One of the results of the current financial and economic crisis is that the ideas of the economist John Maynard Keynes have been pulled of dusty library shelves and are now being peddled as a possible answer to the Credit Crunch. This is a massive turn around for keynesian economic theory, which for the last twenty five years has been discredited amongst the ruling class. The orthodoxy of neo-liberalism and neo-classical economics holds that the state should intervene in markets as little as possible and that taxation and government spending should fall during recessions to help the market restore itself. The state intervention, deficit spending and higher taxes of Keynesianism were seen as part of the social democratic past. Now commentators are calling for the british governement to fund a massive house building programmes to stimulate demand, the financial times wants the government to step into the breach to prevent market failure through boosting consumption. None of this would be of much interest to socialists if it was not for much of the lefts illusions in Keynsianism as a path to socialism.
John Maynard Keynes was a Liberal Party supporting economist commited to capitalism. He developed his theories in the period after the first world war. This was a time of a massive upsurge in workers struggles and there were mass revolutionay parties founded throughout europe. It also was a time of mass unemployment and the Great Depression. Keynes argued that state intervention to boost demand could get a country out of recession. He saw this as a project to save capitalism from itself. The basic idea of the state spending its way out of a recession was adopted by President Franklin Roosevelt's adminstration in the USa, Mussolini's Italy, Hitlers Germany and Juan Perons Argentina. During and after the Second World War Keynesianism became the economic orthodoxy of the entire capitalist world. So how did this capitalist economic theory end up being championed by much the left in europe today?
At the end of the war the working class in western europe had grown in confidence and militancy. Capitalism had been discredited in the eyes of most workers by the great depression of the thirites. The govenments of western europe were faced into making some concessions to the workers. They introduced limited nationalisation, promoted full employment through state intervention and introduced extended welfare provision. In britain the Labour government argued that these measures was the route to socialism. Now these measures undoubtably improved the lives of millions of workers, but their purpose was to allow the system of class exploitation to continue. The nationalised industries were run by civil servants for the interests of the ruling class and not the workers who were excluded from control.
However from the 50s onwards the extension of these measures were seen as the 'road to socialism' by many on the marxist left. Today the Socialist Party and the Communist Party of Britain in particular argue socialism can be brought about by the nationalisation of the commanding heights of the economy and state intervention. They both argue that this can be some how brought about through a parliamentary majority supported by a hegemonic workers movement. At the same time their press harks back to the Attlee govenement as some kind of golden age for workers. These ideas pervade most of the left in britain and in groups like the PCF in France and Die Linke in Germany.
Not only is this a misrepresentation of history it also is throughly reactionary. The globalisation of the world economy since the 1980's means that the nationalisation of a few industries and state supply-side intervention cannot even acheive the limited goal of full employment anymore. So in response the left often reverts to chauvanisitic economic nationalism. It talks of autarky and protectionism. The shining example for these misguided souls is the Hugo Chavez regime in Venezela.
We must always remember that that the bourgois state intervenes in the economy only for the benefit of the capitalist classes as a whole and not for the benefit of the workers. The entire class character of nationalisation means that they exploit the labour of the worker. Socialism is not nationalisation, state intervention or exchange controls, it is the democratic control of the means of production by the working class as a whole as part of an international workers state.