Schumpeter’s obituary of Keynes became news during May 2013, for all the wrong reasons. Schumpeter had said that Keynes “was childless”, and noted in the same sentence that Keynes’s “philosophy of life was essentially a short-run philosophy”. The latter does not follow from the former. Schumpeter was guilty of cramming that sentence, but says nothing of Keynes’s lack of concern for future generations, or his sexuality.
1.
In small part, Schumpeter did have in mind Keynes’s prewar lifestyle. It was a self-indulgent brand of English artistic intellectualism. Keynes’s friend E. M. Forster (the gossips should read VS Naipaul) described the Bloomsbury-cum-Charleston idyl thus: “In came the nice fat dividends, up rose the lofty thoughts, and we did not realise that all the time we were exploiting the poor of our country”. Some of the children experienced this lifestyle as alienating and neglectful (the atmosphere is vividly captured in Virginia Wolf’s novel ‘To The Lighthouse’, and there is the true story of Angelica Garnett).
To put this in perspective, heed the words of one of Schumpeter’s biographers: “Compared to Keynes, Schumpeter had no reason to think that life was something a person could expect to enjoy automatically … His own vision of life resembled his vision of capitalism as a perennial gale of creative destruction”.
2.
When mentioning Keynes’s childlessness, Schumpeter’s obituary had already discussed Keynes’s “not-quite-professional” views on population, namely his effort “to defend (at the threshold of the period of unsalable masses of food and raw materials!) [Malthus’s] thesis that nature had begun to respond less generously to human effort and that overpopulation was the great problem of our time”.
Lest we forget, Keynes was Director of the Eugenics Society. In ‘The End of Laissez-Faire’ he wrote: “The time has already come when each country needs a considered national policy about what size of Population is most expedient”. Then: “The time may arrive when the community as a whole must pay attention to the innate quality as well as to the mere numbers of its future members”. Keynes fretted about “the proportion of the population born from those who, from drunkenness and ignorance or extreme lack of prudence, are not only incapable of virtue but incapable also of that degree of prudence which is involved in the use of artificial checks”, i.e. contraception. Poor working classes.
Keynes held to these beliefs up until his death. In a 1946 lecture he praised Eugenics as "the most important, significant and, I would add, genuine branch of sociology which exists". The comment would have disgusted Schumpeter, not least because Schumpeter, in contrast to Keynes, understood the other disciplines impinging on economics. Schumpeter was a sociologist, historian, and economist. There is psychology, anthropology, and political science in his writings. Among their contemporaries it was conceded that, despite the simple attraction and immediacy of Keynes’s ideas, Schumpeter was the more erudite.
None went so far as to surmise that Keynes remained childless because he feared for the ‘quality’ of his progeny.
3.
We can return to the guilty sentence -- “He [Keynes] was childless and his philosophy of life was essentially a short-run philosophy”. The strongest evidence for concluding that Schumpeter made a mistake by cramming this sentence is the fact that Schumpeter was also childless and his philosophy of life was a long-run philosophy.
Schumpeter’s objections to Keynesian economics were twofold. He believed Keynes’s models and the policy recommendations derived from them were stationary applications to short-run, and historically exceptional, depression conditions. And he believed that the economic problem was long-run capitalist growth -- capitalism was never stationary, it evolved incessantly, or it died. Short-run Keynesian policies, especially the artificial stimulants to consumption, employment, and investment, made the present prospects worse, conserved all of the existing dysfunctions, and damaged the capitalist growth engine by permanently distorting the signals and incentives to entrepreneurs.
Keynes said “it can seldom be right ... to sacrifice a present benefit for a doubtful advantage in the future ... It is therefore the happiness of our own contemporaries that is our main concern”.
For Schumpeter, present and future wellbeing depended identically on the functioning of capitalism. He agreed that suffering could be alleviated, but disagreed about the causes and some of the means. And he was suspicious of claims to relative suffering among populations which have already indulged the advances which capitalism brought about.
A stagnation is a temporary outcome of the cyclical evolution of capitalism, or a result of avoidable dysfunctions, and usually a combination of both. There is no dichotomy. Past, present, and future are a single movement of evolution. Present and future generations are best served by long-run analysis. The long run matters to current policy.
Schumpeter highlights these differences -- in ways relevant today -- in the passages directly either side of the ‘childless’ sentence. Keynes’s ideas can be understood, he said, as a conservative Englishman’s advice on “England’s short-run interests … Like the old free-traders, he always exalted what was at any moment truth and wisdom for England into truth and wisdom for all times and places … What was it that this patriotic Englishman beheld? … [England] had lost many of her opportunities … her social fabric had been weakened and had become rigid. Her taxes and wage rates were incompatible with vigorous development, yet there was nothing that could be done about it … So he turned resolutely to the only parameter of action that seemed left to him, both as an Englishman and as the kind of Englishman he was … monetary management”.
We are frequently told now what Keynes would have thought of austerity. Schumpeter, with his broader knowledge of history and long-run growth dynamics, would wish to end stagnation by eliminating structural obstacles. Things could be done, e.g., the ‘taxes and wage rates’ compatible with ‘vigorous development’ can be fixed. The differences between the two economists were, in practical terms, their contrasting activist responses to downturns.
To paraphrase one of Schumpeter's analogies, the cardiologists today are inexplicably discussing dermatology. They should return their attention to strengthening the beating heart of economic life.
Schumpeter’s obituary of Keynes became news during May 2013, for all the wrong reasons. Schumpeter had said that Keynes “was childless”, and noted in the same sentence that Keynes’s “philosophy of life was essentially a short-run philosophy”. The latter does not follow from the former. Schumpeter was guilty of cramming that sentence, but says nothing of Keynes’s lack of concern for future generations, or his sexuality.
1.
In small part, Schumpeter did have in mind Keynes’s prewar lifestyle. It was a self-indulgent brand of English artistic intellectualism. Keynes’s friend E. M. Forster (the gossips should read VS Naipaul) described the Bloomsbury-cum-Charleston idyl thus: “In came the nice fat dividends, up rose the lofty thoughts, and we did not realise that all the time we were exploiting the poor of our country”. Some of the children experienced this lifestyle as alienating and neglectful (the atmosphere is vividly captured in Virginia Wolf’s novel ‘To The Lighthouse’, and there is the true story of Angelica Garnett).
To put this in perspective, heed the words of one of Schumpeter’s biographers: “Compared to Keynes, Schumpeter had no reason to think that life was something a person could expect to enjoy automatically … His own vision of life resembled his vision of capitalism as a perennial gale of creative destruction”.
2.
When mentioning Keynes’s childlessness, Schumpeter’s obituary had already discussed Keynes’s “not-quite-professional” views on population, namely his effort “to defend (at the threshold of the period of unsalable masses of food and raw materials!) [Malthus’s] thesis that nature had begun to respond less generously to human effort and that overpopulation was the great problem of our time”.
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Lest we forget, Keynes was Director of the Eugenics Society. In ‘The End of Laissez-Faire’ he wrote: “The time has already come when each country needs a considered national policy about what size of Population is most expedient”. Then: “The time may arrive when the community as a whole must pay attention to the innate quality as well as to the mere numbers of its future members”. Keynes fretted about “the proportion of the population born from those who, from drunkenness and ignorance or extreme lack of prudence, are not only incapable of virtue but incapable also of that degree of prudence which is involved in the use of artificial checks”, i.e. contraception. Poor working classes.
Keynes held to these beliefs up until his death. In a 1946 lecture he praised Eugenics as "the most important, significant and, I would add, genuine branch of sociology which exists". The comment would have disgusted Schumpeter, not least because Schumpeter, in contrast to Keynes, understood the other disciplines impinging on economics. Schumpeter was a sociologist, historian, and economist. There is psychology, anthropology, and political science in his writings. Among their contemporaries it was conceded that, despite the simple attraction and immediacy of Keynes’s ideas, Schumpeter was the more erudite.
None went so far as to surmise that Keynes remained childless because he feared for the ‘quality’ of his progeny.
3.
We can return to the guilty sentence -- “He [Keynes] was childless and his philosophy of life was essentially a short-run philosophy”. The strongest evidence for concluding that Schumpeter made a mistake by cramming this sentence is the fact that Schumpeter was also childless and his philosophy of life was a long-run philosophy.
Schumpeter’s objections to Keynesian economics were twofold. He believed Keynes’s models and the policy recommendations derived from them were stationary applications to short-run, and historically exceptional, depression conditions. And he believed that the economic problem was long-run capitalist growth -- capitalism was never stationary, it evolved incessantly, or it died. Short-run Keynesian policies, especially the artificial stimulants to consumption, employment, and investment, made the present prospects worse, conserved all of the existing dysfunctions, and damaged the capitalist growth engine by permanently distorting the signals and incentives to entrepreneurs.
Keynes said “it can seldom be right ... to sacrifice a present benefit for a doubtful advantage in the future ... It is therefore the happiness of our own contemporaries that is our main concern”.
For Schumpeter, present and future wellbeing depended identically on the functioning of capitalism. He agreed that suffering could be alleviated, but disagreed about the causes and some of the means. And he was suspicious of claims to relative suffering among populations which have already indulged the advances which capitalism brought about.
A stagnation is a temporary outcome of the cyclical evolution of capitalism, or a result of avoidable dysfunctions, and usually a combination of both. There is no dichotomy. Past, present, and future are a single movement of evolution. Present and future generations are best served by long-run analysis. The long run matters to current policy.
Schumpeter highlights these differences -- in ways relevant today -- in the passages directly either side of the ‘childless’ sentence. Keynes’s ideas can be understood, he said, as a conservative Englishman’s advice on “England’s short-run interests … Like the old free-traders, he always exalted what was at any moment truth and wisdom for England into truth and wisdom for all times and places … What was it that this patriotic Englishman beheld? … [England] had lost many of her opportunities … her social fabric had been weakened and had become rigid. Her taxes and wage rates were incompatible with vigorous development, yet there was nothing that could be done about it … So he turned resolutely to the only parameter of action that seemed left to him, both as an Englishman and as the kind of Englishman he was … monetary management”.
We are frequently told now what Keynes would have thought of austerity. Schumpeter, with his broader knowledge of history and long-run growth dynamics, would wish to end stagnation by eliminating structural obstacles. Things could be done, e.g., the ‘taxes and wage rates’ compatible with ‘vigorous development’ can be fixed. The differences between the two economists were, in practical terms, their contrasting activist responses to downturns.
To paraphrase one of Schumpeter's analogies, the cardiologists today are inexplicably discussing dermatology. They should return their attention to strengthening the beating heart of economic life.