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KEYNES
AT
HARVARD
Economic Deception
as a Political Credo
A  Veritas  Study
2009 Web version transcribed from the
REVISED AND ENLARGED EDITION (1969)

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 IV 

JOHN MAYNARD KEYNES

The Keynesian theory of economics has swept the academic world to an extent unprecedented in modern times. The focal point of the Keynesian doctrine in the United States has been Harvard University. From Harvard Keynesian influence spread to Yale, Princeton, University of Chicago, University of Wisconsin, Massachusetts Institute of Technology and eventually into almost every College and University in the United States.

From academic circles the Keynesian dogma percolated into government departments on all levels. Not only those bureaus having to do with economic and statistical matters were affected but policy making bodies such as the State Department, the Presidential office, the Treasury, the Department of Agriculture, and the Department of Labor were dominated by Keynesian thinking.

Huge tax-free Foundations, such as the Ford, Carnegie and Guggenheim Foundations, backed by billions of dollars, became the nesting places of Keynesism.

Elements in the banking world such as the Lamonts (and the late Benjamin Strong) became avid supporters of the Keynesian thesis. Certain industrialists, particularly those depending on government contracts and handouts, became enamored of this new philosophy.

The impression has been created that the Keynesian theory possessed such a force of scientific validity that the greatest minds in the country succumbed to its logic. However, extensive research through the Keynesian maze reveal many elements in this theory that contradict its claim to scientific objectivity.

A check of the outstanding representatives of Keynesism in America disclosed the fact that they are largely the same people who had been leaders in the socialist movement for many years past. Further examination shows that by adopting the Keynesian theory these socialists have no intention of abandoning their socialist aims. It soon became obvious that these left-wingers see in Keynesism a means of creeping into Socialism. The Keynesian camp is studded with the names of such time-hardened Fabian Socialists as Stuart Chase, George Soule, Norman Thomas and Harry W. Laidler.

In Britain the Keynesian theories were the officially accepted creed of the Fabian Socialists for many years. They became a standby of Fabianism throughout the world as early as 1919.(1)

The consistent support given to Keynesism by Fabians and other left-wing groups throughout the years, requires an exhaustive examination of the background and associations of John Maynard Keynes as an individual.

There is one propaganda claim that those subscribing to Keynesism possess in common. They all insist that Keynes was a “capitalist economist,” who after following the classical school of laissez-faire began to question the old economic concepts. They also endowed him with a pure scientific detachment which inevitably led him to the conclusion that the system of private enterprise was doomed as such. These same exponents also insist that Keynes wanted to save as much of the capitalist system as was possible.

To evaluate the true motives and teachings of Keynes it has been necessary to scrutinize his whole life. It soon became obvious that the left-wing characterization of Keynes as a “capitalist economist,” who finally saw the light of day, was a gross distortion, made out of the whole cloth, for reasons that will become apparent as this study proceeds.

When John Maynard Keynes was seven years old, his father, John Neville Keynes, a don at the University of Cambridge, wrote a book entitled The Scope and Method of Political Economy.(2) In this work the elder Keynes attacked the principle of laissez-faire and dealt with socialist doctrines in a friendly light. In the preface of this book he acknowledged the assistance of Professor Alfred Marshall, a Fabian socialist, who many years later was responsible for influencing John Maynard Keynes to take up economics as his life’s work.

Alfred Marshall’s economic theories were a main prop for the socialist teachings of the Fabian Society both in England and in the United States.(3) Marshall privately admitted his belief in the Socialist ideal but publicly vended his services by pretending to be an economist of the classic private enterprise school.(4)

John Maynard Keynes as the son of a Cambridge professor was raised in the shadow of the Cambridge campus. The ideas of his father and such academicians as Alfred Marshall made a profound impression on his young mind. He quite naturally followed in his father’s footsteps.

As an undergraduate at Cambridge, John Maynard Keynes banded together with a group of radicals who were destined to become the outstanding Socialist leaders of Great Britain. At the age of 19 his associates included such Fabian Socialists as Bertrand Russell, Leonard Woolf and Ruppert Brooke. At the age of 20 (1903) Keynes became a member of a Fabian group at Cambridge which was headed by G.L. Dickinson, a prominent Fabian Socialist. Dickinson taught history and political subjects at the University. As an undergraduate, Keynes, imitating his father, expressed strong opposition to the principle of private enterprise (Laissez-Faire).(5)

R.F. Harrod, Keynes’ official biographer, describes his hero as having “within him the seeds of rebellion.”(6) Keynes was a leader of radical students demanding separation of Cambridge University from religious connections.(7) In his maiden speech as freshman, Keynes boldly declared “that the British system of government by party is becoming a hindrance to useful legislation.” At this time (1902) Keynes joined the Liberal Club. The Liberal Party had been “permeated” by the Fabian Society and at that time was a chief vehicle for Fabian Socialist manipulations.(8)

In 1905, Alfred Marshall wrote to John Maynard Keynes’ father: “Your son is doing excellent work in economics. I have told him that I should be greatly delighted if he should decide on the career of a professional economist.”(9) Professor A.C. Pigou privately coached Keynes on economics. Pigou, although posturing as a classic economist, has also been identified as a Fabian Socialist.(10)

During his University days Keynes had already developed a reputation for Machiavellian methods. His friends dubbed him “pozzo.” This nickname stuck to him for the rest of his days.(11) Carlo Andrea Pozzo di Borgo (1764-1842) was a Corsican who became notorious for diplomatic intrigue and was hired by various European nations for such purposes.

From 1906 to 1908 Keynes worked for the Civil Service as a minor official in the British Government’s India office. There, at the age of 24, Keynes expressed the Fabian concept that Civil Service administrators are the rulers of the future. Elected and appointed heads, in his opinion, “showed manifest signs of senile decay” and represented “government by dotardry.”(12) This was in line with the general attitude of the Fabian Society, which favored government run by the Civil Service and not a government responsive to the electorate.

In 1908 Keynes became a Cambridge lecturer, being supported in part by an annual stipend from Alfred Marshall, who “was largely in sympathy with the aims of the Fabians.”(13)

Through Alfred Marshall’s backing in 1911 Keynes was made editor of the Economic Journal. This publication was the official organ of the Royal Economic Society. As protege of Alfred Marshall and Pigou the young man became the key outlet of Fabian Socialist articles on economic and political matters. Ironically, this magazine bore the imprint “Patron—His Majesty, the King.”

By 1913 Keynes was installed as Secretary of the Royal Economic Society itself. There he joined hands with the Fabian chief, Sidney Webb, along with Pigou and Marshall to exploit the prestige and respectability of the Royal Economic Society for the benefit of socialism.

It was during this period (1913) that Keynes adopted the concept of eliminating gold as a standard of the monetary system of the nations of the world.(14) His notion of a managed currency (that he sold F.D. Roosevelt on twenty years later) was an old socialist catch-all, espoused by the Fabians since the turn of the century.(15) It is a fundamental concept of State-Socialism.

With the entrance of Great Britain into World War I, Keynes, like many other young radical opportunists, began to cast around for an appointment to Government service which might bring exemption from military duty. Early in 1915, a few months after Britain’s entrance into the war, Keynes secured an appointment with the British Treasury.

Many of Keynes’ left-wing friends became conscientious objectors. When his friends appeared before British tribunals claiming this status, Keynes interceded on their behalf. He boasted of throwing dinner parties for these left-wing objectors in order to “restore shattered nerves.”

Keynes himself had gone through the formality of filing as a conscientious objector. He did this, however, in the rather roundabout way of first postponing action through various bureaucratic subterfuges. Toward the end of the war the conscription office insisted on a decision of his status. At that point he was forced to file as a conscientious objector, just as his friends in the Bloomsbury Socialist circles did. Keynes’ mother was disturbed over the attitude of her son and his leftist friends and wrote to him disapproving of such an unpatriotic stand.(16)

Keynes did not keep his Socialist convictions to himself in those days. His opposition to the private enterprise system was well known to London society. Clarence W. Barron, then publisher of the Wall Street Journal, while in London in 1918, made the following observation: “Saw Professor Keynes of the British Treasury . . . Lady Cunard says Keynes is a kind of Socialist and my judgment is that he is a Socialist of the type that does not believe in the family.”(17)

The end of the war found Keynes at the Peace Treaty negotiations in Paris. He was a key aid to Prime Minister David Lloyd George.

The Socialists in Germany and Austria had taken power in a revolutionary coup against the monarchies of each respective country. Immediately the Socialists of the victorious nations set up a hue and cry to ease the claim of indemnity assessed against the vanquished Germans and Austrians. The underlying motive of the British Fabians was to make things easier for their Socialist comrades who had grabbed political power in the defeated countries.

Keynes argued vigorously for the Socialist position. He presented plans which watered down the indemnity claims. When his pleas were turned down he resigned his position. In the space of two months Keynes wrote his criticisms of the Peace negotiations in a book entitled The Economic Consequences of the Peace (Aug.-Sept. 1919).(18) This became a basic Socialist text and is used as such to this very day.(19)

The Fabian Society made private arrangements with Keynes to publish a special edition of his book for exclusive distribution among radicals throughout the British Empire.(20)

During this same period Keynes’ old Fabian Socialist teacher at Cambridge, G.L. Dickinson, supported Keynes with a radical “front” called the Union of Democratic Control “which opposed retaliatory measures against Germany and reparations.”(21)

In the United States, Fabian Socialists Felix Frankfurter and Walter Lippmann arranged to have The Economic Consequences of the Peace published in a special American edition. Frankfurter brought the manuscript over from England after consultation with Keynes. Graham Wallas, one of the pioneers of the Fabian Socialist movement, consulted with Frankfurter and pronounced the Keynes manuscript a “great work.”(22) Both Wallas and Frankfurter had been instructors at Harvard. Walter Lippmann, who had joined the Fabian Society in 1909, had been one of Wallas’ students at Harvard.(23)

The Economic Consequences became a main prop in the arsenal of Socialist propaganda in the United States. The League for Industrial Democracy and the Rand School for Social Science both urged the Keynes book on their extremist following along with Bolshevik literature such as Lenin’s State and Revolution and Trotsky’s In Defense of Terrorism. As has been noted before, the L.I.D. and the Rand School were American Fabian entities.

As a corollary to the Bolshevik phase of Socialist movement Keynes went through an interesting development. On February 22nd, 1918, Keynes wrote to his mother:

Oh! you’ll be amused to hear that I was offered a Russian Decoration yesterday, a belated one just arrived from the Provisional Government. Being a Bolshevik, however, I thought it more proper to refuse.(24)

It was a common condition during that period for left-wingers to seize on the Bolshevik example as a harbinger of the “new order.” Keynes emotionally fell into the same pattern. At that time he was a high official of the British Treasury and advisor to David Lloyd George on economic policies. Curiously, those of the Provisional Russian Government (Kerensky) were themselves Socialists, but of the non-Bolshevik variety. Like many other socialistic-minded young men, Keynes considered the Kerensky Socialists “reactionaries” and the Bolsheviks “progressives.”

In The Economic Consequences Keynes vigorously opposed the policy of intervention by the allies against the Bolshevik forces and criticized the economic blockade against Soviet Russia.(25)

In 1922 the reputation Keynes acquired through The Economic Consequences was responsible for his employment by the Manchester Guardian to edit twelve supplements under the title of “Reconstruction in Europe.” Keynes recruited left-wing and liberal opinion from all over the world for this series. Contributors, who were primarily from the Socialist-Bolshevik camps, included Maxim Gorky from Soviet Russia, Henri Barbusse from France, Walter Lippmann from the United States, Dr. Benes from Czechoslovakia, and Harold Laski and G.D.H. Cole from England.

In 1924 Keynes gave a lecture at Oxford University which eventually , was published as a small book under the title The End of Laissez-Faire. In this work Keynes eulogized his old master, Alfred Marshall, for the “elucidation of the leading cases in which private interest and social interest are not harmonious.”(26) This was an open admission by Marshall and Keynes that they considered private enterprise as frequently an anti-social force.

Keynes proceeded to expound, in clear-cut terms, that private enterprise, as a general rule, was historically finished and that socialized forms were a natural and progressive development of society.

Keynes’ attitude toward the free enterprise system was in all essentials the same as that of the Fabian Socialists. The Fabian Socialist project of allowing private enterprise to operate while gradually chipping away at its foundation until the government takes over all functions was identical with the Keynesian concept. In End of Laissez-Faire Keynes advances the following preliminary softening-up stage as a basis for a future socialism:

I believe that in many cases the ideal size for the unit of control and organization lies somewhere between the individual and the modern State. I suggest, therefore, that progress lies in the growth and the recognition of semi-autonomous bodies within the State—bodies whose criterion of action within their own field is solely the public good as they understand it, and from whose deliberations motives of private advantage are excluded, though some place it may still be necessary to leave, until the ambit of men’s altruism grows wider, to the separate advantage of particular groups, classes, or faculties—bodies which in the ordinary course of affairs are mainly autonomous within their prescribed limitations, but are subject in the last resort to the sovereignty of the democracy expressed through Parliament.(27)

Keynes along with his Fabian cohorts considered that the large corporations had “socialized” themselves to the point where the profit motive became secondary. Keynes boldly declares:

In fact, we already have in these cases many of the faults as well as the advantages of State Socialism. Nevertheless we see here, I think, a natural line of evolution. The battle of Socialism against unlimited private profit is being won in detail hour by hour.(28)

Keynes’ disagreement with what he calls “doctrinaire State Socialism” is not one of principle but one of tactics. What he means by doctrinaire Socialism is the Socialism of Marxist groups.(29) These expressions have been used to try to give Keynes an anti-socialist coloring, in order to sell Keynes to non-leftists.

Keynes shows a strong prejudice against the risk capital that drives civilization into ever greater technical progress. He opposes economic measures which result in new consumer tastes among the public. He also sneers at private enterprise as “often a lottery,” from which “great inequalities of wealth come about.”(30)

In this same work Keynes showed an early bias (1924) against savings and investments as economic virtues. From virtues he transformed them into evils:

My second example relates to Savings and Investment. I believe that some co-ordinated act of intelligent judgment is required as to the scale on which it is desirable that the community as a whole should save, the scale on which these savings should go abroad in the form of foreign investments, and whether the present organization of the investment market distributes savings along the most nationally productive channels. I do not think that these matters should be left entirely to the chances of private judgment and private profits, as they are at present.(31)

Fabian Socialists have long considered those who saved and invested as a stumbling block against the march of Socialism.

Keynes’ concept of controlling society extends beyond political and economic matters. He even advocates social control of the number of children per family:

The time has already come when each country needs a considered national policy about what size of Population, whether larger or smaller than at present or the same, is most expedient. And having settled this policy, we must take steps to carry it into operation. The time may arrive a little later when the community as a whole must pay attention to the innate quality as well as to the mere numbers of its future members.(32)

As mentioned previously (by Clarence W. Barron in 1918), Keynes “is a Socialist that does not believe in the family.” Naturally, in order to control the birth rate the State must break up the family as an independent and free unit. Private enterprise in running the family, in other words, must also be subject to socialized control.

Keynes’ close friend and official biographer, R. F. Harrod, wrote: “He was not a great friend of the profit motive; he found something unsatisfactory in the quest for gain as such, and came to hope that an economic system might be evolved in which it was curtailed.”(33)

In views of Keynes’ opposition to “quest for gain as such,” it is interesting to note the extent to which he had personally participated in speculations and trading on the international money market. Starting with 4,000 pounds in 1919, Keynes built up a personal fortune of 506,000 pounds (nearly 2½ million dollars) up to the depression year of 1937.

In 1921 Keynes organized an investment company made up of his cronies who had been with him in the British Treasury. The company was even called A.D. Company after the A Division of the British Treasury in which Keynes and his partners had worked.(34) With access to inside information from the British Treasury Department it was relatively certain that Keynes and his cohorts would be able to amass a large fortune.(35) It is easy to see why Keynes considered Ivar Kreuger, the world’s greatest swindler, as “the greatest financial intelligence of his time.” (N.Y. Herald Tribune, July 18, 1960, p. 15.)

Keynes’ continuous attacks against those who engaged in the honest pursuit of profits via private enterprise are difficult to understand in view of his own most questionable financial dealings. However, a check of several hundred of the more prominent Fabian Socialists in England, and their counterparts in the United States, shows that with hardly an exception they manage to live in a high style either through speculation, profit-making or draw high salaries in government, tax-exempt foundations, universities or unsuspecting corporations. The publication of material on a lush royalty basis provides in itself a high standard of capitalistic luxury for hundreds of left-wingers. Prominent agitators against “Capitalism,” according to data in Who’s Who in America, have profited as individuals in all of the above categories. Obviously, Keynes was not alone in maintaining such a double standard.

In 1925 Keynes published three articles which were issued by the Hogarth Press (Fabian Socialist) under the title of A Short View of Russia.(36) These observations were gathered as a result of his visit to the Soviet union during that year. Somewhat appalled by the mass terror and the extermination of millions of people, he nevertheless refused to drop his belief in the Socialist goal. In speaking of the “mood of oppression” he stated:

In part, no doubt, it is the fruit of Red Revolution—there is much in Russia to make one pray that one’s own country may achieve its goal not in that way. In part, perhaps, it is the fruit of some beastliness in the Russian nature—or in the Russian and Jewish natures when, as now, they are allied together.(37)

Keynes, it can be noted, tended to explain away mass murder in large part on the “Russian and Jewish nature” rather than a logical development of socialism itself. The goal of socialism is clearly Keynes’ objective. It is interesting to note the undercurrent of anti-semitism in Keynes’ reference to “some beastliness” in “Jewish nature.” In the same article Keynes also observed that he had doubts “Russian Communism” would “make Jews less avaricious.”(38)

By 1929 Keynes’ teachings had became hardened into a full Fabian Socialist doctrine. He had supplanted his old mentor, Alfred Marshall, as the official economist of Fabian Socialism. Since the British Labour Party was an instrument of Fabian socialism the Keynesian theories formed the backbone of the Labour Party’s economic platform.

When Ramsay MacDonald (a Fabian Socialist of longstanding) became Labour Prime Minister in 1929, Fabians swarmed into control of key government positions. Philip Snowden became Chancellor of the Exchequer and appointed Keynes to the key Committee of Enquiry into Finance and Industry. This was the body which was to draw up plans for steering British economy from private ownership into Socialism. In January 1930 Prime Minister MacDonald appointed Keynes to the Economic Advisory Council.(39) Only the dislocation of economic life due to the world depression (1930) prevented Keynes and his cohorts from instituting Socialist economic measures for all of Britain. Mass discontent drove the Laborites from power.

In 1923 Keynes had acquired financial control of the British publication The Nation, This magazine had been the leading voice of Fabian ideas within the Liberal Party. Keynes remained Chairman of the Board of The Nation for seven years.(40) Under his direction this publication began to assume an even more leftist character. Extreme radicals including even Bolsheviks from Soviet Russia, wrote feature articles.

In 1931 Keynes negotiated a merger of The Nation with the New Statesman.

The New Statesman had been founded by Bernard Shaw and Beatrice and Sidney Webb in 1913 to expound Fabian Socialist views openly. It had been a conspicious outlet for Socialist and Communist propaganda.

The new amalgamation was called the New Statesman and Nation. Keynes became a member of the Board of the new entity “and he was delighted to welcome Mr. Kingsley Martin as its editor.”(41) Kingsley Martin was a well-known Fabian Socialist leader.

During this period (1930) Keynes wrote a two-volume work entitled “A Treatise on Money,” which he had considered his major life-time work and as “the best picture of his total contribution to economics.”(42) This attempt proved to be a failure and even his left-wing friends did not see in this work any good propaganda possibilities. Technically it was promptly dissected by prominent economists and proved to be an inferior contribution.

Keynes during this period developed a keen interest in the United States. As previously noted, he had long been in touch with American Fabians such as Walter Lippmann and Felix Frankfurter and kept up a regular correspondence with them. During the summer of 1931 he made a trip to America. Through prominent financiers Keynes met some of the leading men of business in New York City. He also had interviews with the heads of Federal Reserve System and with President Herbert Hoover. On returning to England, Keynes submitted a lengthy report on American conditions to Ramsay MacDonald, who was then Prime Minister of a coalition government. MacDonald circulated this report as a Cabinet Paper.(43)

American Socialist elements began to see in the economic crisis an opportunity to put across some of their planning devices. The fact that the Republicans were in power under Herbert Hoover was no deterrent to the left-wing. Under the pretense of “economic emergency,” pressure was being brought to bear by leftists, in respectable guise, for building of strong executive powers and creation of special agencies which could act as nuclei for future Socialist operations.

With the defeat of Hoover and the election of Franklin D. Roosevelt Keynes’ American left-wing friends climbed into positions of great power. The campaign began to build up Keynes in America as the modern economic messiah. During June, 1933, Walter Lippmann and Keynes, by arrangement with the British Broadcasting Company, participated in a radio broadcast of their telephone conversation on political-economic matters to listeners on the two continents. “This was stated to be the first broadcast of a conversation between two individuals across the Atlantic.”

When Roosevelt went off the gold standard Keynes wrote an article in the London Daily Mail (June 1933). The headline declared, “President Roosevelt is Magnificently Right.” Keynes was exultant in his belief that the Roosevelt policies “lead to the managed currency of the future.”(44)

For years it had been a point of Socialist strategy that complete government control of currency and all money and currency values is a chief lever in moving society toward redistribution of wealth and complete Socialism.

The New York Times (Sunday, December 31st, 1933) featured an article entitled “From Keynes to Roosevelt.”(45) This article, which was embellished with a portrait of Keynes, covered a complete half page. Dubbed “An open letter to the President,” it was a political tip-off to the left-wingers, in and out of government, as to the line of action to follow.

Walter Lippman in writing to Keynes on April 17th, 1934, stated that: “. . . I do not know whether you realize how great an effect that letter (viz. that in the New York Times) had, but I am told that it was chiefly responsible for the policy which the Treasury is now quietly but effectively pursuing of purchasing long-term government bonds with a view to making a strong bond market and to reducing the long-term rate of interest.”(46)

Keynes made another trip to the United States in June, 1934. His old friend Walter Case, head of the investment trust firm of Case Pomeroy & Company, New York City gave a huge banquet for Keynes so he could meet many influential people. Felix Frankfurter, “gave him a batch of letters of introduction to personages in Washington who had important influence in the New Deal, members of the ‘Brains Trust,’ as it was then called. He had an interview with President Roosevelt.”

F.D. Roosevelt, in a personal letter to Felix Frankfurter, June 11, 1934 wrote, “I had a grand talk with K and liked him immensely . . .”(47)

Keynesian measures in the United States proceeded at full speed. Keynes’ influence was tremendous. A swarm of those who had been associated with the Socialist Party and its various divisions (League for Industrial Democracy, Rand School for Social Science, etc.) and their sympathizers entered various government agencies by the thousands. Keynesism was a respectable cover for emergency measures that were really designed for socialist purposes, as was realized by Frankfurter, Lippmann and their associates who could count on the help of Fabian minded persons like the President’s wife and Labor Secretary Frances Perkins.

Keynes’ official biographer gave a clear thumb nail sketch of the New Deal process when he wrote:

Keynes soon had followers in America who meant business, and by the time that the slump of 1937-38 came, some of these were already in a position where they could exert influence on presidential policy. Even in 1934 his views may have affected the course of events in the United States, not through the President, but through the clever back-room boys who had their ears to the ground.(48)

Keynes consistently busied himself in undermining private enterprise. In the Yale Review (1933) Keynes wrote:

The decadent international but individualistic capitalism, in the hands of which we found ourselves after the war, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous—and it does not deliver the goods. In short, we dislike it and are beginning to despise it.(49)

However, in spite of prejudice against “international capitalists,” Keynes during this same period speculated in United States securities. He had received inside information on those securities which were depressed far below their true long range value. Keynes’ official biographer refers to these speculations:

He paid special attention to public utilities, which, in his view, were suffering from vague fears induced by the New Deal, taking trouble to enlarge his knowledge of particular bonds and stocks. And then he went deeply in, following his maxim now of taking long views as an investor. His American public utility holdings made the most important contributions to the great increase of his fortune in the ’thirties.(50)

This curious dualism in Keynes merely followed the pattern of other wealthy revolutionaries like Bernard Shaw, Joseph Fels, (Fels Naphtha) and Karl Marx’s alter ego Friedrich Engels.

Bernard Shaw in his Fabian socialist book the Intelligent Woman’s Guide to Socialism and Capitalism (1928) wrote:

At last their duties (the capitalist –ed.)have to be taken out of their hands and discharged by Parliament, by the Civil Service, by the War Office and the Admiralty, by city corporations, by Poor Law Guardians, by County and Parish and District Councils, by salaried servants and Boards of paid directors, by societies and institutions of all kinds depending on taxation or on public subscription.(51)

Six years later Keynes echoed the same Fabian concept when he wrote:

Thus, for one reason or another, Time and the Joint Stock Company and the Civil Service have silently brought the salaried class into power. Not yet a Proletariat. But a Salariat, assuredly. And it makes a great difference.(52)

The concept of Salariat as the new ruling elite of socialism, instead of the old Marxist concept of working class or proletariat, is the distinguishing feature of the Fabian Socialist thinking. The word Salariat is obviously a semantic construction based on the Marxist term proletariat. Actually the principle of the Salariat as exemplified in the Soviet bureaucracy is looked upon by Fabian theoreticians as a living proof of their thesis.

When the Fabian leader George Lansbury visited the Soviet Union in the early twenties he wrote:

When I suggested he (Lenin–ed.) should ask Sidney and Beatrice Webb to go out and teach his friends how or organize administration, he smiled and said he did not mind me suggesting that the Bolshevik scheme of things was a glorified kind of Fabianism.(53)

As Bernard Shaw and Keynes outlined above, the Salariat is the administrative vehicle designed to operate the Socialist society. The problem of administration even in the early days of Bolshevism already involved the Salariat as the key to the Soviet bureaucracy.


1  John Maynard Keynes, Economic Consequences of Peace, Harcourt, Brace, N.Y. 1920.

2  John Neville Keynes, Scope and Method of Political Economy, Fourth edition, Kelley & Milman, N.Y. (first published 1890).

Especially interesting is the fact that the elder Keynes vigorously attacked the principle of private enterprise (Laissez-Faire). See pp. 67-74.

Thirty-six years later his son, John Maynard Keynes, published a book under the title The End of Laissez-Faire (1926).

3  Fabianism in the Political Life of Britain, McCarran, p. 20.

4  History of Economic Analysis, J.A. Schumpeter, pp. 765, 833, 888.

5  The Life of John Maynard Keynes, R.F. Harrod, p. 192.

6  Ibid., p. 88

7  Ibid., p. 93

8  Ibid., pp. 60-61.

9  Ibid., p. 107.

10  Fabianism in the Political Life of Britain, p. 61.

11  Life of John Maynard Keynes, p. 180. A good analysis of the career of Carlo Andrea Pozzo di Borgo can be found in the 12th Edition of the Encyclopedia Britannica.

12  Ibid., p. 123.

13  History of Economic Analysis, J.A. Schumpeter, p. 833n.

14  Life of John Maynard Keynes, p. 164.

15  Some references on this topic are:

Fabian Essays in Socialism, 1889 passim.

A Guide Through World Chaos, G.D.H. Cole, p. 220. (Mr. Cole is a prominent Fabian leader.)

Fabianism in the Political Life of Britain.

Sister McCarran brings out the fact that the Fabians believed “The departure from the gold standard had rendered it easier to attack the rentier class by stabilizing the pound at a level below its old parity.”

Also some Fabians believed that the pound “should be allowed to drop until the rentier class should be despoiled.” (1913) p. 545.

16  Life of John Maynard Keynes, pp. 213-216.

17  They Told Barron, The notes of Clarence W. Barron, Harpers, N.Y., 1930, pp. 188-189.

18  Life of John Maynard Keynes, p. 254.

19  John Maynard Keynes, The Economic Consequences of the Peace, Harcourt, Brace, N.Y., 1920, p. 294.

20  Fabian News, London, March 1920, p. 17.

21  “G.L. Dickinson,” Columbia Encyclopedia, 2nd ed.

22  Life of John Maynard Keynes, p. 290.

23  Fabian News, Oct. 1909, p. 78.

24  Life of John Maynard Keynes, p. 224.

25  Economic Consequences, p. 294. As noted previously, Walter Lippmann quit the United States staff at the Peace Conference over the identical question during the same period.

26  John Maynard Keynes, The End of Laissez-Faire, Hogarth Press, London 1926, p. 27. (A Fabian publishing house.)

27  Ibid., p. 41.

28  Ibid., p. 44.

29  Ibid., p. 45.

30  Ibid., p. 47.

31  Ibid., pp. 48-49.

32  Ibid., p. 49.

(Keynes had no children.)

33  Life of John Maynard Keynes, p. 333.

34  Ibid., p. 299.

35  Ibid., p. 300.

Here R.F. Harrod, Keynes’ chief disciple, writes:

It is clear that in the early rapid build-up of his private fortune he cannot have relied upon long-term considerations or even upon business-cycle movements; in this case it was quicker changes that he had to take into account; he traded very actively, moving in and out continually.

In the management of his own capital and in these small companies, the aim in early days was to get a quick enlargement of capital, and the method one of extreme boldness, decisions being taken on an economic appraisal of the general situation.

Keynes knew that his own father would disapprove of his speculative practices. In a letter to his mother on September 3, 1919 Keynes wrote: “My diversion, to avoid the possibility of tedium in a country life, is speculation in the foreign exchanges, which will shock father but out of which I hope to do very well.” (p. 288)

Since the British Treasury had the inside track on future monetary fluctuations of a far flung Empire it was relatively easy for the “AD” gang to make profits in this field.

Keynes even wrote an involved theory, full of economic double-talk, to show that his speculations did no harm to the consumer or to society; whereas speculations of others could do great harm. (p. 303)

36  John Maynard Keynes, A Short View of Russia, Hogarth Press, London, 1925.

37  Ibid., p. 27.

38  Ibid., p. 15.

39  Life of John Maynard Keynes, p. 397.

40  Ibid., p. 335-36.

41  Ibid., p. 397

42  Ibid., p. 403.

43  Ibid., p. 437.

44  Ibid., p. 445.

45  John Maynard Keynes, “From Keynes to Roosevelt.” New York Times, Sunday, December 31, 1933, p. 2xx.

46  Life of John Maynard Keynes, p. 450.

47  Ibid., p. 448.

Frankfurter was not the only Harvard Professor in Keynes acquaintance. As early as 1927 Keynes was in close contact with other Harvard professors through the agency of the “Harvard Economic Service.” p. 394.

48  Ibid., p. 450.

49  John Maynard Keynes, “National Self-Sufficiency.” Yale Review, (Summer, 1933) p. 760, quoted in Science & Society, Winter 1947, vol. XI, no. 1, p. 63. (Science & Society is cited as a communist publication by government bodies.)

50  Life of John Maynard Keynes, p. 448.

51  Intelligent Woman’s Guide, p. 32.

52  John Maynard Keynes, “Mr. Keynes Replies to Mr. Shaw,” Stalin-Wells Talk, New Statesman and Nation, 1934, p. 35. (Printed as a separate volume.)

53  My Life, George Lansbury, p. 243.

G.D.H. Cole, Guide to World Chaos, p. 489 ff. Cole deals extensively with the salariat concept.

 

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Chapter V – THE GENERAL THEORY BY JOHN MAYNARD KEYNES