Early Wednesday afternoon, economist Mark Thoma recommended that his readers take the time to absorb the entirety of the John Maynard Keynes essay "The End of Laissez-Faire," originally published in 1926. He posted the essay to his blog, Economist's View, where he has been heroically synthesizing, tracking and analyzing just about anything of merit that anyone, anywhere, writes online with respect to economic affairs.
At this particular juncture, when, depending upon your inclinations, you might be either celebrating or bemoaning the "high-water mark" of free market capitalism, Keynes' views are as relevant as ever, and his essay is both a masterful lecture in the origins of laissez-faire thought as well as a sweeping denunciation of it. If you have an hour to spare -- or even if you don't -- follow Thoma's lead. You won't regret it.
The beginning, as apropos in 2008 as it was in 1926:
The disposition towards public affairs, which we conveniently sum up as individualism and laissez-faire, drew its sustenance from many different rivulets of thought and springs of feeling. For more than a hundred years our philosophers ruled us because, by a miracle, they nearly all agreed or seem to agree on this one thing. We do not dance even yet to a new tune. But a change is in the air. We hear but indistinctly what were once the clearest and most distinguishable voices which have ever instructed political mankind. The orchestra of diverse instruments, the chorus of articulate sound, is receding at last into the distance.
A mini-manifesto, from the middle:
A study of the history of opinion is a necessary preliminary to the emancipation of the mind. I do not know which makes a man more conservative -- to know nothing but the present, or nothing but the past.
A bold peroration, near the end:
Let us clear from the ground the metaphysical or general principles upon which, from time to time, laissez-faire has been founded. It is not true that individuals possess a prescriptive "natural liberty" in their economic activities. There is no "compact" conferring perpetual rights on those who Have or on those who Acquire. The world is not so governed from above that private and social interest always coincide. It is not so managed here below that in practice they coincide. It is not a correct deduction from the principles of economics that enlightened self-interest always operates in the public interest. Nor is it true that self-interest generally is enlightened; more often individuals acting separately to promote their own ends are too ignorant or too weak to attain even these. Experience does not show that individuals, when they make up a social unit, are always less clear-sighted than when they act separately.
How the World Works must read more Keynes. That is my resolution of the day. But I doubt whether encouraging such a resolve was the intention of the people who originally posted the full text of "The End of Laissez-Faire" to the Web. At Panarchy.org, a Web site devoted to a particular strain of libertarian anarchy, the brief introduction to Keynes' essay states, a bit peevishly:
This essay is worth reading for especially two reasons. First of all, for the wealth of historical information about the origin of the laissez-faire expression and attitudes. Secondly, as a political text full of fallacious reasoning and misleading images. Unfortunately, no serious thinker intervened to show the emptiness of Keynes' positions; and so Keynesism became the new economic doctrine and protectionism the political recipe, in fashion once again, leading to all sorts of economic and political disasters.
Keynes was no protectionist, and his "new economic doctrine" has long been out of fashion in the Age of Milton Friedman. But he's back!