I learn something new about John Maynard Keynes

Tuesday, February 28, 2012

Keynes begins his essay "The End of Laissez-Faire" in the version included in his Essays in Persuasion with the stirring passage:

Let us clear from the ground the metaphysical or general principles upon which, from time to time, laissez-faire has been founded. It is not true that individuals possess a prescriptive ‘natural liberty’ in their economic activities. There is no ‘compact’ conferring perpetual rights on those who Have or on those who Acquire. The world is not so governed from above that private and social interest always coincide. It is not so managed here below that in practice they coincide. It is not a correct deduction from the principles of economics that enlightened self-interest always operates in the public interest. Nor is it true that self-interest generally is enlightened; more often individuals acting separately to promote their own ends are too ignorant or too weak to attain even these. Experience does not show that individuals, when they make up a social unit, are always less clear-sighted than when they act separately.

I have always been disappointed that Keynes did not support this claim with logical argument, he simply stated it as fact and drew its implications for policy. Now I learn that the Essays in Persuasion version of the essay is just an excerpt from a longer essay that was published as a pamphlet by Hogarth Press in 1926. The passage above opens Part IV of the longer essay: Parts I-III provide a fascinating account of the history of laissez-faire and a more comprehensive practical and philosophical critique. I regret now having assigned the Essays in Persuasion version to my History of Thought students rather than the complete version. I also vow to track down the originals of every essay in Essays in Persuasion to see what else I've been missing lo these many years.*

* Of course I know already that Economic Consequences of the Peace and Tract on Monetary Reform are worth reading in their entirety. Over and over again!

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