The Private Sector of John Maynard Keynes

What relation does the thought of John Maynard Keynes have to his psychobiography?

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It is instructive to compare his 1936 classic The General Theory of Employment, Interest, and Money to the thought of two other great economists, Marx and Kondratieff. According to Marx, great depressions occurred because an increasingly impoverished working class could not afford to buy the output of an increasingly productive capitalist economy. Kondratieff, on the other hand, said long periods of capital investment create an approximately 50­year cycle of prosperity followed by stagnation, each long wave inevitably culminating in a great depression. Ignoring such long-term phenomena, Keynes narrowed his focus to the short-term business cycles of five years average duration. Unlike Marx and Kondratieff, he made no inquiry into deep causes, proposing instead that the government should compensate for recessions with deficit spending and for bouts of inflation with budget surpluses.

These economic ideas came from the mind of a man who suffered from a lifelong, recurring psychological depression. A superb psychobiography of Keynes by David Felix [John Maynard Keynes: The Biography of an Idea (Transaction Books, 1994)] attributes this depression to the humiliation and abuse his otherwise loving father inflicted upon John Maynard in early childhood. Keynes never succeeded in discarding the father introjects [internalized bad feelings from his father] at the root of these depressions, but instead seethed with hostility throughout his life, as expressed unconsciously in personal attacks on innumerable eminent people he interacted with.

Neither would Keynes endure the experience of these depressions; indeed, such introspection would have been the first step to bringing the introjects to consciousness and thereby dealing with the root of his suffering. Instead, Keynes compulsively increased the work level in his government career whenever he felt the onset of a recurring loss of psychic energy. Through a series of such short-term fixes, Keynes managed his underlying depression, rather than tried to understand its deep causes and possibly eradicate it.

It can surely be no accident that the specific solution Keynes the economist prescribed for the economic Great Depression exactly fit the specific solution by which he regulated his own psychic depression. Keynes rejected Marx’s call for a massive redistribution of wealth, which would have been psychically equivalent to overthrowing the father introjects. Nor could he embrace Kondratieff’s theory of long waves beyond government control, which would have been equivalent to passively but consciously enduring recurring psychic depressions. Instead, Keynes prescribed management of short-term economic fluctuations by means of compensatory government fiscal policy. This corresponds exactly to his method of psychic regulation: tolerating no idle capacity and keeping himself fully employed with government work whenever he felt the onset of depression.

Keynes’s projection of psychic material onto the economic system may help explain his neglect of long-term processes and other limitations and distortions in his economic thought. But what about the central and enduring idea of the Keynesian revolution — that those holding political power are ultimately responsible for the private sector? That world-transforming idea, I would think, drew its power from a valid insight in the unconscious depths of John Maynard Keynes. Could the insight have been that his father, and not he, was ultimately responsible for what happened in his childhood — his private sector? I would think so.

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