From Foreign Affairs, January/February 2002

Summary:  Was John Maynard Keynes a Keynesian? The third volume of Robert Skidelsky's magisterial biography answers this question by arguing that the economist's legacy is the promotion of, not opposition to, classical British liberalism.

Walter Russell Mead is Senior Fellow in U.S. Foreign Policy at the Council on Foreign Relations.

Keynes, whose sins of theoretical unorthodoxy were forgiven as his 1940 proposals on war finance increasingly commended themselves to both politicians and civil servants, was sent to Washington to negotiate the terms of war loans and postwar economic proposals -- and, if possible, to save the empire from the Americans. "America must not be allowed to pick out the eyes of the British Empire," a furious Keynes noted on a Treasury memorandum as the degree of economic damage to the United Kingdom's prospects began to sink in.

Much of Fighting for Freedom -- too much, it sometimes feels to the reader following the peregrinations of complex, evolving memoranda on both sides of the Atlantic -- involves the story of Keynes' sometimes misguided, usually unsuccessful, but always brave efforts to roll back the tide of American demands. The British wanted gifts of money and materiel; failing that, they sought unrestricted, unsecured loans at concessional rates. The Americans, naturally enough, preferred to lend only on good security to a known defaulter such as the United Kingdom. Although they were prepared to offer concessions on both interest rates and the timing of repayments, they set their faces resolutely against any British efforts to rebuild a trade system centered around London, based on preferential tariffs for the empire and the crown dominions. They also kept a sharp eye on any British efforts to compete with American firms in Latin America, an area where U.S. and British commercial ambitions historically had clashed.

When it came to the Bretton Woods institutions, the British, led by Keynes, wanted flexible institutions that could force creditor countries (that is, the United States) to assist debtors (such as the United Kingdom). The Americans wanted more rule-bound institutions capable of exerting pressure on debtors.

Keynes, his health progressively undermined by the heart condition that ultimately killed him, won a number of the battles in this long, twilight struggle, but the American position was sufficiently strong, and suspicion

of the British so deeply entrenched, that overall he made little headway. Although by no means an uncritical cheerleader for Keynes' diplomatic skills, Skidelsky argues that Keynes punched above his country's weight in these negotiations and that, in any case, there was little more that the British could have done.

If there is a villain in the story of Keynes' Washington negotiations, it seems to be Harry Dexter White, a key aide to Morgenthau whose Anglophobia was accentuated by his ideological sympathies for the Soviet Union. Skidelsky goes far beyond the usual discussions of whether White spied for the Soviet Union during the war (a question the author handles with great balance and skill) to look much more pertinently at the ways in which White's pro-Soviet stance sharpened some of the wartime conflicts between the United States and the United Kingdom. One such conflict concerned the notorious Morgenthau Plan, which would have reduced postwar Germany to a pastoral economy. The permanent destruction of the German economy would have made the Soviet Union the master of Europe, a consequence which disposed White (the plan's true author) to support the proposal, while adding to the horror with which Keynes and his colleagues in Whitehall regarded it.

A MAN IN FULL

The chief flaw in this book is what it omits. Friendship and the arts remained central to Keynes' sense of himself throughout his life, but we see very little of the private or even the aesthetic Keynes here. This is not a plea for more information about what the historian Edward Gibbon called "the natural history of a human life," but a lament that so much of what made Keynes Keynes has been lost to the biographer and therefore to us by the passage of time. Keynes had no Boswell to jot down his table talk; almost all that is left is the paper trail -- the memoranda remain, the conversation is almost all gone.

We get relatively little about the mature friendships of this man whose early views of friendship as the greatest good shaped, Skidelsky persuasively argues, his entire moral outlook on life. American readers will long in particular to know more about Keynes' friendships with future Secretary of State Dean Acheson and journalist Walter Lippmann. The connections Keynes had with the tumultuous events and politics of the era have also been slighted. Skidelsky does a good job of following Keynes' tortured views on appeasement, but his participation in the literary and political life of the period remains largely out of focus.

We do not know what made the mature Keynes appreciate a book or a painting. We only glimpse him at ease with his friends. Skidelsky mentions Keynes' interest in seventeenth- and eighteenth-century English authors but says very little about it. Many of the connections between the aesthetic and moral preoccupations of the younger Keynes and the practical concerns (and, as Skidelsky tellingly observes, the increasingly Burkean cultural views) of the mature Keynes can probably be traced through this interest. A passing reference to a correspondence between Keynes and fellow period enthusiast T. S. Eliot hints at undisclosed levels of reflection and thought.