Keynes on Russia
John Maynard Keynes was one of the greatest economists of all time. He was, as a young man, a participant in the Versailles Peace Conference after the First World War, where he opposed the harsh conditions that the French negotiators wanted to impose on Germany. In the 1930s he produced a “general theory” that was instrumental in getting the world out of the Great Depression. In the 1940s he was a key player in setting up the Bretton Woods economic system of fixed exchange rates which reigned for thirty years.
Keynes married Lydia Lopokova, a Russian ballerina in August, 1925. Soon after the wedding they visited Russia. It might have been a honeymoon combined with a comprehensive look at the strange world of Russia after the Revolution. He described his findings in an essay entitled A Short View of Russia. It was first published in some periodicals, reprinted elsewhere and republished in Volume IX of Keynes’ collected works.
A number of versions therefore exist. I shall take the liberty of quoting from various versions. “We can picture the Communists of Russia as though the early Christians led by Attila were using the equipment of the Holy Inquisition and the Jesuit missions to enforce the literal economics of the New Testament.” I know Churchill’s version of what Russia is like: “A riddle wrapped in a mystery inside an enigma.” It sounds all right but is totally meaningless. But Keynes got it right. We can just about imagine how early Christians led by Attila might have managed the economy: not very well.
Keynes is not impressed by what he sees. He describes Leninism as a combination of religion and business. He sees Lenin himself as a Mahomet, not a Bismarck: more a founder of religion than an international statesman. Keynes raises the question: “What are the forces of religion?” He thinks they might be considerable. “The exaltation of the common man is a dogma which has caught the multitude before now. Any religion and the bond that unites co-religionists have power against the egotistic atomism of the irreligious.”
As we can see, Keynes does not think much of the economics as applied by the Communist Party of the Soviet Union. He says: “How can I accept a doctrine which sets up as its bible, above and beyond criticism, an obsolete economic textbook which I know to be not only scientifically erroneous but without interest or application for the modern world. “ (This is very likely a reference to Marx’s Das Kapital.)
As one would expect, Keynes is interested in what the Bolsheviks do. He realises how resources are raised for investment: by buying agricultural products from the peasants below the world price, and selling them industrial products above the world price. Keynes sees that a modest amount of money could be raised for investment this way. Little could he realise that the amount raised this way could be quite substantial. That came later when Stalin became the boss. His policy was to take away most of the peasants’ wealth, just leaving them enough for survival. And very often what was left happened to be not sufficient for survival.
When in Moscow Keynes met Zinoviev, President of the Communist International, whose forged letter had played a major role in the Conservative victory in the 1924 British elections. Keynes describes Zinoviev’s aides as having the full faith of fanaticism in their eyes. Those aides offered some prophecy to Keynes: “Ten years hence the level of life in Russia will be higher than it was before the war and in the rest of Europe it will be lower than before the war.” Keynes concedes: “Having regard to the natural wealth of Russia and to the inefficiency of the old regime, having regard also to the problems of Western Europe, and our present inability to handle them, can we feel confident that the comrades will not prove right?”
And some further comments in a similar vein: “I could not subscribe to the new official faith any more than to the old one. I should detest the actions of the new tyrants no less than those of the old. But I should feel that out of the cruelty and stupidity of old Russia nothing could ever emerge but that beneath the cruelty and stupidity of New Russia some speck of the ideal may lie hid.” As we have seen Keynes does not exclude the possibility that Russia might achieve some limited success: not due to an improved economic technique but to the exhortations of the high priests of the new religion.
Keynes also says in conclusion that “Russia will never seriously matter to the rest of us unless it be as a moral force.” Subsequent history of Russia proved that Keynes was not quite right. As it turned out, Russia mattered for us less as a moral force, and more as a physical force. And that brings me to the fighting in Ukraine. If he were alive today, what would Keynes say about the Russo-Ukrainian War?
He would first express his regret that the present rulers of Russia had completely abandoned the early aims of the Bolsheviks, in particular their striving for equality (Keynes has great interest in differential salaries and wages) and their disdain for making money. In 1925 these aims could be compared with the values of the greedy West. The Russians may not have had much to eat but they held the high moral ground. Today their sole interest is in old-fashioned conquest.
Keynes’ view of the war would be based on the state of the Russian economy: shattered but good enough for the continuation of the war. He might say something like this: “Having regard to the natural wealth of Russia and to her potential military manpower, I feel that Russia cannot be defeated. We shall have to get used to the situation as it was half a millennium or so ago, when aggressive states on the edge of Europe (Tatars and Turks are good examples) could initiate a ‘special military operation’ at any time. Let us not forget that the Turks were at the gates of Vienna in 1683. The city (and perhaps Europe too) was only saved by the timely intervention of Jan Sobiesky, King of Poland.”
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