Chapter 1 draws on conversations with hundreds of ‘everyday’ people about the economy, as well as recent research from other projects, to show that there is a significant democratic deficit when it comes to public understanding of the economy. Along with showing that the public has a weak grasp of how our economy functions, the chapter also demonstrates that underpinning the public conception is a vision of the economy as something akin to a ‘pot of money’. The chapter concludes by briefly outlining what is wrong with this vision of the economy by contrasting it to the accepted understanding of the economy taught in all introductory economics courses. This comparison makes it evident that myth is at work in the public understanding of the economy.
Chapter 2 explores the vision of the economy in the financial sector. It begins by outlining how important the financial sector is, not only in its capacity to shape the material conditions of our society, but also the ‘soft power’ it wields in its ability to influence public discourse about the economy. Based on time spent visiting London’s financial district and talking to its inhabitants, the chapter outlines how the sector operates on flimsy, hollow and self-serving representations of knowledge, before concluding by pointing to the type of economic myth that stems from this institutional context, and showing how it pollutes public discourse.
Chapter 5 gives the lie to the myth by dealing with some fundamentals of how our economy actually works. It shows what is wrong with the visions of the economy exposed in the previous four chapters, before concluding on a hopeful note, showing how it is possible to achieve a better future if we are able to dispel the paralysis of myth. It does this through first outlining the process of credit creation, to show that the economy is not a finite pot of money, but largely dependent on the creation of money by private banks. It then draws on some insights from modern monetary theory and other heterodox economic writers to show how the state could wrest control of the creation and allocation of credit away from the private sector and put it to use in order to create a greener and fairer economy.
Chapter 3 shifts from the financial to the political sphere and is based on trips made to Whitehall to speak with civil servants working on economic policy. The chapter first provides some context by indicating the importance of economic communication in the political sphere as well as the civil service’s role in economic policy and communication. It then draws on time visiting Whitehall to outline the pressure to present economic knowledge in the political sphere as objective – when it is anything but – and describes the type of myth that stems from this pressure. Finally, before concluding, the chapter provides a case study that looks at how the argument constructed plays out in practice, through the setting of an economic policy: the minimum wage.
Chapter 4 looks at the media as a place that is supposed to form a bridge between the elite sites explored in the previous two chapters (finance and politics) and the ‘everyday’ people in chapter 1. The chapter starts by outlining the democratic role of the media and its importance in educating the public about the economy and holding elites to account. Having established the media’s importance, the chapter moves on to an ethnography of a financial magazine and the many conversations had with people working in economic journalism. The interview material and ethnographic observations show that the media promotes a self-serving vision of the economy that aids the myth stemming from the other elite spaces visited.
For a number of decades our economy has failed to work for ordinary citizens. Stagnant wages have been combined with underemployment and rising costs of basic goods like healthcare, education and housing. At the same time, a small minority of the population make obscene profits, while in the background we continue to hurtle headlong into an environmental emergency. However, despite there being no shortage of anger and anti-elite sentiment expressed in what is often referred to as the ‘culture wars’, no significant challenge to the dominant economic model has broken into the mainstream. The pound and the fury argues that behind this failure of imagination are a set of taken-for-granted myths about how the economy works – myths that stifle debate and block change. The book analyses these myths, explores their origin, how they circulate and how they might be dispelled at a time when, away from the public gaze, economic theory is opening up new possibilities of economic action. Possibilities that, as we emerge from the chaos of Covid-19, could lead to the radical structural changes we desperately need.
It is impossible to adjudicate definitely on the prospects for a return to Keynes. There are many interpretations and, as the first section argues, grounds for saying that Keynes never went away. Much of the economic practice of the post-WWII boom period endures. The second section argues, however, that structural shifts have weakened national bases of economic organisation, potentially limiting the scope and efficacy, and crucially also the institutional supports, of Keynesian intervention. The third section reflects on the experience of the global financial crisis of 2007–09, which confirmed that leading states retained the capacity to intervene effectively, before disappointing hopes of a more radical, long-term reorientation with policy reversals which brought severe austerity, particularly in Europe. The preceding argument suggests that there was an economic rationale for such a turn, which is misunderstood simply as bad policy. The fourth section considers arguments that the growing environmental crisis requires an interventionist green Keynesian response. There is a constituency for change in economic interests and a powerful social movement, but there are also dangers in a lowest-common-denominator approach which ‘greenwashes’ insufficiently radical reform, which can be undone by the dynamics of capitalist and interstate rivalry. The final section argues that reining in capital in more consistently Keynesian ways would require a leap of political faith beyond anything that Keynes’s own political philosophy would allow. This is not to discount the possibility of reform but suggests that its achievement requires going beyond Keynes.
This chapter introduces economics as Keynes encountered it and then how his own work before the General Theory begins to break from orthodoxy. First, it discusses the classics as they were understood by Marx, for whom ‘classics’ was a qualified term of approval, as distinct from the ‘vulgar’ school of mere apologists. It briefly identifies what was lost from this tradition in the later marginalist revolution in terms of its treatment of economic aggregates and economic interrelation, which Keynes substantially recovers, and in terms of the classics’ focus on production and growth, in which Keynes has little interest. This first section then discusses the beliefs which Keynes criticised, the adherence to the quantity theory of money and Say’s Law. The second section introduces Jevons’s and Marshall’s marginalism, their vision of an exchange economy, the concepts of utility and disutility, and their attitude to money, production and labour. Keynes has a somewhat ambivalent relationship: both in and against this tradition. There is a sense in which he can point out its failings precisely through a more careful application of its principles. The third section discusses Keynes’s own early work, particularly the Tract on Monetary Reform and the Treatise on Money. Keynes would retrospectively see himself as having still been orthodox when he wrote these earlier books, but they anticipate important later themes and the Treatise, in particular, sometimes makes more radical departures, and attempts a more dynamic analysis, than would the General Theory.
Towards a critical but constructive appraisal of Keynes’s thought
The introduction describes the structure and rationale of the book. It argues that Keynes should be seen as neither villain nor hero and that while the left should appropriate his ideas with caution, he provides insights at a level of concreteness which Marx’s analysis largely ignored and which were concerned with issues of the modern world which Marx could not have foreseen. A critical Marxist engagement can simultaneously increase the power of Keynes’s insight and enrich Marxism. The introduction describes how, to understand Keynes, whose work is liberally invoked but seldom read, the book first puts Keynes in context, explaining his biography and the extraordinary times in which he lived, his philosophy and his politics. The book describes Keynes’s developing critique of ‘the classics’, of mainstream economics as he found it, and summarises the General Theory. It shows how Keynes provides an enduringly valuable critique of orthodoxy but vital insights rather than a genuinely general theory. The book then develops a Marxist appropriation of Keynes’s insights. It argues that Marxist analysis of unemployment, of money and interest, and of the role of the state can be enriched through such a critical engagement. The book addresses Keynesianism after Keynes, critically reviewing the practices that came to be known as ‘Keynesianism’ and different theoretical traditions that have claimed his legacy. It considers the crisis of the 1970s, the subsequent anti-Keynesian turn, the economic and ecological crises of the twenty-first century, and the prospects of returning to Keynes and Keynesianism.