Strachey on Keynesian Economics

John Strachey wrote about Keynesian economics in a book entitled Contemporary Capitalism which was published in 1956.1 Strachey was a British Labour party politician, Fabian Society member, and author of The Theory and Practice of Socialism.2

John Maynard Keynes on Time Magazine In the 20th century, John Maynard Keynes became one of the world’s most influential economists and “one of the fathers” of modern macroeconomic theory.3 In 1936, in the midst of the Great Depression, Keynes published The General Theory of Employment, Interest and Money. Keynesian economic theory is rooted in the belief that government should intervene in the affairs of the market in an apparent attempt to mitigate the effects of economic recessions, depressions, and booms.

Although some form of Keynesian economics has flourished in governments worldwide – especially during the 20th century in the U.K. and the United States – many are not aware that Keynes’ theories have been used as pretense to gain control over the means of production of a society. John Strachey wrote in Contemporary Capitalism:

Was not a horrid possibility visible behind and beyond [Keynes'] proposals, each of which looked so innocuous when taken separately? If once it were admitted that capitalism could be regulated and controlled in this way, might not the wage-earning majority of the population come sooner or later to the conclusion that the thing to do was neither to put up with things as they were nor to go through the fiery furnace of social revolution, in order to establish a wholly new system, but to harness – to bit and to bridle – capitalism in its own interest? Was it not apparent that Keynesism had only to be pushed a little further and a state of things might emerge in which the nominal owners of the means of production, although left in full possession of the legal title to their property, would in reality be working not for themselves, but for whatever hands had grasped the central levers of social control?

For Keynes had rashly shown that those levers had only to be pulled and pushed this way and that, in order to manipulate the system at will. And, in a democracy, would not those hands in the end almost certainly be those of the representatives of the wage-earning majority of the population? Might not the end of the story be that the once proud possessors of the means of the production would find themselves in effect but agents and managers on behalf of the community? If this was saving capitalism, its true defenders felt, it was saving it in a most Pickwickian sense.4


  1. Book review of Contemporary Capitalism on Google Book Search: “By a prominent member of Great Britain’s Labour Party, this is a careful, lengthy presentation of principal economic theories and developments from the time of Ricardo through Marx to John Maynard Keynes and present day capitalism, in which the author’s opinions and thought-provoking conclusions are clearly set forth. It develops the steps through which the 18th century ‘Labor Theory of Value’ — the foundation of Marx’ system but also ‘the coping-stone of the system of the enthusiastic prophets of capitalism’ — leads to the very heart of our contemporary economic and social problems. He goes at length into Ricardo’s ‘Law of Price’, hailed among early 19th century intellectuals as the discovery of value itself, and his subsistence theory of wages which was picked up, against the background of Malthus’ theory of population, by Karl Marx and developed into dogma which, while showing foresight into the natural tendencies of capitalism, placed blind reliance upon theories inadequate to the facts. This, while not a treatise on Communism per se, does treat the development of its theories with the importance they deserve, and places them in perspective with the various stages of growth of capitalism as increasingly modified by political systems enacting equalitarian measures, in response to the democratic form of government. This ends with an evaluation of John Maynard Keynes and the ideal of democratic socialism; a later study is to follow on political forces and institutions. For students of world economics and government primarily but it should also be of interest to bankers, industrialists and political representatives concerned with the basic economic forces which are determining our future.” “Contemporary Capitalism”. Kirkus Reviews.
  2. See for example, Socialism is a Transition Stage for Communism; Proposition 8, Mormons, and the New Statesman; for a Marxist perspective, see Mattick, Paul. “Strachey Confesses“. 1937. Marxists Internet Archive. 18 November 2008; and New Fabian Essays. London: Turnstile Press, 1952. According to the U.K.’s National Archives: “While never officially a member of the Communist Party, Strachey was throughout the 1930s one of the most effective popularisers of Marxist doctrine and of the CP’s immediate policies. Through books like The Coming Struggle for Power and The Theory and Practice of Socialism Strachey had an enormous influence on the left both in Britain and in the USA, while from 1936 he made a major contribution to the Left Book Club as one of its three selectors and as a pungent political commentator. Towards the end of the decade he came increasingly to be influenced by Keynesianism and Roosevelt’s New Deal. It was this profounder divergence over the possible scope for reforming capitalism that underlay his split with the Communist Party over the character of the war in 1940.” See “John Strachey (1901-1963), Labour Politician and Socialist Thinker“. The National Archives. 18 November 2008.
  3. “John Maynard Keynes”. Wikipedia. 18 November 2008.
  4. Strachey, John. Contemporary Capitalism. New York: Random House, 1956. 287-288.

Tags: , , , ,

  1. Mark D.’s avatar

    The way I see it, a new generation has to learn that the state cannot tax, spend, print, or regulate its way into prosperity. Other countries learn this lesson from time to time, but the last U.S. lesson was three decades ago and it will probably be a few years before it sinks in again.

  2. Greg’s avatar

    Mark – thanks for your comments. I agree with your assessment. Each generation has its own unique opportunities and challenges. Unfortunately, the fiat currency used in the U.S. has only created a “house of cards” upon which our prosperity rests.

  3. Republicae’s avatar

    The Socialist John Strachey also stated that “Keynesian Economics was an indispensable step in the right direction. The fact that the loss of objectivity, and the intrinsic value of the currency which is involved (i.e., inflation) will sooner or later make necessary, on pain of ever- increasing dislocation, a growing degree of social control . . . for the partial character of the policy will itself lead on to further measures. The very fact that no stability, no permanently workable solution can be found within the limits of this policy will ensure that once a community has been driven by events to tackle its problems, in this way, it cannot halt at the first stage, but must of necessity push on to more thorough going measures of re-organization.”

    Of course, this is exactly what we have witnessed over the decades, especially during the last few years. The next step is now being put into place in this country! WAKE UP AMERICA!

Leave a Reply