Keynes Was Really a Conservative

Yves here. Note that Keynes was not concerned with the preoccupations of classical economists, who saw curbing rentiers as important, since their profiteering interfered with productive activity. Keynes had a more benign view of commerce. But he might have needed to see, say, the US health care industry in action to get a more rounded perspective.

By Bruce Bartlett, a former Treasury Department economist and the author of Reaganomics: Supply-Side Economics in Action and Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy. He writes a weekly column for Twitter: @BruceBartlett.  An adaptation from Forbes originally published at Evonomics 

Ten years ago, conservatives decried the $787 billion stimulus package enacted under President Obama. More recently, the costs of President Trump’s tax cuts are projected to total $2.3 trillion over 10 years. But conservatives still decry spending on progressive programs like The Green New Deal or Medicare for All with “how will you pay for it?” questions.

Those on the right have been making this same argument ever since British economist John Maynard Keynes popularized the idea of using budget deficits to stimulate growth in his 1936 book, The General Theory of Employment, Interest and Money. For this reason, Keynes, even more so than Karl Marx, is the principal bête noire of free market economists. They believe governments should never do anything to counteract economic downturns. Consequently, they must implicitly believe that all recessions are the result of massive and simultaneous failures by private businesses and workers who must therefore bear all the costs of adjustment. By opposing government intervention, free market economists are saying that it either made no mistakes or should do nothing to fix those it may have made.

What Keynes understood is that governments bear primary responsibility for recessions. In really severe downturns, such as we suffered in the 1930s and are suffering today, government action is essential to turn the economy around; the private sector simply can’t do it on its own. He also understood that democratic societies cannot long tolerate high levels of unemployment. At some point, people will jettison capitalism for some sort of socialism, which would threaten democracy as well.


Peter Drucker, a conservative admirer of Keynes, viewed him as not merely conservative, but ultraconservative. “He had two basic motivations,” Drucker explained in a 1991 interview with Forbes. “One was to destroy the labor unions and the other was to maintain the free market. Keynes despised the American Keynesians. His whole idea was to have an impotent government that would do nothing but, through tax and spending policies, maintain the equilibrium of the free market. Keynes was the real father of neoconservatism, far more than [economist F.A.] Hayek!”

John Kenneth Galbraith, whose politics were well to the left of Keynes, not to mention Drucker, agreed with this assessment. “The broad thrust of his efforts, like that of Roosevelt, was conservative; it was to endure that the system would survive,” he wrote. But, Galbraith added, “Such conservatism in the English-speaking countries does not appeal to the truly committed conservative.”

As Keynes himself explained, “the class war will find me on the side of the educated bourgeoisie.” He expressed contempt for the British Labor Party, calling its members, “sectaries of an outworn creed mumbling moss-grown demi-semi Fabian Marxism.” He also termed it an “immense destructive force” that responded to “anti-communist rubbish with anti-capitalist rubbish.”

It was obvious to those on the political left and in the Soviet Union that Keynes was one of socialism’s greatest enemies, even if some on the right still view Keynes as a crypto-communist. State socialism, he said, “is, in fact, little better than a dusty survival of a plan to meet the problems of 50 years ago, based on a misunderstanding of what someone said a hundred years ago.” Indeed, Keynes told playwright George Bernard Shaw that the whole point of The General Theory was to knock away the Ricardian foundations of Marxism.

Keynes often expressed disdain for Soviet Communism. “Red Russia holds too much which is detestable,” he wrote, terming communism “an insult to our intelligence.” Communists, Keynes believed, were people who produced evil in the hope that good may come of it. And he had little respect for Marx, calling him “a poor thinker,” and Das Kapital “an obsolete economic textbook, which I know to be not only scientifically erroneous but without interest or application for the modern world.”

Keynes completely understood the central role of profit in the capitalist system. This is one reason why he was so strongly opposed to deflation and why, at the end of the day, his cure for unemployment was to restore profits to employers. He also appreciated the importance of entrepreneurship: “If the animal spirits are dimmed and the spontaneous optimism falters … enterprise will fade and die.” And he knew that the general business environment was critical for growth; hence business confidence was an important economic factor. As Keynes acknowledged, “Economic prosperity is … dependent on a political and social atmosphere which is congenial to the average businessman.”

A major theme of The General Theory is the importance of maintaining the freedom for prices to adjust, which is necessary for the proper functioning of the economy. This made Keynes a strong opponent of price controls and national economic planning, which was much in vogue after the Second World War. “The advantage to efficiency of the decentralization of decisions and of individual responsibility is even greater, perhaps, than the 19th century supposed; and the reaction against the appeal to self-interest may have gone too far,” he wrote.

Indeed, the whole point of The General Theory was about preserving what was good and necessary in capitalism, as well as protecting it against authoritarian attacks, by separating microeconomics, the economics of prices and the firm, from macroeconomics, the economics of the economy as a whole. In order to preserve economic freedom in the former, which Keynes thought was critical for efficiency, increased government intervention in the latter was unavoidable. While pure free marketers lament this development, the alternative, as Keynes saw it, was the complete destruction of capitalism and its replacement by some form of socialism.

“It is certain,” Keynes wrote, “that the world will not much longer tolerate the unemployment which … is associated–and, in my opinion, inevitably associated–with present-day capitalistic individualism. But it may be possible by a right analysis of the problem to cure the disease whilst preserving efficiency and freedom.”

In Keynes’ view, it was sufficient for government intervention to be limited to the macroeconomy–that is, to use monetary and fiscal policy to maintain total spending (effective demand), which would both sustain growth and eliminate political pressure for radical actions to reduce unemployment. “It is not the ownership of the instruments of production which is important for the State to assume,” Keynes wrote. “If the State is able to determine the aggregate amount of resources devoted to augmenting the instruments and the basic rate of reward to those who own them, it will have accomplished all that is necessary.”

One of Keynes’ students, Arthur Plumptre, explained Keynes’ philosophy this way. In his view, Hayek’s “road to serfdom” could as easily come from a lack of government as from too much. If high unemployment was allowed to continue for too long, Keynes thought the inevitable result would be socialism–total government control–and the destruction of political freedom. This highly undesirable result had to be resisted and could only be held at bay if rigid adherence to laissez-faire gave way, but not too much. As Plumptre put it, Keynes “tried to devise the minimum government controls that would allow free enterprise to work.”

The threat of totalitarianism may not be as great today as it was in the 1930s. But it would be naïve to believe that it was possible for the government to stand by and do nothing in the face of the greatest economic downturn since the Great Depression, as many conservative economists advised. The alternative to stimulus could ultimately have been something far worse from the conservative point of view, as Keynes well understood.

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  1. BlakeFelix

    Yay! I like Keynes. Throw in a carbon tax and a UBI and some socialized medicine, and whatever armed forces are needed for defense and let the market sort the rest out.

      1. BlakeFelix

        I’ll stand by my belief that we, or any society, should have some armed forces to monopolize violence within its borders. You can argue we have little to protect, but I still find being conquered unappealing, whether it is by an internal force or an outside one.

    1. WheresOurTeddy

      The US could be defended by a standing army of 800,000 to 1 million, and citizen national guard militias totaling 2.5-3 million that train in their local areas in purely defensive guerilla tactics. We could not build another ship for 20 years or a plane for 10 and it wouldn’t change a thing, except where all that $$$ would go (maybe health care/housing/jobs to the citizens? I know, what a socialist…)

      1. Plenue

        The US doesn’t need to be defended at all. We’re probably the least threatened nation in history. We share borders with the mighty militarist juggernauts (/s) of Canada and Mexico, and to either side are insulted by thousands of miles of deep water. The US doesn’t need anything other than a few border checkpoints and a Coast Guard. The US military right before WW1 was a whole 120,000 strong, with an extra 80,000 National Guard. Even this was ludicrous overkill.

        1. BlakeFelix

          The correct size and disposition of the armed forces wasn’t detailed in my comment because it is over my head. I tend to agree ours is large and inefficient, and burning money that we could better use elsewhere.

  2. Anonymous 2

    Thank you Yves. An interesting read.

    As per Skidelsky, Keynes in fact went through a series of different stages intellectually during the course of his life. So, if someone says ‘Keynes thought’ one needs to follow it up with the question ‘when?’.

    He started as a pretty standard Marshallian free market economist but then, with the General Theory, moved to a position where he saw the case for a degree of government intervention to stabilise demand. During WW2 he became considerably more sympathetic to the case for a greater degree of state intervention and planning before, in the last years of his life, adopting a more nuanced, complex view.

    Sadly a lot of people write as though Keynes died immediately after the General Theory.

    As for Keynes’s political loyalties, he was a Liberal, in the British sense of the word, which is different to the American meaning of the word and does not readily translate to any American political term that comes to my mind.

    1. Basil Pesto


      In your opinion, does this piece fit that description?

    2. PlutoniumKun

      I think the Keynes himself worked hard at pushing the line that he was an inherently free market thinker, even when he knew full well that the logic of his ideas were strongly contrary to the mainstream free market thought at the time. He wanted his ideas to be taken up by the mainstream, he had no interest in being an outsider shouting truths into the abyss.

      He was very much an establishment man (even those his private life was more than a little bohemian) and worked hard to make sure his thinking was seen as firmly within the Overton Window of the time, even when it wasn’t. You might say he made sure he was labeled as a Warren, not a Sanders.

  3. paul

    he was a Liberal, in the British sense of the word

    And this too has been tempered by time.
    When I was young, the liberal party were seen as a refuge from the establishment parties, while being nothing more than a pressure valve.
    Since their almost annual reconfiguration, they have reformed into a fantasy of moderate and moronic tories.
    They well deserve being the fourth most popular party. (fifth if you believe the brexit fluffers).
    Swinsonmania is just like Cleggmania, a terrible infection thankfully restricted to the guardian offices.

  4. dearieme

    Keynes spent his whole life as a Liberal. You can reasonably argue that the attempt to preserve the British liberal order was essentially conservative, but really the problem of nomenclature arises because Americans have so perverted the meaning of “liberal” that it now refers to various illiberal sects and cults.

    You could also argue that Americans have so perverted the meaning of “conservative” that it now refers to … Actually, what does it refer to?

    1. PKMKII

      Modern American Conservatism is an example of what happens when people start believing their own marketing. The original point of Conservatism was not a pseudo-libertarian small government, but rather a movement to retain a position and role for traditional social hierarchies within a market society. Back in the day, that meant the aristocracy, but it’s evolved to fit the traditional social hierarchies du jour (racial, gender, sexuality, religious). Conservatism in the 70’s and 80’s realized that, in the moment, free market purism would both serve that purpose while acting to obscure the purpose under the fig leaf of libertarian values. As long as racially and religiously conservatives dominated the spending in the market, letting the free market decide things would maintain the hierarchies. This served them well in the neocon era.

      Problem is, conservatives started to believe that this wasn’t just a marriage of convenience, but rather an essential interdependence of traditional hierarchies and the market. So when the one-two punch of the Great Recession requiring some heavy-duty government interference to save the market, and the emergence of woke capitalism that saw the dominant spending in the market switch to people with socially progressive values, hit over the last decade, conservatism reacted with incoherent anger that reality was no longer in sync with the conservative propaganda. Hence the Tea Party and Trump behaving less like a consistent ideological movement and more like the rantings of your uncle when he’s had a few too many glasses of white wine at thanksgiving dinner.

      That’s why, as much as he is regressive in so many ways, Tucker Carlson is currently the best mainstream example of an original conservative. Despite people painting him as heterodox for questioning the market, he’s really going back to conservatism’s roots.

    2. Plenue

      “Actually, what does it refer to?”

      What it’s always referred to: those who side with wealth, power, and privilege against the interests of the much greater part of the population that actually has to work for a living. That hasn’t changed since the Left-Right spectrum was invented during the French Revolution.

      The specific wealth and privileges being defended have changed; back then the Right-most were defending a literal King. You won’t find many Monarchists around these days (they’re making a minor comeback in some dumber corners of the internet though), but the Liberal Capitalists have taken their place. Keynes being a Liberal (in the correct, non-American sense of the term) and a Conservative are not remotely mutually exclusive.

  5. David

    Agree with the above. Keynes was a classical British Liberal who, like many of his type, came to understand the need for government intervention to make the system work. When I was studying economics in the 1960s, Keynes was the man who had saved the capitalist system from itself. In the UK, at least, that view is still often heard.
    In any event, Keynes, as a Liberal, was by definition not a Conservative. The two ideologies were at daggers drawn well into the twentieth century, and it was the Liberals who wanted to change and modernise British society and the economy.

      1. PlutoniumKun

        In modern terms, I’d say the Liberals were the 10%ers, the Conservatives the 1% by inheritance-ers.

  6. nobody

    GGP, FWIW:

    Keynes is a fascinating thing. He has been erected into some kind of a colossal wax icon: he is one of those authors that, through posterity’s massive, torrential, relentless and extraordinarily abiding mythologizing effort, have come to lose all adherence to their historical, physical existence. And, deep down, Keynes was a mask of such fanatical vanity that this kind of modern sanctification must have been precisely the type of goal he had been striving to secure for his entire life…

    As for Keynes the man, from what we know, he seems to have cut a pretty despicable figure: arrogant, racist, a shameless thief of other people’s ideas, an exploiter of the underclass (for male prostitutes), and a speculator. But more to the point, as a theorist, he was a total nullity: he is the dottore of the commedia dell’arte, the pedantic character who knows everything without understanding anything thereof.

    This man, who had been hailed by Time magazine in 1999 as one of the towering gods of the 20th century, failed miserably to comprehend every major event of his time: 1) Versailles, case in point; 2) Britain’s return to gold, which he denounced as the inane archaism that caused the great strike of 1926 {it was neither the former nor did it cause the latter}; 3) the coming and severity of the Slump; and 4) the Nazi recovery. As for Versailles, he did not have a clue as to what was being devised: he stormed out of the conference moaning that Germany could not pay what was asked of her, not intuiting, as Veblen did, that those astronomical sums were never meant to be paid, but only, through the first series of “gold installments,” to burst the bubble of the German war debt.

    But then again, it was not his role to predict, intuit anything; he did exactly what the commedia expected of him: a nice little Keynesian tantrum, followed by a book that told the story (nowadays it’d have come with a bonus DVD…)…And then in 1941 (if I remember correctly) to crown his remarkable dramatic career he was made a Director of the Bank of England; yes, imagine him, gloatingly gabbing away at the very feet of the High Priest, Montagu Norman…That’s Keynes, the great Keynes, the champion of the enlightened middle-class…

    1. Deschain

      Yeah …. I’m gonna say the Weimar hyperinflation of 1921-23 kind of validated Keynes’ analysis over Veblen’s.

      1. Foppe

        the hyperinflation was created by choice by policy elites at the time, see Mark Blyth’s Austerity book for details.

    2. Christopher Herbert

      “And, deep down, Keynes was a mask of such fanatical vanity that this kind of modern sanctification must have been precisely the type of goal he had been striving to secure for his entire life…” Are you sure? Anyway, he was vain. He did understand Versailles, which was a miserable failure. He wrote a book ‘Essays in Persuasion’ that many economists consider to be one of the best examples of applied economics. And I do detect a faint smell of goldbuggery coming out from nobody in particular.

  7. TG

    Pure communism can initially lead to rapid progress, but eventually it becomes ossified and stagnant.

    Pure capitalism leads to top-down corporate control, and monopoly, and poverty and eventually – paradoxically – a stagnant and inefficient economy (think: Mexico).

    The ideal solution is capitalism where the ruling elites are afraid of the system falling apart, and are willing to let the working classes get enough of the proceeds to live a decent life. Think: FDR, modern Singapore.

    The problem now, is that our elites don’t care about the long-term health of the system.

  8. Ernie

    A valuable and educational read. Thank you.

    I have one quibble: the statement that “The threat of totalitarianism may not be as great today as it was in the 1930s” is not accurate. It may appear the threat is reduced, most likely because the totalitarianism of today is disguised, but it is not reduced at all, but rather, it is growing like an undetected or ignored cancer. Totalitarianism is essentially a collaboration between capital and government as a means to benefit capital. Today, capital avoids leadership positions in government, choosing instead to plant proxies in positions of power and influence, and of course, engages lobbyists, so as to rule without being elected or without getting bloodied in coups.

  9. Susan the other`

    Thanks, Yves. Very interesting. The intro point that maybe Keynes would rethink his love of free market pricing rights if he could see the debacle we have in the US which we euphemistically refer to as the Health Care Industry. This precious example says it all because Keynes was both quaint and imperious. Clueless about the future. Already technology had taken off like a scalded dog in the race to develop weapons of mass destruction. And it has been that tech progress which has put medical industrial capitalism in such a dead end. It can almost serve as a metaphor for all capitalism. Capitalism, the free market, has been coopted by technology. Medicine will never again be the country doctor. It is headed full-tilt for high tech status that only government can organize and maintain. Much like mitigating unemployment for the sake of demand – but in this case it will be more like mitigating lack of universal health care for the sake of demand. And when the government tampers with unemployment statistics it is a travesty. Just think if government is so captured that they tamper with health care stats in the same way. Just allowing some percentage of people to suffer and die in desperation so that costs can be cut and profits realized. Keynesian. Clearly MMT is the high tech version of maintaining a capitalist system because it is honest. I don’t think anything but honesty will work these days.

  10. rd

    A few thoughts on this.

    1. The free market will look after the rentiers because they build an unstable system and, when it goes down, their wealth plunges as it is based on finances (often leveraged), not real productive assets. They rely on non-free market mechanisms, like the 2008-2009 interventions of TBTF etc., to keep their wealth and power. That didn’t happen in the late 1800s/early 1900s or in the early 1930s so they were crushed and inequality stayed at relatively low levels for decades after the financial collapses.

    2. Regulation, like Glass-Steagal, can help keep systems stable but not if the regulatory systems are captured like has happened since the mid-90s. A pure free market system would have a high turnover of the people creating financial instability instead of today’s system of locking them into perpetual success.

    3. However, using the free market to correct the instabilities wreaks havoc in general society as we saw in the rolling depressions between the Civil War and WW I and then the Great Depression. So Keynes’
    prescription is to have government step in and provide stimulus during those downturn periods to cushion the blows to general society caused by the free market cycles. Government debt can be paid back in boom periods which may also help regulate excesses and reduce the likelihood of plunges.

    4. Neo-liberalism has turned all of these things on their heads so we do fiscal stimulus in good times while encouraging financial instability by encouraging rentiers, and then save the rentiers at the expense of general society while also imposing austerity when government spending is needed the most.

    5. Even the central banks are participating in this by tacitly adding financial market “stability” as a third goal in addition to managing inflation/deflation and employment. They didn’t do their job of regulating the financial sector when they had the chance to keep a stable system and instead started saving the people who caused the trouble in the first place.

    6. Keynes gets a bad rap from the “small government” people who want to keep government small except when it is to the benefit of their supporters (large corporations and wealthy individuals). Interestingly, the small government people who bemoan government deficits are generally the author of the policies that dramatically increase deficits. The big government people end up with smaller deficits.

  11. Oregoncharles


    Both may be true, because the theory and the person are not the same. The theory is quite likely to have implications that its maker won’t countenance. (Disclosure: I should say here that the economics I learned in college [Samuelson’s textbook, IIRC] was precisely the American Keynesianism that Keynes is said to have despised.) So the “American Keynesianism” he despised may well have been a logical extension of his work.

    Similarly, and presumably the reason this article is appearing here, with MMT, the contemporary extension of Keynes. It’s based on a description of the way a sovereign fiat currency actually works, and gives the government a great deal of freedom. (The US has had a full-fledged fiat currency only since, I think, 1972, so the implications are still sinking in.) The theorists are progressives (for lack of a better term), so they envision and advocate progressive policies like M4All or a Green New Deal. But in reality, for political reasons, at this point MMT applies only to military spending, where the funds are treated as endless, and not to social spending. And indeed, it frees the government to spend as much as it likes where it wants to (up to the point of unwanted inflation or resource limits, of course – but who says the military would actually stop there?)

    The law of unintended consequences applies to theories, too.

  12. Anon


    The folks in Sweden, Norway, among others, would cast a “No” vote on this statement.

    1. Bruce Bartlett

      I was stating Keynes’ point of view circa the mid-1930s. The dominant forms of socialism at that time were Soviet or Nazi. I’m sure Keynes would admit today that socialism and democracy are perfectly compatible.

  13. Peter Dorman

    Keynes was complicated. Here’s an example, based on my reading of Skidelsky: In crucial respects, Keynes was a cultural radical. His enthusiastic embrace of pleasure and refined consumption, of a particular vision of good living, fits in with what we now, in retrospect, see as a hallmark of 20th century queer culture. JMK openly basked in this culture (although his marriage in midlife seemed to curtail the purely sexual part) and devoted much of his time to promoting visual and performance arts. I suspect his valorization of sensual pleasure through art and elsewhere was an element in his foregrounding of demand in economics; certainly anti-Keynesians have picked up on this and regard his theory as “degenerate”. At the same time, however, Keynes’ taste in the arts seems to have been conservative and rather elitist—at a time when radical experimentation in every art form was widespread.

    As for politics, through most of his adult life Keynes sought to establish an alliance between the “enlightened” (nonsocialist) elements of the labor movement and the correspondingly enlightened (socially responsible) elements of the capitalist class. He did this in his role as a polemicist and political adviser, and also as an economist; The General Theory, among other things, is a brief for why workers and investors have a common interest in high levels of consumption.

    Simply dichotomizing between radical and conservative is too simple for someone like Keynes. Little boxes….

  14. notabanktoadie


    Positive yields on the inherently risk-free debt of monetary sovereigns is not laissez-faire but welfare proportional to account balance.

    Nor is needlessly expensive fiat laissez-faire, e.g. the Gold Standard, but privilege for private interests such as gold owners, fiat hoarders and private banks (by making fiat too expensive for general use).

    Nor is failure to provide basic accounting services (checking/debit) in its fiat to all citizens laissez-faire – unless the definition of laissez-faire includes sovereign dereliction of duty in providing a risk-free payment system in addition to mere paper bills and coins.

    Likewise, grossly unequal distribution of necessary real resources such as land is not laissez-faire but sovereign dereliction of duty.

    To his credit, Keynes opposed the Gold Standard but otherwise I’m not sure he had an adequate definition of laissez-faire.

  15. John

    Very good post, I think this is a good take on Keynes. A while back, I read a fairly similar post on Keynes’s politics:

    As Yves rightly points out at the beginning, however, that we have no idea what Keynes would have actually thought about the rise of the welfare state. Keynes died right before his ideas were implemented on a mass scale all over the first world, which for a good two and a half decades or so, saw the greatest period of economic growth in history. (The fastest growing country during this period was the USSR, but that’s besides the point.) One can imagine him wanting to take credit for such a period of prosperity. But his turn towards the right at the end of his career may have continued, and he might have become an English version of a Goldwater Republican, disgusted by the growth of government and wishing for a return to the type of state that existed before the Great Depression.

    1. Oregoncharles

      the easiest way to grow fast is to start with very little, as the USSR did after Stalin and WWII were done with it.

    2. Anonymous 2

      He supported Beveridge’s proposals which produced the basis for the Welfare State after 1945. I am unsure how enthusiastically but he was their principal defender inside the UK Treasury.

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