The Joe Walker Podcast - The Reign Of Keynes, Part I — Zach Carter

Episode Date: February 28, 2021

Zach Carter is a senior reporter at The Huffington Post and the author of the New York Times bestseller The Price of Peace: Money, Democracy and the Life of John Maynard Keynes.Full transcript available at: josephnoelwalker.com/zach-carterSee omnystudio.com/listener for privacy information.

Ladies and gentlemen, boys and girls, swagmen and swagettes, welcome back to the Jolly Swagman Podcast. It is great to have you here. This week we have a fascinating episode in store. So what, or who, is our subject? On Easter Sunday in 1946, in Furl, Sussex, a 62-year-old British man, known to his friends as Maynard, died. John Maynard Keynes was declared by the Times in its obituary of him to have been the greatest economist since Adam Smith.

Close to 75 years later, his ideas remain alive. A receding sliver of people have ever shaped political and intellectual history as much as Keynes. In his time, he bestrode British public and intellectual life like a colossus. The reign of Keynes derived mainly from his brains. Two years before his death, Keynes was at the Bretton Woods Conference fighting for British interests and for his economic legacy. Here's how Lionel Robbins, a rival of Keynes's,

described Keynes in his diary from that expedition. Quote, In the late afternoon we had a joint session with the Americans Keynes in his diary from the most remarkable men that have ever lived. The quick logic, the bird-like swoop of intuition, the vivid fancy, the wide vision, above all, the incomparable sense of the fitness of words, all combined to make something several degrees beyond the limit of ordinary human achievement. The American sat entranced as the godlike visitors sang and the golden light played around. End quote. That was from one of Keynes'

ideological competitors. Keynes was, above all, a patriot, but his intellectual legacy is open to us all, and his driving purposes of unlocking the puzzle of prosperity and maximizing the prospects of peace remain as relevant today as they were in the first half of the 20th century. My guest in this episode helps us to understand the worldview of Keynes and the man behind the models. Zach Carter is a senior reporter at the Huffington Post, where he covers Congress, the White House, and economic policy. He cut his teeth at SNL Financial as a senior reporter at the Huffington Post, where he covers Congress, the White House, and economic policy. He cut his teeth at SNL Financial as a banking reporter during the 2008 financial crisis. And he is the author of the New York Times bestseller, The Price of Peace, Money, Democracy, and the Life of John Maynard Keynes. It was named one of the best books of 2020

by the book critics of the New York Times, The Economist, Bloomberg, and many others. Without much further ado, please enjoy my conversation with the mighty Zach Carter. Zach Carter, welcome to the Jolly Swagman podcast. Thanks so much for having me. Zach, I admire not only your chutzpah in writing a biography of Keynes in the shadow of Lord Skidelsky's three-volume masterpiece, but the fact that you were successful. The Price of Peace was, in my opinion, and in the opinion of many others,

one of the best books of 2020. Why was now the right time for another biography of Keynes? Well, first, thank you so much. That is a very generous assessment of the book. I think I came to Keynes through the 2008 financial crisis. I was a banking reporter at a financial trade publication. And all of my sources were, at the time, very conventional, you know, kind of rational markets kind of people. Markets know best. Government spending is inefficient. The market is generally self-correcting. And these kind of ideas. And suddenly in 2008, all of these same people were saying, we need a big bank rescue program and also a fiscal stimulus program.

Otherwise, the world is going to end. And I think these people were perfectly sincere. They had changed their minds. I don't think there was some sort of philosophical underpinnings surrounding it. And so I started reading Keynes. I did not start with the general theory. I started with the economic consequences of the piece because the general theory is just such a hornet's nest of a book. But the economic consequences of the piece, the book that makes Keynes famous in 1919 when he's criticizing the terms of the Treaty of

Versailles, it's a much more accessible work, both in terms of the economics and in terms of the way it's written, the literary presentation. this is a book that I think most people can understand pretty intuitively, which is why it was so successful. And I thought, this is not really about debt and deficits at all. If you read that book, there's nothing about counter-cyclical spending in there. It's about war and peace and about humanity trying to live together and a little bit about political leadership too. So I became very, very interested and just started reading. And to your point about Lawrence Skidelsky, I talked to him several times over the course of writing of this book. I think he's a just fantastic scholar. You know, his books were written over the course of almost a 30-year period. I mean,

they're an amazing piece of scholarship. But like Keynes in his own life, I think Keynes' legacy changes as the political and economic climate changes. And so the last edition of Lord Skidelsky's book came out 2001 or so. It's been 20 years. The views within the economics profession had changed. And so Keynes' sort of changing worldview and the significance of it, I think, had changed for a contemporary reader. And if you went back and read those books, you know, you'd just be seeing them through a different historical interpretive lens. And I thought, I was thinking in particular of 2008 as being a watershed moment and the rise of all of these right-wing, in the United States, we tend to call them populist movements, but I think the better word is really just authoritarian movements, both in the United States, but also around the world. That all seemed very much

in a sort of unpleasant harmony with what Keynes lived through. And what I saw as the major project of his life, to which his economics, for which he's much more famous, is, I think, sort of a subset or a sort of set of tactics for treating this broader philosophical and political problem. What was the state of economics, both as a field and as a profession, when Keynes was getting started? It's a, I think at least in the United States, there's a tendency to think of economics as this field that's full of people studying money and having attitudes similar to those in an elite business school. That is not the way the economics field existed at the turn of the 20th century. Keynes didn't even study economics when he was at Cambridge. He studied mathematics. It was just a very young discipline.

People had been doing economics for a long time, people like Adam Smith or John Stuart Mill, but in the British tradition at least. There are, of course, other traditions as well. But these people were thought of as sort of philosophers more broadly. The economic stuff that they did wasn't a specialty that they focused on exclusively. They were also interested in moral philosophy. So John Stuart Mill is somebody who's probably more famous today as a philosopher than as an economist, but he was a very important economist in his day. It was also a field with,

I think, much more disagreement over what it actually was and what the purpose of economics was for a time. But by the turn of the 20th century, there was a kind of broad consensus that had formed over the wisdom of what Keynes referred to as laissez-faire economics, sort of free trade and free markets will bring the world to a harmonious equilibrium and march everyone together hand in hand to progress. And that worldview became very difficult to square with events in the world at the outbreak of World War I. It was difficult to square with events as they existed before World War I if you did not live on the European continent and were in one of the various colonial occupied territories of the British Empire

or the other European empires where violence and dysfunction was quite common. But seeing that violence come home to Europe in World War I, I think changed a lot of attitudes about how the world works and what economics was supposed to do and made people rethink what the sort of correct government policy response was, what the sort of managerial outlook for the government with regards to the economy ought to be. And Keynes was not the only person whose ideas started to change as a result of the war, but I think his set of ideas was by far the most successful, at least of the

European thinkers trying to grapple with what had happened at the time. What strikes me about Keynes and other members of the so-called clerisy, the educated elite, was that apart from being intellectuals, they also had a sense of responsibility for being the ruling class. So not just for producing ideas, but also for governing, getting involved in the affairs of the state, joining the civil service, solving practical problems. Was this a uniquely British tradition among public intellectuals? And if so, where did it come from? A very good question. I do not think it was a uniquely British point of view. I think Keynes and his social milieu, he was a member of the Bloomsbury set. So these are artists and writers and poets, people like Virginia Woolf or E.M. Forster, who are very, very accomplished artistic people, at least by the mid-1920s. When they become good friends, they're all just young people who, you know, like to drink

champagne and sleep with each other. But that community is part of an international community. Bloomsbury is embedded in a world that's communicating both artistically and just directly corresponding with similarly minded people in St. Petersburg, in Berlin, in Paris. A bunch of Keynes' friends go and visit Pablo Picasso and Gertrude Stein at one point. And I think that artistic worldview is sort of a subset of a broader elite worldview. In many ways, these artists see themselves as being countercultural icons, people who are opposed to imperialism and sort of extractive kind of governing strategies of the various European empires at the time. But I think they get a lot of their ideas about what constitutes good

rulership and good leadership from the way that the elite looks at itself, or looked at itself at the time. And they just believed that the elite wasn't very good at it. I think that is a European-wide phenomenon. There is a sense that these empires wanted to not only create a prosperous world for their people, but also a culturally rich world. French elites and British elites had a very serious cultural rivalry for a very long time, to the point in World War I, where when Keynes was running war finance for the British Empire, he sees an opportunity to scoop up a bunch of Degas paintings on the cheap at a sort of fire sale in Paris, and is very excited to go and pick up all of these wonderful French masterpieces and get them in British museums. So I think that's a fairly common worldview, at least across the European empires.

As for where it comes from, I can only speculate. I think something about – I see Keynes as someone who's very deeply embedded in the traditions of liberal British imperialism. So he believes that the British Empire is this force for truth and justice and goodness and light, the way I think a lot of American exceptionalists today think of the United States. And when he comes into facts that conflict with that, that perception, he's very distressed, World War I being the biggest of those facts. But I think that imperial, that sort of liberal imperial tradition, it's despite being, you know, paternalistic, did take seriously the idea that there were responsibilities for the overlords of the world. They did have a right to rule, but they had to rule well. And I think looking back, at least from an American perspective,

it's easy to lump all of the imperialists together as one sort of bad, monolithic, you know, organization. And there's, you know, I don't think that's necessarily a confusion, but at the time people fought over these things. There were disputes among the imperialists over what was considered good government and who had a right to the, you know, the largesse of the empire. And so I think it's all rooted in European imperialism, both for better and for worse. I want to talk about one of Keynes' more underrated skills,

and that is marketing. Was the general theory a deliberate allusion to Einstein's general theory of relativity? It most certainly was. It was, he was claimed. Just the way that Einstein suggested that Newtonian physics was sort of a special case in a more general theory of how the world worked. Keynes wanted to suggest that the laissez-faire prosperity of pre-1913 Britain was a special case of a broader system of economics in which, in fact, markets tend toward a, let's say, discordant equilibrium. An equilibrium of underemployment in which people are not employed and countries are at each other's throats and over resources and peace is

fragile. One of Keynes' better known lines is, in the long run, we're all dead. And it's often misinterpreted, as I'm sure you know. Zach, for example, the historian Neil Ferguson, read it as like a YOLO kind of statement and insinuated that it might have been colored by Keynes' sexuality and the fact that he had no children. What did Keynes really mean by, in the long run, we are all dead? Yes, terribly misinterpreted, and not only by Neil Ferguson, who, despite his, at times, success, is a very talented historian, I think. Rand Paul, a senator in the United States just made a big,

a big fuss about the same basic idea here where he said, you know, Keynes just didn't care about the future. He didn't care about his grandchildren. He just said, you know, we're all going to die. So let's, let's live while we're young. Um, that, that is wrong. Um, in the long run, we're all dead comes from a 1923 book called A Tract on Monetary Reform. And in it, Keynes says it may be the case that in the long run, all of these magical functions of the market will eventually balance and lead to some sort of harmonious prosperity.

But an enormous amount of stuff can happen over the short run. If in the long run, everything is okay, but in the short run, we're all dead, that is not a particularly helpful state of affairs. Life is lived in the short run. So depending on how long the long run is, you know, he even says in certain places later on, Adam Smith considered the long run to be, you know, more than 90 years. So entire generations could could be born and pass away before economics would the self-correcting market would self-correct. That's not helpful. If you're an economist, you've got to do something to create prosperity in the here and now. And as his thought developed over the subsequent decade or so, Keynes came to believe not only that you could see a lot of unpleasant and inefficient market outcomes over the short run. Those unpleasant outcomes could create their own problems that would prevent this good long run from coming into being. So if you have a terrible depression and a bunch

of authoritarians come to power and take over the government, the market's never going to get a chance to correct. The bad thing will have happened and society will have been damaged in a very serious and permanent way. So that's what he meant by in the long run, we're all dead. He did not mean everybody, you know, go out and party. You're going to die anyway. Although he did, he did, he was a Bon Vivant in saying that I think there was a, there's a lovely line. I'm not sure if it is apocryphal or true, but apparently towards the end of his life, he said that my only regret in life is having not drunk enough champagne.

I do not know if that one ever happened. I kept it out of the book, um, because I just couldn't find the evidence for it. There are a few of these. There's one like when he's responding to some journalist who says, why do you change your mind so often, Mr. Keynes? And he says, well, when the facts change, my ideas change. What do you do, sir? Again, sounds great, but there's no evidence that he ever said that. At least none

that I could find. And I believe Lord Skidelsky is with me on this, although it's been a while since we talked about it. So it rings true, though, because it's the sort of thing that Keynes would have said. Bloomsbury was obsessed with the good life. And Keynes came to economics after studying philosophy, where he was studying the nature of the good. What does it mean for something to be good? What does it mean to live a good life? And he had this very sophisticated and detailed philosophical worldview from his friends at Cambridge and then from Bloomsbury, where a good life was basically doing all the things that his friends in Bloomsbury liked to do. It was reading great works of literature, contemplating great works of art, enjoying the company of brilliant and beautiful friends,

and having a very robust sex life, which certainly in Bloomsbury everybody did. It was a community of people that were constantly trading each other all together closely the way other difficult experiences combined people together. I don't know if you ever played high school sports, but I had a very unpleasant time rowing crew when I was in high school. But I was very close with my crewmates just because we hated doing it so much. We understood this misery together. So I think Bloomsbury was a bit like that. But the whole point was he did live a life that was full of partying all the time when he was young.

I mean, they would hang out and drink champagne and cut each other's hair and debate all the wonderful things that they wanted to debate. Everything that Keynes had wanted to do since he was very young. So he was not a man who was prone to asceticism or an austere vision of life. He had a very boisterous and rich lifestyle that he came to believe could be shared by the broader community. It wasn't just for fancy people in Bloomsbury. And so he spent most of his adulthood trying to find economic

strategies and diplomatic solutions that would allow that lifestyle to be democratized. There's a lovely quote attributed to Dorothy Parker about Bloomsbury. They lived in squares, painted in circles and loved in triangles That's right I mean Dorothy Parker had a way with words so Indeed So did Keynes, he was an accomplished writer And on top of that he had many years to think about the ideas in the general theory and how to express them. My view is that Keynes enjoyed making the book dense and

difficult. If you read the, I can't believe, I remember it's called the preface or the introduction, but the sort of forward to the book, he says, the general public is welcome to listen to these debates at this time to eavesdrop on them. But right now, this is really a debate for academic economists. Academic economists need to figure out our theoretical underpinnings because we've been wrong for a long time. And once we get it figured out, then our brilliance can be distilled and translated for political leaders and for the general public. So feel free to listen in, you know, regular folks, but you're really not going to understand this. He was aware of how difficult the book was to read, and he was trying to appeal to an audience that thought of itself

as a particularly sophisticated audience and understood themselves to be sort of intellectual. I think masters of the universe is too strong. That's a later 20th century conception for major players in financial markets. But people who were sort of lords of the true intellectual course of events that had some sort of ownership over that intellectual status, which translated into power in politics. The other way to think of it is that these ideas are just very difficult and very complex, and Keynes was still working them out on the fly when he published The General Theory.

He wasn't quite sure how all of them fit together. And so the book's just a bit of a mess. And he didn't have time to clean up the language to make it more accessible. I don't find that one quite as compelling. I think even other dense works that he published previously are more accessible than The General Theory. And he has this capability when he wants to communicate with the public of being very, very clear. He, he has a whole, he spends most of his career as a as a public intellectual who's writing for,

you know, ordinary publications that the general, for a general audience that he's, he's running the nation in Athenaeum and writing in it all the time. Some of his most important work comes in these sort of pamphlets, policy pamphlets that are available to the general public. Some of his ideas that become sort of formalized in the general theory are released to the public in these types of pamphlets beforehand. So he has the capacity to be clear when he wants to. I, I think the difficulty of the general theory is, is an attempt for Keynes to correct the, the ways that he exerts influence over government. For, for most of his career, he's getting the right answers and not getting them implemented.

So just about every policy that he, you know, lays down a marker on from the beginning of World War I until the beginning of World War II, Keynes loses. He'll say, you know, we should have lower reparations against Germany. Nope. He'll say we you know, we should have lower reparations against Germany. Nope. He'll say we should do he's he's advocating for deficit spending as early as 1929. And the general theory is not published until 1936. Obviously, that doesn't happen. These big, big fights over policy, he keeps losing and he thinks, well, maybe it's because, you know, I thought that I could persuade the public. And by persuading the public, the leaders would act, but that doesn't seem to be true. I think I need to persuade some sort of elite audience, and they will persuade leaders to act. I think it's open to debate whether that was actually successful. general theory in a lot of ways is effective in the United States after the Franklin Roosevelt

New Deal deficit spending is already happening, is already taking place. It sort of legitimizes what's happening in the United States. But in Britain, the deficit spending doesn't become the norm until the war. And it's the war, not the ideas that force the government's hand on adopting what we would now call Keynesian policies. But it's one thing to say that Keynes's professed target audience were other academic economists. And then another thing to take the additional step, which is the step you take in the book, that he had a kind of meta strategy and the sheer ugliness of the book was intended to create a prestige industry of interpreters or high priests, which would then open the doors to the corridors of power to Keynesian economists. That seems kind of speculative.

Is there good evidence that that's what he intended? Well, it's been a while since I dug into the specifics of this issue, but he writes letters to friends and other economists where he explains his worldview, I think, in pretty clear detail. There's one 1935 letter to, I'm forgetting the name of the socialist, the Fabian socialist playwright, Bernard Shaw, where I think he's pretty explicit about this. There's some correspondence back and forth with Joan Robinson where I think he's pretty explicit about it. Can't get you chapter and verse. But yeah, letters to other friends from Bloomsbury. The wife or girlfriend of...

Who is the philosopher? Bertrand Russell. You can see I'm trying to pull from these different correspondents. I don't have it handy. I can't put it chapter and verse. But yes, he does discuss this stuff in letters with his friends. Now, are those letters representative of the way he was thinking every day of the week? Or are these just a handful of things that happen to have been preserved that, you know, establish some fact pattern that you can interpret? I think other scholars are,

are, I think it's reasonable to dispute the interpretation, but I think disputing it is wrong nevertheless. Why did Keynes distance himself from chartalism in the general theory? I don't know if he does. I dispute the premise. He's not as explicit about it as he is in Treatise on Money in 1930, where he spends the whole opening chapter talking about chartalism and Knapp's theory of money. I think the general theory is just, he's already said that. He's already made that point. So he's talking about other factors.

And clearly, a treatise on money, for all its influence, people like Joseph Schumpeter thought it was just a fantastic piece of work, even though they couldn't stand Keynes' politics. Nobody reads the treatise on money anymore. They read the general theory. And I think that's sort of part of the problem. I think to really understand Keynes' theoretical perspective in the general theory, it helps to understand how he is continuing and breaking with the ideas in the

treatise on money. I think the charitalism is something that he is assuming to be continuous with the previous book. You mentioned FDR's New Deal a little earlier. How should we view Keynes' involvement in the new deal? Was he influential or was he just a redundant kibitzer? Both. I think, you know, there are people in FDR's new deal who have come to a sort of rough and ready vision of Keynesian economics on their own. Mariner Eccles, who is FDR's Fed chairman, really the person who makes the Federal Reserve into a newly legitimate force in American economics

after the financial crisis of 1929, he basically thinks you have to do deficit spending and public work spending in order to get the economy moving again when it stalls out. That's, I think, the common sense, general understanding of what Keynesian economics is still to this day for most people. And there are a lot of people in the Roosevelt administration who think that way. Keynes, as a British economist, however, gives them a certain intellectual legitimacy. So, you know, Eccles is chair of the Fed, but he's also just this guy from a Utah banking family. Utah is a very thinly populated state at the time.

It still is today. It's basically a whole bunch of deserts. So some guy came in from the desert who runs a bank that caters to sheep farmers. And this is not considered super prestigious in Washington. However, British intellectuals who hang out with great poets and great artists and great novelists, Americans look over at somebody like that and say, ah, that person really knows what's going on. They must be quite brilliant. And there's a certain power that Keynes was able to wield over people who had been to graduate school and studied economics who were in the Roosevelt administration.

You asked earlier about what was the economics profession like at the turn of the 20th century. It changed an awful lot with the New Deal because there were so many new government agencies that needed both straightforward economists, just people to do macroeconomic work, and also people who understood how to think about the world through an economic lens. Because prior to the New Deal, getting a position in the Treasury Department, for instance, being an economist wasn't in any way considered a necessary prerequisite or credential for that job. Mariner Echols didn't have a PhD when he became head of the Federal Reserve. If you had studied poetry at Harvard and worked at the right bank for a few years,

yeah, sure, you could work at the Treasury and be a top official. That changed with the New Deal. You had all of these people who needed to be credentialed in important new positions of government where they could actually wield a lot of power, move a lot of resources, change a lot of policies administratively. And those people were reading Keynes. And I think Keynes did have a lot of influence over the way those agencies were run, what they did. Whether he was influential in getting the administration to deficit spend, I think, is much more tenuous.

The Roosevelt administration spent big early on, but it didn't really want to. I mean, it did want to spend big, but it didn't want to be running deficits. It just sort of ran deficits because tax revenues didn't exist. The economy was so terrible. They were really trying not to run big deficits at first. It's not until 1938 that they really start putting their foot on the gas intentionally. There are disputes among Roosevelt's top advisors this entire period about whether deficits are good or deficits are bad. So

Keynes is influential in those discussions. But again, the general theory is not published until 1936. And so Keynes' ideas about deficit spending are out there, but they're out there in academic journal articles. They're out there in, you know, pamphlets on British government policy and, you know, what we now call magazine articles. They're newspaper articles in Britain. So I think he does have influence, but the way that he has influence is much more complex than just Keynes had an idea, he persuaded everybody, and the Roosevelt administration did it. One of those economists who got his start during that atmosphere of Keynesianism in the New Deal was John Kenneth Galbraith, right? Yes. Galbraith becomes famous in the 1950s as another public intellectual, but he is working as an economist in the agriculture department as early as the early 1930s, like 1933, I believe. Washington again during World War II running the Office of Price Administration, which is basically

the nationwide price-fixing agency that the Roosevelt administration starts up to deal with the scarcities created by the war. I want to step back out of the general theory and rewind by 15 years. So 15 years before the general theory, Keynes had published a treatise on probability. For the uninitiated, can you just give a brief summary of what Keynes was trying to achieve? A treatise on probability. It sounds like it's a book about math when you hear A Treatise on Probability. A Treatise on Probability is in many ways a book that's against a mathematical way of understanding reality in the future and of reducing human reason to fractions and percentage points.

It's a book about the nature of rationality and what it means to be a rational or reasonable person making decisions in a world where we do not know what the future will bring. So it comes from this... he's intervening in this philosophical milieu with people like Ludwig Wittgenstein, Bertrand Russell, Frank Ramsey, and these big, heavyweight Cambridge philosophers. And he's trying to give a theory of knowledge, something that philosophers would care about, not something that economists would care about. And when he's working on this theory, he doesn't think of

himself chiefly as an economist. He's thinking about himself as a Cambridge academic in this philosophical world. And he says, look, if we don't know what the future is going to hold, how can we make a decision in the present that we can call rational? We don't know what the future is going to hold, how can we make a decision in the present that we can call rational? We don't know what's coming. So how can we do something now that's going to prepare ourselves and the people around us for a future state of events? We don't know what those future events are. This becomes a very useful problem in economics, because, of course, economists never know the future. When you look at forecasters, macroeconomic forecasters, they're constantly getting things wrong, right? So what does it

mean to be a good macroeconomic forecaster? Getting it right, obviously, is helpful, but can you get it wrong and also be reasonable you know, reasonable? And Cain says, look, we have to imagine that we are making decisions based on probabilities and something can be rational if, you know, a decision can be rational if, if the outcome that we are predicting with, with our, our action or our choice is probable. But he says you can't put a fraction or a percentage on those future outcomes. There is no, you don't get to repeat the experiment. It's not like reaching into a bag full of coins and knowing that, well, there's a certain number of nickels and a certain number of quarters in here.

And if I reach in, I've got a 20% chance of picking one or the other. That's not what he's saying. He's saying there is a – something can be probable and can be objectively probable. But to know that it is objectively probable is not to run some sort of fancy equation. It is to just perceive directly, intuitively, that it is probable. It's a sort of formulation of a philosophical idea that G.E. Moore put forward in 1903 in his book Principia Ethica, where good things exist in the world, They are good.

They are objectively good. And human beings as rational agents can perceive them to be good. But goodness, for more, is this irreducible thing. It cannot be divided into subparts. It can't be. It's not like a molecule that's made up of other atoms. It just is the thing. He called it an organic unity.

And he said a good life is made up of assembling different organic unities over the course of your life. So Keynes is applying that idea to probability. And it is a 400-page book. It's very thorny. But when he published it, he thought it was his, his great masterpiece. He said, I will never undertake something so ambitious again. And it sounds silly because he does all these other incredible things, but in, in a certain respect, I think that statement holds up. He's say, this is his attempt to give a theory of human knowledge and of what it means to

know in, in the context of, I think, a fairly unique, certainly within the kind of Enlightenment rationalist tradition, a fairly unique frame for what knowledge is. The book is not influential. I think Frank Ramsey has a lot of critiques of it, but I think the really important critique is just that wittgenstein says this whole way of doing philosophy is silly and if you look at you know who is the dominant thinker in anglo-american philosophy departments over the century after a treatise on probability is is released or theory probability is released it's not um it's not john maynard keynes, it's Ludwig Einstein. Ramsey's critiques were certainly important though. And I know he only gets a passing kind of mention in The Price of Peace, but he really rolled Keynes intellectually. And Ramsey's subjective probabilities went on to become subjective Bayesianism and then had a really important

influence over economic thought. And effectively, Ramsey won the intellectual argument against Keynes. What was it about a young guy in his early 20s that was able to best the great John Maynard Keynes in that argument? Or alternatively, what was it about Keynes that was so willing to exceed the debate to Ramsey? Both great questions. So Frank Ramsey, for people who don't know, was this brilliant mathematician and philosopher in Cambridge, but he died very young. I think he was 26 when he died. So all of this stuff was happening. Keynes was a bit. I think he was 26 when he died. So all of this stuff was happening. Keynes was a bit of an old elder statesman at this point within the Cambridge philosophy world. But Keynes in 1920, 1921, was not, you know, the grand old man of British

economics that he would become. So I think it's important always when you see him being challenged by folks over the course of his career to remember that he doesn't have this great legacy yet, where he is considered one of the great economists in history. He is considered a much more influential person within that milieu because he had such a powerful role in the British Treasury during World War I. But he very famously left the Treasury. He also had an enormous smash hit bestselling book in The Economic Consequences of the Peace in 1919. So I think, so it's important to remember that he is, you know, a more prestigious and powerful figure than Frank Ramsey at the time, but he's not this towering giant that we see today.

So there is a bit of, particularly in the economics department, people thought of themselves as being part of the same project whose ultimate aim was getting the right answer, finding the truth. And part of that stems from the philosophy club. All of these guys who Keynes is debating with, early on at least, are disciples of G.E. Moore. And they feel like they're doing sort of applied Mooreism. So they're going to apply more to mathematics. They're going to apply more to reasoning. They're going to apply them to probability. They're part of a school, right? It's a school of thought. What's important is that together they get to the right answer. So even when they get into these heated, heated debates and are going back and forth and, you

know, arm wrestling over this stuff, they do feel a sense of shared or sort of common purpose in what they are doing. Frank Ramsey's psychology, I just don't know in the same detail that I know Kane's. So I don't want to speculate on what gave Ramsey the chutzpah to challenge Kane's. But, you know, I think he was a really brilliant guy who was confident in his intellect, who was accustomed to being around people like this. You know, if you're hanging out in Cambridge as an undergraduate and then, you know, an adult, I can't remember if Ramsey got a formal, you know, higher degree. A lot of these people in Cambridge philosophy, like Wittgenstein, you know, get, don't really have degrees when they're doing their, their best work, but they,

they're, you know, chummy with the, the, the philosophers who do, you know, if you're hanging out with Ludwig Wittgenstein and Bertrand Russell and, you know, all day, then, you know, taking on Keynes at some point is maybe not the craziest thing you've ever done. But it, it is, you know, I made a conscious choice in the book not to get into this particular debate because I felt like Keynes on probability here was more concerned with the philosophical implications of knowledge here. And it was the implications from Wittgenstein

that mattered more for Keynes in 1921 than those from Ramsey, which is one reason why he's happy to concede the point. Well, I wouldn't say happy, but willing to concede the debate to Ramsey. But if you are interested in in this particular conflict, there's a very good biography of Frank Ramsey that that came out last year. The name of the author is escaping me at the moment. Cheryl Mizak. Cheryl Mizak, yes. It's an excellent book and very much worth your time. So at the heart of the general theory lies a conception of uncertainty

and that pervades economic life. It drives economic fluctuations. And Keynes' idea of uncertainty is distinct from risk. And actually the best exposition of his understanding of uncertainty can be found in a response to critics of his general theory in 1937, so a year after it's published, where he says that, by uncertain knowledge, let me explain, I do not mean merely to distinguish what is known for certain from what is only probable. The game of roulette is not subject in this sense to uncertainty.

The sense in which I'm using the term is that in which the prospect of a European war is uncertain, or the price of copper and the rate of interest 20 years hence. About these matters, there is no scientific basis on which to form any calculable probability whatever we simply do not know. Should we view Keynes' understanding of uncertainty, as espoused in the general theory, as a new idea, or is it present in a treatise on probability? I think his ideas change a little bit. No one has the same view of the world in their early 50s that they do in their mid-30s. But I think, I mean, the reason that I chose to write about the treatise on probability was not just because he wrote it and it's a book that Keynes did. I mean, there are lesser and, you know, books of lesser and greater importance in the, in the Keynes

canon, I think you can draw a pretty, a pretty clear line from the treatise on probability to the general theory. And I think that, that idea of, of uncertainty about, um, he says in, in the general theory, he says, you know, we think that we're making these mathematical predictions about the ability of different investments to, you know, to yield a profit. But we just don't know about these, you know, about corporate earnings a couple of years hence any more than we know, you know, about the prospects for an expedition to the South Pole. Things happen. And I think this year, where we've had this massive global pandemic, which has completely upended the global economy, is a great illustration of that idea. Anybody who was doing macroeconomic forecasting in 2018

was going to get the wrong answer and they were going to get it through no fault of their own. No one knew what was coming. And it upended things in this way that will change policymaking and views about the economy even for years to come. In the United States, people are taking, I think, broadly Keynesian ideas about the economy much more seriously today than they were certainly 10 years ago, but even I think two years ago as a result of the pandemic. For me, uncertainty and its connection with what he calls the animal spirits is the most beautiful and pregnant idea in the general theory.

That's why chapter 12 is my favorite chapter, while much of the rest of the book is sort of incomprehensible to me. But the connection between uncertainty and animal spirits is that Cain says, like, there's no way people can use precise calculations to form their long-term expectations. Because the Bayesian decision tree forks out forever in front of us. Therefore, the reason people do anything at all, like the reason we start businesses and take economic decisions, must be due to animal spirits. It must be due to something else. I think the quote is, well, I don't think I have it here. The quote is, if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but mathematical expectation, enterprise will fade and die.

But while I was on that riff, you gave the thumbs up, Zach. I take it that chapter 12 is also your favorite chapter of the general theory? I mean, how could it not be? It's easily the most accessibly written of the 24, with the possible exception of chapter 24, which I think is actually kind of mystical in ways that make it a little bit – even though you can get a handle on what he's saying, what he's saying is just a bit fuzzy. Yeah, chapter 12, I think Paul Krugman gave a very influential talk on Keynes in reading the general theory several years ago, where he said there are basically two kinds of Keynesians. There are chapter 12 Keynesians, and there are chapters one through four Keynesians. And I think as a description of the different schools of thought, he was absolutely right. There are people who look at chapters one through four and say,

well, the refutation of state's laws is what's important. This stuff in chapter 12 about uncertainty and the ability of financial markets to effectively allocate resources based on beliefs about the future. That stuff is very interesting and maybe useful and good, but not core to the meaning of the book. And I disagree with that Krugman paper on the sort of theoretical basis rather than descriptive basis of the field. I think to really, I think the theoretical meat of chapters one through four, what makes them make sense, the reason why Say's law can be thrown out is because of what Keynes says in chapter 12. Now, there are other interpreters who say, no, no, no, it's chapter 17, or maybe it's chapter 16, and the way he talks about interest rates and liquidity preference and all this other stuff. And, you know, people make whole careers

detailing why they think that is true. And, you know, I wish them well. But I think chapter 12 is really where the action is. And to your point there about where enterprise is afoot, Keynes using the word enterprise with a capital E doesn't just start in the general theory. In the treatise on money in 1930, he talks about a distinction used to make the investments, to buy the factories and the equipment that give people jobs. So essentially, thrift and by extension, inequality is required in order to create a system that lifts everybody up, albeit in unequal ways. And Keynes just says, you know, no. Were the seven wonders of the world built by thrift? I deem it doubtful.

It's enterprise. It's this sort of spirit of this sort of will to do something, to act, that is embedded in human beings that can be activated by different circumstances that matters, not the sort of retrenchment and defensive crouch that is represented by Thrift. So there again, I think it's useful to have a background in the treatise on money in Keynes' earlier works when reading the general theory to get some idea of what he's going for there. But honestly, if you are curious about Keynes and haven't read him before, chapter 12 is fairly accessible. You can pick it up and get a good idea of what's going on there without having an extensive background in economics or Frank Ramsey

and Ludwig Wittgenstein. Yeah, several great metaphors in chapter 12 as well, like beating the gun, the beauty contest. You describe Keynes' proposals... Incredible. Yeah, you describe Keynes' proposals at the Bretton Woods conference in 1944 as a breakthrough, potentially on par with the general theory, whereas most people would view the general theory, whereas most people would view the general theory as the climax of his intellectual career. So why are you right? And why are most people wrong? Oh, teeing me up for my next piece. I'm working on a magazine article

about this right now for the 75th anniversary of the Bretton Woods institutions. Oh, cool. Yes, good timing. Well, if you look at the policy proposals that Keynes makes over the course of his life, the general theory is a bit thin on practical ideas. I think it's widely interpreted as being a book that advises counter-cyclical spending. In particular, you know, the idea of putting money in consumers' pockets being a way to boost aggregate demand and increase economic activity, which is, you know, one policy implication. At the end of the book, he also says, we will need a somewhat comprehensive socialization of investment.

What does that mean? What is somewhat comprehensive? Even what does socialization mean in this context? Keynes has a very flexible idea about what he means by socialism and socialization. Sometimes he means these things as a sort of epithet and sometimes he means them as sort of a progressive ideal. It just depends on the context. So when you get to Bretton Woods, Keynes has been wrestling with this idea of the state's power to secure good outcomes and to insulate society from shock. And he has come to this belief that sustained high levels of public investment are not only necessary, but also just very good, that by running very high levels of public investment for years on end, we can not only tame the business cycle, in a sense, but also lead to a

world where people don't have to work that much, where we've actually solved so many social problems that we don't need to secure a decent livelihood for people by making them go out and do things with the resources of the earth. It's a very utopian vision. That's a much more developed philosophical view than what he expresses in the general theory. In Bretton Woods, most of that stuff about public investment is happening in the back of his mind from the perspective of a British imperial manager. Just as he managed British war finances in World War I and for, you know, in large part over the course of World War II, at Bretton Woods, he's trying to figure out how to give the British government some sort of

wiggle room to do things that are necessary to create all of the things that he wants to have for British people. So he's involved at this point in helping develop the Beverage Plan, which is essentially the creation of the modern British welfare state, the National Health Service, old age pensions, everything that we associate with the welfare state today in Britain. And he knows that those things are expensive. And he knows that the American government isn't particularly interested in helping Britain. So there's this one side of him that's just trying to give himself some wiggle room there. But his grand vision is of creating an international

monetary system that will prevent international conflict. That is a much bigger project, I think, than the project that he is undertaking in the general theory. The general theory is related to that project. And there are some lines that I quote in the book about inadequacies with the trading system. And if countries can manage aggregate demand with these sort of what we now call Keynesian strategies, they can take care of full employment and not beat each other's throats and be preying on each other through trade systems, which is related to this idea. But I don't think it's the central thrust of the general theory. The general theory is about changing the minds of economists about how the economy works. a system where countries do not have to be forced into a sort of deflationary strategy in order to meet the demands and expectations of fair play in the international world.

If you have to create unemployment through deflation, Keynes believes, you will create international enmity. People will blame foreigners for their own misery. And to some extent, they will be right. I mean, I think the failure of the gold standard over the 1920s, you know, shows that the movement of international money, you know, you can, to some extent, blame, blame, not, you know, maybe, maybe not, you know, just farmers living in other countries, but, but the way the monetary system is set up, you know, advantages, you know, certain, certain parties more than others. So he's, he's trying to eliminate this source of international conflict. Now, the problem with Bretton Woods is that he loses just about every single one of these battles. His grand vision is just overruled by Harry Dexter White and the American regard to preserving the British government's ability to act within the Bretton Woods system become the Americans win and it becomes a sort of, I guess, instrument of Cold War policy or American imperialism. those big diplomatic economic and monetary arrangements to create international harmony

and that they should be used to create international harmony um i i think is something that is still kind of novel today i i think harry dexter white understood what he was doing as a diplomatic mission and i think he got a lot of support for that idea from John Maynard Keynes. And he felt, even though he was literally going to battle with him in these negotiations day in and day out for years, even before Bretton Woods actually happened, I think under his view of what the stakes were and of what could be done with this agreement is very much informed by Keynes himself. And to some extent, White, as a young man, really looked up to Keynes as an economist and views him as something of an intellectual hero, even though they're sort of at loggerheads here.

So I do think that the actual treaty that was signed, even though it reflects American interests much more so than British interests and certainly doesn't have the grandeur of Keynes' proposals, is trying to do something that we haven't, at least in the United States, we haven't done with economic treaties and economic diplomacy in decades now. And I think when I look around at the world today and see inequality, climate change, the rise of authoritarianism, that kind of economic diplomacy strikes me as something that could be of great value today. A few questions about the process of writing a book, if I may. How long did the price of writing a book if i may how long did the how long did the price of peace take to write depends on how you count uh if if if you take the long view i i started i started reading about canes in 2000 like seriously reading about cannes in 2008. So from then to the completion of the final manuscript in 2019 is 11 years. I think that's a little bit of an excessive timeline. I started the proposal in, I guess, the spring of 2016, worked on the proposal for about a year,

signed a contract in March of 2017, and then delivered the first draft in, I think, September of 2018. And then the final draft, which was, I guess, the third or fourth time through in September of 2019. So it took me a year to do the proposal, which is a lot of work and research, right? So it's not like you're starting from scratch when you start on the book after the contract's accepted. Then a year and a half to get the first draft done, and then another year to get that worked out. And the book changed radically over the course of the different drafts. Just problems that you see in the first draft

that you require research and the introduction of new ideas, things were cut. Frank Ramsey got cut, I think, in the second draft, for instance. You're trying to tell the story. They tell you when you're writing these things, to slaughter your children, I think, is the metaphor, which is a terrible metaphor, especially once you have children, because cutting things

from a book is not like killing a human being. But you become very attached to the things in your book. And I was very aware when I was writing this one that, you know, if people wanted to learn every detail of John Maynard Keynes' life, that there was a place for that. And it's the three-volume biography by Robert Skidelsky. If they're feeling slightly less ambitious, they can look at Donald Moggridge's thousand-page tome. So I knew I didn't want to write, you know, 1800 pages. There's going to be stuff that I, I, I needed to remove to, to create, to simplify the narrative, but deciding what to add and what to cut, you know, took a long time. There's, there's quite a bit on Keynes and liberal imperialism in that book that was not there in the

first draft that, that came in, in the second draft. And quite a bit on Bretton Woods and World War I that entered in the third draft. So, you know, it was quite a process. It wasn't just like we were copy editing that last year. How did you manage your time while you were writing the book? Badly. The first six months were just great because I got book leave. My day job, I'm a reporter at HuffPost. And they gave me five and a half months off to just work on the book and said, your job will be here when you get back. So that was great.

I mean, just focusing on the book, reading and writing and reading and writing. When you get to a place where you feel like you can't write and you can't figure out how to fix the chapter, the answer is usually that you don't have enough research. So then you got to go read some more. And that's I mean, that was the life, just writing a book that I love and reading all this fascinating material. That was great. When I had to go back to work, though, and the first draft was only about two thirds done, that became very difficult. So my wife was working on a book at the same time. Hers is about history of US immigration policy. And so I think that helped because I had to spend evenings and weekends working on the book, and so did she.

So it wasn't like I was, you know, neglecting my family to pursue this grand career. We were both doing that. We'd just sit in the office or the living room and take breaks to tell each other what crazy things we just read. So that was really, really fun. But if you have kids, you can't do that. So the next book's going to be trickier. We have a toddler now. But as you can tell, I had six months. I got the first draft two-thirds done. I didn't turn the draft in for another year. So when you have to work five days a week and you have evenings and weekends to do research and writing, it just takes much, much longer to get things complete. And my job was very flexible.

I took a lot of time off the year before the book came out while we were going through edits. I have a pretty good job where I have a lot of vacation time, at least by U.S. standards. So I used all of that on the book. And again, not something that is generally conducive to a harmonious relationship, but my wife was doing the exact same thing. So we cut each other a lot of slack. I assume you and your wife proofread each other's books. What is your wife's best quality as a reader of your work? Oh boy, that is by far the highest stakes question you've asked. So my wife is an editor. She's the national editor at the New York Times. She is very, she's good with everything.

I mean, all of her, it's not like she's bad at copy editing or bad at sentence to sentence stuff. She was really good at taking chunks of the book and saying what, and just forcing me to focus on the idea I was trying to get across with like a chapter. So chapter by chapter, what is the point of this chapter? How does it fit in with the broader message you're trying to tell in this, the broader story you're trying to tell in this book? And how do the components of this chapter fit in with the point of the chapter? So why is it important in this particular case that we get into Frank Ramsey?

You're not going to talk about Bajan's stuff later. It's, you know, at least that's what we decided. May have been a mistake. I think I got dinged for it in a review somewhere. There are people who like Frank Ramsey a lot. But what is the point of all of this stuff? You have these great anecdotes about Cain's fox hunting and going to the ballet. They're charming and they break up the movement between economic theory and political machinations quite well, but how do you make that into something that fits?

How do you make those different parts of Cain's life fit into what you're trying to tell with the story? She was just very good at helping to focus on things and to show when it was clear that I had stuff that had to go or had stuff that needed to be amplified or brought to the forefront in a better way. I think a really good editor isn't just somebody who tames your excesses. It's somebody who points out places where you can be more excessive. And she's good at both of those. One of the things I loved about the book

was it had a great insights to pages ratio do you think about that consciously uh well that's sort of you're you're sort of saying it's it's efficient right no no no something a bit different i mean like when i open a book i enjoy being able to learn something or several things on any given page and the references and anecdotes and insights and interesting facts that I'd never heard of before were leaping off almost every page. Well, that's great. I love to hear it. I think I read a lot of economics and I read a lot of a lot of policy papers as part of my job. I cover economic policy, U.S. economic policy. And I don't typically find the process of reading economic papers to be particularly enjoyable. I think some of that's because the writing is bad.

Some of that's because the writing is intentionally bad so that people take it seriously as an economics paper rather than a work of popular journalism or something. I think sometimes it can be, any profession, any specialty gets bogged down in jargon in a way that allows you to communicate more quickly with other specialists and more efficiently, but loses people who are not specialists. And I think often even obscures the number of interesting things that are happening within even happening within, um, you know, within even, you know, just a short, you know, 20 or 30 page, you know, journal article. So with somebody like Keynes, he's always operating on so many different sort of intellectual planes. Um, there's, there's Keynes, the, the, the art lover, there's Keynes, the philosopher who's concerned with reason and knowledge. There's Keynes, the political actor who is trying to stop a war and create world peace. And there's Keynes, the economist who's trying to understand what has gone wrong with the gold standard and, uh, a monetary system that just basically works.

Uh, nevermind Keynes that, you know, the, the depression fighting, uh, guy who's just trying to get his country through, you know, the next six months, uh, over and over again, all of these things are, are linked, um, in one person so that there are relationships intellectually between all of them but you know trying trying to find the meaning of any particular act that Keynes is engaged in at any given time there are often just many sort of many facets to the significance of that and so I don't know if I was consciously trying to have a lot of insights per page. I just think Keynes as a historical figure was somebody who was just spraying insights all over the place. And so when you cover him, it's very easy to you know, to present those.

Some final questions on Keynes. So I'm going to invite you to participate in counterfactual history here with all of its attendant risks. All right. Could Keynes have developed the ideas he developed if he hadn't belonged to his various social circles, the Bloomsbury set, the apostles, the circus, if instead he was a reclusive genius? Yeah. So all the caveats of who really knows,

et cetera, et cetera. I don't think so. I think, I think Keynes needs other people, both to tell them he's a genius so that he can have the confidence to do these things. One of the things we haven't talked about is that Keynes was convinced that he was very, very ugly his entire life. And he had very low self-esteem about himself as a romantic partner. And he was also, I think, really depressed, saddened, felt set back by his inadequacies as an artist, because he's around all of these artists all the time. And so he's constantly trying to prove himself to people in Bloomsbury that he really does belong in this crowd,

that he's not just this numbers guy who works at Treasury. He is one of the, you know, esthetes who gets to hang out with Pablo Picasso, too. And I think you can see that clearly in the economic consequences of the piece with the character sketches he does of Wilson and Clemenceau and Lloyd George. He's trying to compete with Virginia Woolf. He's trying to show his friends back in Bloomsbury and Lytton Strachey, I'm an artist like you, and you can do art within this kind of work and this kind of writing. So I think he feels a need to both to prove himself to them, but I also think he's getting ideas from them.

I think his view of the world is constantly shaped and reinforced by them in a way that being a reclusive genius, you know, he has friends who are reclusive geniuses. Wittgenstein, I think, is the most, is the best example of that. You know, Wittgenstein just goes off and is kind of angry and miserable for long periods of his life and then comes back to Cambridge and then goes off again. And, you know, Wittgenstein produces, you know, I think, you know, basically two really important works over the course of his life. Keynes is just constantly popping off masterpieces. And they're not all books. I mean, I think the proposals that he puts forward at Bretton Woods, even though they're not enacted, I mean, I think those are really serious masterpieces of the form in which they're participating. And I don't think that would happen without Bloomsbury. Now, he does leave Bloomsbury behind, really, after he marries

his wife, Lydia Lopakova, in 1925. I wouldn't say he leaves them behind, but he gets some social and emotional distance from them. And I think his wife gives him a certain sense of confidence that he didn't have before. But yeah, I just find it hard to believe that he would be, even if he was producing great works, I don't think it would be with the frequency that he created them. And I don't think they would have had the same content. Hmm. he created them and I don't think they would have had the same content. Did Cain see some of himself in Isaac Newton? And if so, which parts? I think so. Again, with the caveat that I haven't studied Newton's life in the detail that I've studied Cain's, but Cain's wrote a couple of very, very impressive biographical sketches of Newton during his life. And I think my favorite quote from, there are so many good quotes in these, but he says, Newton wasn't the first of the scientists or the last of the alchemists.

He was the last of the magicians. And he meant this as a compliment. He said that Newton had this ability to sort of intuit or divine some important fact about how the world worked and that, you know, some secret hidden in God's plan and that he could then dress that intuition up in mathematics in order to persuade people that this flash of insight was really true.

But that Newton was really, in a way, an artist in addition to being a scientist. That really what makes Newtonian insights in mathematics or in physics or even economics, people forget that Newton was a really important figure in the monetary policy debates of the late 17th century. What made those, that work so impressive was a flash of insight that's very similar to, you know, the muse that possesses a poet. He was just very good at using the language of mathematics and the language of science to persuade people. And so in Newton, science was an art. And I think, I don't know if that's true, you know, I don't know if Newton, I just don't know. I'm not disputing Keynes' assessment here because I just don't know enough about Newton's life.

But I do think that that's the way Keynes thought of himself. I think that Keynes wanted to be thought of as a creative artist because he wanted the approval of all of these other creative artists in his life. And he believed that the work that he was doing in economics was not just, you know, impressive algebra, but, you know, creative work that would, you know, that belonged alongside people like Virginia Woolf. Yeah, Keynes was incredibly intuitive, but he also put that intuition to practical use. And I think those twin aspects of Keynes as an economist, the intuitiveness and the practicality, were in a strange way summarized by Hayek

shortly after Hayek received the Nobel Prize. He made some comments about how Keynes was you know, was a great man, but not a great economist. I think there's a video of this, but I think the direct quote was, Keynes was brilliant, but economics was only a sideline for him. And I think that's more of a compliment than Hayek perhaps realized. Hayek and Keynes have just a very complicated relationship. Politically, of course, they don't get along at all. Hayek is very much a conservative aristocrat, whereas Keynes is kind of a liberal aristocrat, liberal in the American use of the term. But they are both working from a sense of deep respect for Enlightenment, capital L, liberalism. They do take these thinkers seriously, people like John

Stuart Mill and Adam Smith. Neither of them like Karl Marx very much. They have a lot in common in that respect. And so their political disputes, I think, are more heated because they both think that they are presenting the sort of true legacy of the same set of sort of shared principles and foundations. And I think in the United States today, increasingly, people just take the sort of Hayekian interpretation of Enlightenment liberalism to be liberalism. I don't know how it's thought of in the rest of the world, but Keynes would just have thought it was totally outrageous that, you know, it is liberal to be opposed to, you know, a social welfare state or to – he helped socialize British medicine. But he thought that those were very, very liberal things to do the same way that Hayek

thought that like the gold standard and laissez-faire were fundamentally liberal things to do. I think Hayek did mean that as a bit of a dig. And Hayek was very well versed in all of this economics coming out of Austria and because he's an Austrian. And Keynes was not quite as well versed. I mean, I don't want to say he wasn't well versed because he cites all of these people in the treatise on money. And this is the time when there's no internet, right? If you want to get your hands on journals in other languages of economics, it takes some real work to do. But Hayek thinks that Keynes' interpretations of those Austrian thinkers in the treatise on money are wrong. And so he then says, see, look, Keynes didn't read anything. This is just a sideshow. He

really didn't know anything about the history of economics. I don't think I don't think that's a fair assessment of Keynes's level of knowledge. But his point that economics was a sideshow for him, you know, I think I think there's something to that. I mean, I think I don't know if I would say sideshow because it's such a big focus of – he spends so much time on it. But I don't think he thinks economics – as a young man, I don't think he believes economics is going to be the great project of his life. And it's not clear to me that at Bretton Woods he thinks the general theory is the great project of his life. He's a statesman and a philosopher. I think before – those activities take priority for him above being an economist.

And so to that... In that sense, I think Hayek is right. Could economics ever produce another person of Keynes' stature? Yes, but will it, I think, is the real question. Economics has got to adapt. At least in the Anglo-American tradition over the past 40, 50 years, it has just narrowed the scope of what it does

to a place where... I don't want to dismiss the quality of the work that a lot of economists do. Sometimes I've used economists broadly and people who do very good work have said, hey, you're disparaging my profession. And, you know, there's good work that's being done in economics. But it's not this grand philosophical political project the way that it was with Keynes. It's very much a textbook-oriented exercise where we know what the rules are. We've got our principles. Let's apply them to these facts before us and, you know, run the model, get the answer. And that is, you know, there's value to that.

There's value to empirical studies on, you know, how things actually work. But I think the theoretical sweep of Keynesian thought. I think to some extent Hayek had it too, moving in a different direction. I don't think, the way Friedman is a sort of successor to Hayek in this way, I don't think he has anywhere near the kind of grandeur or ambition philosophically that Hayek has. And I think Galbraith in the Keynesian tradition comes pretty close. I think Galbraith is thinking about big ideas too. I don't think he's quite as grandiose as Keynes because he doesn't have the background in,

you know, Cambridge philosophy that Keynes has. But he is working with big ideas and trying to do things that Keynes is trying to do with economics. But in our own time, I mean, I think Thomas Piketty has been trying to do economics that way. His new one on – it's escaping me, Capital and Ideology, I think is the name. Uh, you know, that, that is, is an attempt to do political theory and economics together to, to, to get back to a sort of political economy way of, of doing things. Um, but I, I don't know. I think the profession would have to change quite a bit and become more introspective and more willing to countenance challenges to its years in that it's become more Keynesian on policy outcomes. But I don't know if it's become more Keynesian on the philosophical foundations. I think people

are more likely to say, well, we don't really know what the relationship between government budget deficits and inflation is right now than they are to say, we need to rethink, you know, economic humanity and what it means to be an economic agent and actor. And I don't think you get rewarded in the field for trying to do work like that. I think you have to go to philosophy or politics departments to do that, or be a journalist. I think in the United States right now, academia in general is kind of viewed with less prestige and authority than it was 15 or 20 years ago because of this hyper specialization that's gone on in every department, not just economics. So yes, but probably not. Well, if people want inspiration, I can recommend a book called the price of peace money democracy

and the life of john manard canes zach thank you so much for joining me come back anytime thanks so much for having me i hope you enjoyed that conversation as much as i did two things before you go. One, if you want to read the transcript or the show notes for this episode, you'll find them on my website, thejspod.com. Number two, please subscribe to the show. It means that you won't miss new episodes like this one, and it also makes it easier for other people to find us, and I would appreciate your help.

The audio engineer for the Jolly Swagman podcast is Lawrence Moorfield. Our dehydrated video editor is Al Fetty. I'm Joe Walker. Until next week, thank you for listening. Ciao.