I’m getting very tired of reading articles in left leaning outlets in which Keynesianism and socialism are either conflated or worse, mixed together in a big bowl of philosophical mush. The reason for my annoyance in this regard is simple: the two are incompatible.
Explaining the theories of John Maynard Keynes in any depth would be both time consuming and start a whole bunch of arguments, so instead I’m going to attempt to summarise Keynesianism succinctly in terms few people will (hopefully) complain about (here I go; wish me luck): the private sector does lots of things very well, but it has fundamental, recurring problems. Such as the fact that it is prone to boom and bust, which as we know leads to recessions and in a worst case scenario, depression. So one of the functions of the state is to, on occasion, use its resources to plug the gaps. If the government of the day sees a recession coming, it can action a bunch of capital projects to prop the economy up and get it over a hump. The essence of Keynesianism is that demand dips in capitalist economies, so keeping things smooth requires state spending in appropriate ways.
Lots of people on the Right do not like Keynesianism, and this makes perfect sense. If you want to argue that the market always knows best, you cannot then think that the state should act as guarantor of any economy. Keynesianism was the essential divide between Balls and Osborne going into the last general election, so this is still very much a live left-right debate. But just because the Right isn’t keen on Keynesianism does not make it socialism. In fact, to repeat, the two ideas are actually irreconcilable with one another.
In order to accept Keynes’ prescriptions for how to mend an economy, you must first accept that capitalism is necessary but flawed. Whereas socialism is about displacing capitalism completely. Therefore, in a socialist society, Keynesianism becomes totally irrelevant – if you’re planning the whole economy, you don’t need to smooth out the rough bits that capitalism brings. Capitalism is gone and whatever the economy is under central planning, it is. You cannot think that a state’s function in the economy is to stand back most of the time and then only intervene when necessary, while simultaneously believing that the state should run every bit of the entire economy.
Take this example: within Keynesianism, it would sometimes be prudent to put a halt on state sponsored capital projects for periods of time. If the economy was going through a real high point in its cycle, you would want to hold back large infrastructure projects until such a time as they would be more economically valuable – when you need to create jobs and growth in a downturn or pre-downturn, for instance. Socialist thinking on this would never countenance such an idea; again, within a centrally planned economy, if you held off big government projects for the bad times, nothing would ever get built since there is no longer any private sector to do such things within. Also, there would theoretically be no bad times in a socialist economy anyhow (although the history of the 20th century might just tell you something different on this final point).
All of this may seem like pedantry or semantics, but it really isn’t; this is a discussion about what ideas shape left and centre-left thinking over the next decade, perhaps more. And if everyone keeps conflating Keynesianism with socialism, you’ll end up with the mush that encapsulates most of the left and centre-left thinking we current have perpetuating itself further and further into the future.