ABSTRACT
This chapter offers some thoughts on some aspects of John Maynard Keynes’s political economy that might help in the search for solutions to the serious economic problems. It argues that the dominance of society over capitalism in Keynes’s vision of Liberal Socialism was greater than in the post-war social democracies of Europe. The major policy tool required to accomplish the transition from laissez-faire capitalism to Liberal Socialism was societal control over two-thirds to three-quarters of all large-scale capital investment. Keynes attacked classical theory because its assumption set did not incorporate the actual “facts” of British capitalism, but rather was selected in order to demonstrate that laissez-faire capitalism created the best of all possible worlds. Keynes believed that replacing laissez-faire capitalism with Liberal Socialism would dramatically loosen that constraint. Keynes’s long-run theory stressed capitalism’s tendency toward secular stagnation brought on by inadequate capital investment, a relatively high interest rate, and a low investment multiplier due to excessive inequality.
