ABSTRACT
John Maynard Keynes’s writings on competition and industrial policy are virtually unknown; certainly modern “Keynesian” macro theorists rarely if ever mention them. His writings on the failures of unregulated competition in this era are of two kinds. The first kind consists of concrete studies of the troubled coal and cotton industries, which had been such important exporters before the war. The second kind represents an analysis of major industries dominated by a small number of giant firms in an era of increasing returns to scale and the rise of monopoly or oligopoly capitalism. One of the central failings of “free” competition in the context of the 1920s, Keynes said, was that it was incapable of efficiently coordinating the downsizing of Britain’s declining export industries that suffered from chronically large excess capacity. Keynes argued that it is the responsibility of the government to try to assist those industries that suffer from excessive competition to create collusion and cooperation under government regulation.
