Adam Tooze has an amazingly informative and thoughtful review in the LRB of Geoff Mann’s book on Keynes and Keynesianism.
If you were seeking an example of Keynesian government today you wouldn’t look first to the West, but to China, where a Communist Party that brooks no opposition presides over a technocratic regime par excellence. Not only are China’s economic managers hard-headedly pragmatic in their approach to the politics of the market, but the deeper impetus for the policy-makers in Beijing is, in Mann’s sense, truly Keynesian. What is at stake is the post-Tiananmen compromise: accept and support the regime in exchange for growth and social transformation. Much has been made of the role of neoliberal thinkers in launching Deng’s market revolution in the 1980s. But when the going gets rough, the Chinese turn Keynesian. Beijing’s response to the 2008 crisis was the most dramatic work-creation stimulus in history. When in 2009 the governor of the People’s Bank of China proposed a new global currency system, he explicitly invoked Keynes’s proposals at Bretton Woods. Beijing’s successful management of China’s growth involves exchange controls, guidance of the exchange rate and direct regulation of bank lending – techniques reminiscent of 1950s Keynesian fine-tuning. And President Xi’s current personal priority is the elimination of the final residuum of absolute poverty by means of large-scale resettlement and investment.
Tooze is very good on the intrinsic pragmatic ad-hocery of a Keynesian approach to policy. “It isn’t by accident”, he writes,
that ‘when liberal government comes face to face with necessity, it “goes Keynesian”’; in other words it ‘acknowledges uncertainty and disarticulation, recognises imperfection and indeterminacy, and turns away from the long run to the immediacy of the moment’. The crisis of 2008 was a classic demonstration of this. What central bankers like Bernanke were asking politicians to do in September and October 2008 had been unthinkable only weeks before.
But the Chinese regime isn’t in the business of ad-hocery. And they are — like all of us, but perhaps in a more extreme way — faced with the problem of climate change. “Xi’s ‘Chinese dream’”, says Tooze, “is the most spectacular Keynesian promise ever made”.
The underlying fear of domestic unrest is palpable, the scale of repression is astonishing, but so is the gamble on growth. There is no counterpart in Western experience to the astonishing transformation in the fortunes of a population of more than a billion people in a matter of thirty years. But like any instance of rapid capitalist growth, China’s boom is fraught with danger. The country’s finances are highly unstable. The boom generates deep inequality at home, while abroad it incurs the envy of the United States, a declining hegemon with erratic politics and a track record of aggression. Added to which few places on earth experience the environmental costs of growth more acutely than China. Large parts of the country are at risk of becoming uninhabitable. The promise of growth is more real and more life-altering than ever. But so too is the possibility of catastrophe. Keynesians insist that we resist the blandishment of future calm to focus on the turmoil of the present. But on a rapidly warming planet, the waters are calmer now than they will be later. Just decades from now, a large part of humanity may count itself lucky if it is only in the long run that we are all dead.
Fabulous essay, well worth reading in full.