Edgar Hardcastle

Keynes and the Russian Revolution

Source: Socialist Standard, May 1967.
Transcription: Socialist Party of Great Britain
HTML Markup: Michael Schauerte

In the popular view two economists are accepted as having had outstanding influence on events of the last half century—Marx and Keynes. Marx is supposed to have guided the aims and policies of the Russian government since the Communist Party came to power in 1917 and Keynes’ preaching of full employment and the way to achieve it has been more or less closely followed by most of the political parties of the Western world, including all the Tory and Labour governments in Britain since the end of the war.

Here, of course, is one of the issues on which Marx and Keynes came into conflict. Marx held that unemployment is a necessary feature of capitalism, while Keynes held that it should and could be reduced almost to the point of disappearance. It is not our purpose to deal with that aspect here except to say that there is nothing in the post-war rises and falls of employment to justify the claims of Keynes’ admirers, which does not deter them from claiming that his discoveries have revolutionised economics and politics.

There is, however, a striking difference between the relationship of Marxism to Russia and that of Keynesism to Britain and other countries. It is that British politicians and their advisers have indeed been trying to apply Keynes’ theories in their conduct of affairs, but Russian governments have been acting in complete disregard of Marx’s theories.

Marx saw that the overthrow of the Tsarist autocracy would clear the way for the development of capitalism. This has indeed happened, but while the Communist Party rulers in Russia have presided over the building up of a great capitalist power they have chosen to pretend that it is Socialism.

What did Keynes make of all this? It happens that he set out what he thought in a series of articles in the New Statesman republished in a booklet A Short View of Russia published by Hogarth Press in 1925. This was some years earlier than Keynes’ book The General Theory of Employment, Interest and Money but after he had made a name for himself with his Economic Consequences of the Peace and his Tract on Monetary Reform. He was already regarded as a major figure in the world of economics.

Keynes had nothing but contempt for Marx but we can now compare the maturity and accuracy of Marx’s views of developments in Russia with the superficiality of Keynes’ judgements.

For Keynes the Russian revolution was not a stage in the development of capitalism, but the emergence of a new world religion; not based on changes in the real world but engendered in the minds of the leaders, Lenin and his associates. Keynes had something in common with the Russian leaders; he shared their belief that progress comes from the “intellectual minority“. Here are two typical passages:


But quite apart from other factors, it was the indifferent multitude—indifferent, that is, to Socialism—who, as the Socialist Party of Great Britain said at the time, made nonsense of the utopian dreams of introducing Socialism in Russia in 1917.

The second quotation is an attack on Marx’s Capital chiefly revealing for what it tells us about the smug intellectual superiority of Keynes:


Keynes had no sense of the historical development of society and showed little appreciation of the problem which faced Russia, as it does all countries in the early stages of capitalism, of accumulating capital to build up large-scale industry. His advice to the Russian government was to lower the wages of town workers, and “get itself into a sufficiently strong financial position to be able to pay the peasant more nearly the real value of his produce. ” As the town workers were a small minority and the peasants the vast majority of the population, it certainly wouldn’t have solved the problem. It was about as useful as telling a starving man that what he ought to do is to get hold of a large sum of money without telling him how.

Although, for Keynes, Leninism was a religion he did not wholly approve of it, but he did believe that it would create a society in which money making and love of money would lose their hold, especially among the new generation—though not to the extent of making “Jews less avaricious or Russians less extravagant”.But although this might be alright for the Russians it was not congenial to “an educated, decent, intelligent son of Western Europe” (who, incidentally, made a fortune by financial speculations). He disliked the “mood of oppression” in Russia, for which he had a simple explanation:

In part, no doubt, it is the fruit of Red Revolution. 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.

What can one say of such a shallow interpretation of history except that if Keynes had troubled to understand Marx he might have known what was really taking place in Russia.