Jonathan B. Wight

I’m re-reading the final Chapter of Keynes’ The General Theory (1936) to prepare for a seminar class on the Great Recession of 2008.  Aside from Keynes’ push for death taxes and for nationalizing the banking system (!), and aside from the complete manipulation of income taxes and interest rates—okay, if you can get beyond that—here is what he says about individualism and freedom:

But, above all, individualism, if it can be purged of its defects and its abuses, is the best safeguard of personal liberty in the sense that, compared with any other system, it greatly widens the field for the exercise of personal choice. It is also the best safeguard of the variety of life, which emerges precisely from this extended field of personal choice, and the loss of which is the greatest of all the losses of the homogeneous or totalitarian state.

So, in other words, Keynes is the great moderate, saving liberalism from the communist threat.  At the macro level all is controlled by the government to maintain aggregate demand at full employment.  But at the micro level markets can work under laissez faire to produce whatever they want to satisfy individual desires. 

Now, there is that one modifying phrase above I’ve bolded:  how do we purge individuals of their defects and abuses?  I suspect Keynes had something in mind like Adam Smith’s moral sentiments:  it would take self control and social norms.  But I don’t know Keynes well enough to say. 

Does anyone else have an answer to that question?