NCPA - National Center for Policy Analysis

Keynes Saved Capitalism

January 19, 2004

Many respected academics have long drawn analogies between the economic theories of John Maynard Keynes, generally considered the most important economist of the 20th century, and the economic policies of Nazi Germany, says Bruce Bartlett.

For example:

  • An article in the April 1975 issue of the prestigious Journal of Political Economy points out that German economists in the early 1930s were well aware of Keynes' work and were developing theories along parallel lines; these involved the now familiar prescription for economic depressions of large budget deficits, public works programs, and easy credit.
  • A July 1992 article in the journal Explorations in Economic History found that German fiscal policy stopped being restrictive and turned "Keynesian" as soon as Adolf Hitler took power; government spending increased almost immediately, helping to pull Germany out of the depression while America and Britain still maintained restrictive fiscal policies.
  • Furthermore, it turns out that Keynes' greatest admirers have long maintained that Hitler's economic policies were indeed Keynesian; in a lecture to the American Economic Association's annual meeting in 1971, economist Joan Robinson, a close colleague of Keynes, said, "Hitler had already found how to cure unemployment before Keynes had finished explaining why it occurred."

But Keynes developed his theories in the 1930s precisely in order to save capitalism. He understood that it could not long survive the mass unemployment of the Great Depression. His goal was to preserve what was good about capitalism, while saving it from those who would destroy it completely, says Bartlett.

Of course, there is much in Keynes' work to criticize. Many of the economic problems of the postwar era resulted from it. But in the context of his time, says Bartlett, Keynes is a man to be admired, not slurred as a crypto-fascist.

Source: Bruce Bartlett, "Keynes Saved Capitalism," National Center for Policy Analysis, January 16, 2004.


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