This is a very good post by Unlearningecon, mostly addressing Hazlitt's low quality arguments against Keynes.
At the end, he discusses the notion that Keynes had totalitarian sympathies. Unlearningecon writes:
"As a brief note on Keynes totalitarianism: this seems to be based
on Keynes mentioning several times that certain policies – both
flexible wages (of which he disapproved) and various exchange rate
mechanisms & capital controls, as well as active fiscal &
monetary policy (of which he approved) – are more easily applied under
totalitarian conditions. These observations are quite clearly true - any economic
policy, implemented word for word, is easier to apply under
totalitarian conditions. This does not mean that totalitarianism is desirable, and you will not find Keynes saying anything of the sort. Furthermore, even if he did say such things, this is irrelevant to his economics."
Raoul, the commenter on my blog who raised this point, really bungled the issue of Keynes claiming that flexible wages could only be uniformly reduced as a matter of wage policy (personnel policy, basically - wage setting by bargaining betwen firms and workers, as opposed to changes in the price level) in an authoritarian society. He did say this. This was his primary argument for not wanting to reduce wages through "wage-policy". He essentially said look, if all wages have to be reduced and you do it by wage policies in a free society you get all kinds of relative distortions as well; that's why relying on wage policy for this isn't the best way to do it.
So that point is dead in the water. Raoul mistakes Keynes rejecting something because it's authoritarian for embracing it because it's authoritarian!
But then the other point is the old German preface. Unlearningecon essentially concedes the premise of these attacks when he writes "any economic policy, implemented word for word, is easier to apply under totalitarian conditions". That is not the meaning of the German preface. Too many people read that one passage without reading the whole thing, which is actually a short intellectual history of the German Historical School and it's shortcomings. Keynes offers Keynesianism as an alternative to them. It is addressed to these German economists and everything about "working better in a totalitarian society" makes sense when you read it that way. Not only does that phrasing make more sense that way (really - Keynes supporting totalitarianism? - that shouldn't pass the smell test for people), but it doesn't sound as out of place when you interpret it that way - it's more in the context of the rest of the preface.
My extended discussion of the German preface is here.
I really need to write this up more formally some time soon.
Instead of the passage you always hear cited, I think people should be citing this one: "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!"
That is more or less the heart of the preface.
Noted for May 19, 2013
4 minutes ago