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Economics and Political Economy: Marx, Keynes, and Schumpeter Author(S): Robert L Economics and Political Economy: Marx, Keynes, and Schumpeter Author(s): Robert L. Heilbroner Source: Journal of Economic Issues, Vol. 18, No. 3 (Sep., 1984), pp. 681-695 Published by: Association for Evolutionary Economics Stable URL: http://www.jstor.org/stable/4225467 . Accessed: 15/11/2013 23:53 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Association for Evolutionary Economics is collaborating with JSTOR to digitize, preserve and extend access to Journal of Economic Issues. http://www.jstor.org This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions J; JOURNAL OF ECONOMICISSUES Vol. XVIII No. 3 September1984 Economics and Political Economy: Marx, Keynes, and Schumpeter Robert L. Heilbroner The centenaryconnection of the death of Karl Marx and the birth of J. M. Keynes and JosephSchumpeter is an historicalaccident that poses an unusualchallenge. One would think the occasion would provide an excusefor exploringthe lines of influenceemanating from Marx to Keynes and to Schumpeter,and the mutual interactionof the latter two. But that, I fear, would be disappointing.Marx exerteda profoundeffect on Schumpeter,as we all know.So far as Keyneswas concerned,Marx might as well have neverlived-at least that is the conclusionto whichI come whenreflecting on Keynes'sstatement that "the futurewill have more to learn from the spirit of Gesell than from that of Marx,"' a judgmentI attributeto the fact that Keyneshad probablyread more of Silvio Gesell thanof Marx. More interestingis thatKeynes and Schumpeter,each a toweringfigure in the twentiethcentury, seem to have exercisedvery little effect on one another. In his magisterialHistory of Economic Thought, Schumpeter refersto Keynesas "thefather of modernstagnation"-an appraisalthat in itself indicatesthe distancebetween them.2 That distancequite apart, it is clear that Keynes'smajor contributions-the bold use of aggregates as the pillarsof a new form of analysisthat we call macroeconomics,the centralplacement of expectationsand uncertainty, the emphasison liquid- ity-had no relevancewhatever to Schumpeter'smajor analytical work The author is Norman Thomas Professor of Economics, New School for Social Research. 681 This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions 682 RobertL. Heilbroner in the developmentof a new theory of profitsand of the businesscycle.3 And if Keynes seems to have given nothingto Schumpeter,Schumpeter gave as little in return.We know that Keynes read and commentedon Freidrichvon Hayek's The Road to Serfdom,published in Englandin 1944, but there is no recordof his havingread or writtenabout Schum- peter's incomparably more important Capitalism, Socialism, and De- mocracy,published two yearsearlier. Thus the centenarydoes not providemuch occasion for the usualtrac- ing of filiationsand reciprocalinfluences. It does, however,serve another and moreuseful purpose: to raisewith rare clarity a questionabout which surprisinglylittle has been written.The questionis why economistscome to such differentconclusions about the common object of their scrutiny. I do not referto the notoriousdifferences among economists who seek to forecastnext month'seconomic performance. There is no more difficulty in understandingthis rangeof opinionthan thereis in understandingthe divergenceof meteorologists'predictions. The reasons are the same in both cases, and no cause for scandalin either.The real issue, whichmay indeedappear to have its scandalousaspect, arises when great economists, of the statureof our threeexemplars, direct their attention to whatI shall call the cosmologicalproblem of economics,namely, the social configura- tions of productionand distribution-if you will, the macro and micro patterns-that ultimatelyemerge from the self-directedactivities of indi- viduals. That problem was first resolved by Adam Smith in his extra- ordinarydepiction of a society that generatedfrom its spontaneousac- tivity both a tendencytoward internalorder and "external"expansion. Whatis remarkableabout Marx, Keynes, and Schumpeteris thatthey are among the very few who have proposedresolutions to this problemof an imaginationand scope comparableto that of Smith-but that theirreso- lutions differfrom one anotheralmost totally. In Marx's great schema the systemis destinedto pass throughsuccessive crises that both alterits socioeconomictexture and graduallyset the stage for a likely final col- lapseof somesort. In Schumpeter'sview, the dynamicsof the systemgive riseto a prospect of long-term,continually self-generated growth-not quitethe "hitchless" growthof Smith'smodel-but growthdependable and powerfulenough to formthe basis for Schumpeter's"plausible capitalism."4 In Keynesthe trajectoryis muchless certainbecause it dependson the outcomeof a tug of war betweenthe animalspirits of entrepreneursand the constraintsof saturablemarkets and propensitiesof thrift-a tug of war whose out- come, however,can be remediedby appropriategovernment intervention. Whatis different,not to say more scandalous,about this divergenceof This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions Economicsand PoliticalEconomy 683 views fromthe divergenceof forecastsabout next month'seconomic per- formance?The answeris that each model servesall too plainlyto under- pin or substantiatethe politicalvalues of its proponent.Marx's projection of a crisis-ridden,unstable economic system has an obviousaffinity with his explicitpolitical animus against capitalism and his hopes for socialism. Schumpeter'splausible capitalism is clearly supportiveof his conserva- tive socioeconomicviews. And Keynes's conceptionof an economy in whichgovernment intervention could assurefull employment-could in- deed abolish scarcityitself within the span of a single generation-un- questionablyprovides a propitioussetting for the liberal societythat was his avowedpolitical preference.5 The scandal,then, is that these three great economists-and if they, then what of the lesser lights?-seem to have resolved the cosmological problemnot by looking into their telescopesbut into their hearts, pro- jecting into the skies the constellationsthey wished to see there. How, then, shall we explain this congruenceof political economy-the name we shall attach to the large-scalescenarios of socioeconomicchange- and economics,the processof analysisthat undergridsthe scenario? Let us see if we can accountfor this problemin the most directway, simplyby admittingthat it is nothingbut a scandal.In otherwords, let us proposethat the politicalconclusions of our trio are added,exogenously and arbitrarily,after their analyses are complete, more or less in dis- regard,or even in the face of, conclusionsto which their economicshas led. This thoroughlydiscreditable idea, whichsuggests that economistsdoc- tor or simplyignore their "economic" results when they turnto "political economy"has, in fact, a good deal goingfor it. At the end of The General Theory Keynesdefends the "moderatelyconservative" implications of his analysisas well suitedto preserve"the traditions which embody the most secureand successfulchoices of formergenerations."6 With the benefitof hindsight(and I daresayeven ex ante) we can see that this statementis little more than wishfulassertion. Keynes's social outcomeassumes the most extraordinarypassivity on the part of the capitalistclass-acquiesc- ing withouta murmurin the euthanasiaof its auntsand uncles,as well as in a marked diminutionin the stakes of the game-while taking for grantedcontinuing working-class agreement on "themost secureand suc- cessfulchoices of formergenerations." Marx would have scoffedat such a naive prognosis.From anothervantage point and for differentreasons so did Hayek.I see no way in whichKeynes's chapter on "SocialPhiloso- phy" can be presentedas the reasonedconclusion of the economicin- vestigationthat has precededit. This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions 684 RobertL. Heilbroner The case of Schumpeteris more complex.The idealizedplausible cap- italism of Capitalism, Socialism, and Democracy, as Schumpeter himself wrote, contains"no purelyeconomic reasons why capitalismshould not have anothersuccessful run."7 The socialistfinale of Schumpeter'sdrama thereforerests wholly on extraeconomicfactors, namely,on the subver- sion of the capitalistspirit by the corrosiverationality of capitalism'soff- spring,the intellectualframe of mind.8As with Keynes,there is no clear chain of causalityor even of consistencyleading from the economic to the political.Indeed, the very success that Schumpeterpredicts for cap- italismwould seem to inclinethe outcomein anotherdirection, dispelling the skepticismof the critics, perhapseven giving rise to a spirit of neo- conservatism.This leaves unansweredwhy Schumpetercame to such a perverse conclusion (a matter about which I will offer a conjecture shortly), but assuredlyit also makes
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