Keynes As an End State Liberal

Keynes As An End-State Liberal

The first stage in identifying anyone's view of the functions of the state is usually to enquire about their objectives. Within the narrower confines of economic policy, this is called identifying the 'arguments' in the social welfare function. Sometimes identification goes further with a statement of the 'trade-off between these arguments. This sounds like a useful typological device for analysing Keynes's position, were it not that, as we have already warned the reader, the whole concept of a 'social welfare function' is rejected by public choice libertarians of the Buchanan school.

The basic concern of Buchanan (e.g. Buchanan, 1975) is to deny that a libertarian position requires the making of ethical judgments of the kind made by social philosophers who 'play God'. 'My natural proclivity as an economist is to place ultimate value on process or procedure, and by implication to define as "good" that which emerges from agreement among free men, independently of intrinsic evaluation of the outcome itself (Buchanan, 1975, p. 167). It follows that liberalism is about determination of the 'correct' contractual procedures which will allow individuals to consent to intervention by government. That procedure, if it is to be compatible with an individualist position, requires, so far as is practically possible, unanimous consent. Therefore, the common procedure used by economists to identify a social welfare function which is then to be 'maximized' implicitly rejects the individualistic decision-making process, which is the only mechanism through which individuals both express preferences and have them acted upon. To claim that preferences can be revealed and acted upon by governments, unencumbered by individuals' consent, is to presuppose that they and their officials will always act in an enlightened and wholly disinterested way.

It is a curious paradox that, in the light of Buchanan's distaste for Keynesian elitism (see Buchanan, 1991), there are elements in Keynes's rather fragmentary thinking on political matters which express a sympathy with an individualistic stance. His ethical position, derived from G.E. Moore, put great emphasis on an ideal conception of what constituted 'civilization' - in Moore's view, the pleasures of human intercourse and the enjoyment of beautiful objects. The cultivation of 'good states of mind' need not entail any form of political action. Indeed, the diversion of personal energies into the grubby world of politics could lure individuals towards activities which would be at total variance with pursuing the ethical ends of spending time in civilized company and refining the elements that constitute the good life. The state need have no role in pursuing the goals of civilized society, though, presumably, it was taken for granted amongst The Apostles that it was necessary for their protection.

There is a further distinct element in Keynesian thinking which appears to be in sympathy with the subjectivist elements in public choice theory. The complexity and uncertainties of economic life place major limitations on the individual's ability to achieve his/her ends with given means. The resemblance seems to be superficial, at least when it comes to examining the consequences of uncertainty. For public choice theorists it provides an additional argument for circumscribing state action, because governments cannot possibly acquire the knowledge which would be necessary to maximize any social welfare function. Keynes was conscious of this limitation on government action, which is why, it is claimed, he rejected the notion that we could ever know enough to be able to apply Benthamite utilitarian principles, assuming we wanted to do so (see Skidelsky, 1988). However, if reasons could be found for government action to promote the ends he desired, then, while philosophic doubt might be right and proper, the problems of life could not wait. Economists should not sit on their hands but should organize knowledge so as to assist the intuition of those who had to act.

However, it would be wrong for me to try to bring 'contractarian liberals' into the same camp as 'end-state' liberals - for this distinction see Barry, 1986. An important change came in Keynes's ethical position which authorities seem to agree was the result of the profound effect of the First World War on Keynes and many others who had led sheltered and privileged lives. Put very baldly, it seemed wrong that the benefits of civilized living, which represented all that was good, should be enjoyed by the few. Such benefits should be available to all those who wished to enjoy them. One's view of the functions of the state depended, therefore, on whether the achievement of this aim required government action.

As we shall soon observe, the aim of spreading the benefits of civilized living widely certainly did entail, in Keynes's mind, a crucial role for government. He would certainly have seen nothing particularly controversial in describing the end-state, the goal at which policy should be aimed. Nor do I, although I would wish to define the goal differently. Nor have I ever been able to accept that Buchanan has avoided a normative approach to political action by claiming that it is possible to devise constitutional arrangements which minimize coercion. This must presuppose that certain kinds of behaviour are the norm. As a minimum it requires that citizens believe that the democratic process is a good thing and accept the moral obligation to abide by the decision rules which are agreed between them - for further discussion of this issue, see Barry, 1986.

Nevertheless, Buchanan's position does raise a major question about end-state liberalism of crucial importance in examining Keynes's position. What if the defined end-state is not one which would be the outcome of the democratic process? Is not the democratic process an essential component of a liberal philosophy? Charles Rowley and I (Rowley and Peacock, 1975) provided a categorical answer in our examination of the 'constitutional' approach. We argued that a corollary of the liberal doctrine that there is equality before the law requires that all individuals, other than minors or lunatics, should have the same share in making the law. The acceptance of majority rule, however, does not require liberals to endorse the outcomes of majority voting which result in illiberal policies. One must abide by decisions arrived at by majority rule, while reserving the right to use all reasonable methods of persuasion, short of coercion, to attempt to alter the preferences of those who would vote for illiberal measures.

A full answer on Keynes's view of this dilemma must wait until we have further examined what action he thought would be necessary to achieve his goals. One can say at this stage that his view of how the democratic system worked, though not expressed in a formal model of the Buchanan-Tullock kind, was very different. In practice, he appears to have seen the public rather as reactors, not necessarily passive reactors, to the agenda presented to them by politicians. I have never come across a passage where he ever suggested that the universal franchise was a positive hindrance to achieving his goals and, pace Skidelsky and Fitzgibbons, I do not think it is sensible to produce an undergraduate essay on Burke, however brilliantly written, as evidence to the contrary. However, Keynes believed passionately in the power of ideas in changing preferences. His tactics of persuasion required the concentration of the attack on the minds and souls of politicians and civil servants as the real sources of power. It is fair to say that Keynes avoided the issue that Buchanan raises, but probably would not have thought it one which it was necessary to be bothered about.