Keynes and the Nazis

Tyler Cowen joins a growing list of people who are citing the German preface to the General Theory to argue that Keynes had at least some sympathy with totalitarianism.

It's absurd. It's wrong. It's a complete misreading of the preface.

This is the passage that I think gets to the heart of what Keynes was trying to do in the preface: "But could I hope to overcome the economic agnosticism of Germany? Could I convince German economists that methods of formal analysis constitute an important contribution to the interpretation of contemporary events and to the shaping of contemporary policy? It is, after all, a feature of German character to find satisfaction in a theory. How hungry and thirsty German economists must feel having lived all these years without one!"

Most of the preface involves Keynes tracing out the history of economic thought in Germany, through the German Historical School which rejected Ricardianism for the simple reason that German institutions didn't always coincide with Ricardian assumptions. Predictably, a school of thought grounded in institutional and historical analysis emerged instead. Keynes thought this was unfortunate, and that there was a role for "formal analysis". He thought his theory could provide that role, because he thought his theory was sufficiently general to be useful for economists living with less-than-Ricardian political institutions (like totalitarianism).

The German preface is an intellectual history and a methodological argument directed at the German Historical School.

Period.

I go through the preface line by line here.

Here's a challenge - don't comment on this post without having read the preface from beginning to end.