The Economics of Illiberalism 🔬

On Keynes, the 1925 Address, and the Politics of Stabilisation

Prologue: The Word and Its Shadow

On the term illiberalism, before we begin

“The class war will find me on the side of the educated bourgeoisie.” — J. M. Keynes, 1925

Illiberalism is a word that has been doing a great deal of work in our own decade, and almost none of it carefully. It is invoked to name regimes that hold elections but suffocate dissent, parliaments that pass laws but answer to nobody, parties that wear the mask of democracy and the substance of something else. By common usage, it has come to mean a kind of political ailment — something that happens to liberalism from the outside, the way a virus happens to a body.

This essay proceeds from a less comfortable premise. Illiberalism, we will argue, is not merely the negation of liberalism. It is what liberalism becomes when its economic foundations cease to deliver on their promises and its political philosophy refuses to update itself to meet new conditions. It is the residue, the ghost-in-the-machine, the ledger that remains when the assets have been quietly transferred elsewhere. It is — to anticipate the figure who will guide us — the politics of an Era of Stabilisation governed by men still operating the levers of an Era of Abundance.

That figure is John Maynard Keynes, and the document around which this small book is built is his August 1925 address to the Liberal Summer School at Cambridge, published shortly afterward in The Nation and Athenæum under the title Am I a Liberal? It is one hundred and one years old. It reads as if it were drafted yesterday.

What follows is, in the first instance, a faithful summary of that address — its arguments, its tonal swerves, its strange and surviving relevance. It is, in the second instance, a biography of its author, told as the unfolding of a single sustained intellectual project rather than a chronology of offices and honours. And it is, in the third instance, an essay — an attempt to read Keynes’s 1925 question (Am I a Liberal?) as the precise inverse of the question our own century is forced to ask: not whether one can still be a Liberal, but whether liberalism, having outlived the conditions that produced it, has become the operating system on which something far less liberal now runs.

The reader will find that the answer Keynes gave in 1925, with characteristic mischief and characteristic precision, was: only if liberalism becomes something other than what it has been. The reader may also find that the answer was not heeded. That non-heeding is, in essence, the subject of this essay.

I. An Address at Cambridge

August 1925 · The Liberal Summer School

Keynes opens by confessing what every honest political animal already knows: that to belong to no party at all is to be cold and lonely and futile, and that one will therefore, if forced, choose a party by the principle of repulsion rather than the principle of attraction. The Conservatives offer him, he says, neither food nor drink, neither intellectual nor spiritual consolation. The Labour Party is more attractive on its surface; but Labour is a class party, and its class is not his class — “the Class war will find me on the side of the educated bourgeoisie.” And worse, he predicts that Labour’s intellectual wing will never gain control, that real power will be seized by what he names, with prophetic exactness, the Party of Catastrophe.

By the negative test, then, the Liberal Party is what remains. But Keynes refuses the easy passage from negative test to positive doctrine. He looks at the historic Liberal platform — Civil and Religious Liberty, the Franchise, the Irish Question, Dominion Self-Government, the House of Lords, graduated taxation, social insurance — and pronounces it achieved, obsolete, or absorbed by every other party. Of the old Liberal planks he sees only two still seaworthy: the Drink Question, and Free Trade. And of these, only Free Trade survives as a living issue, and survives by accident, since the philosophy that originally animated it — laissez-faire individualism — is one Keynes has already, by 1925, ceased to believe in.

The historic party questions of the nineteenth century are as dead as last week’s mutton; and whilst the questions of the future are looming up, they have not yet become party questions, and they cut across the old party lines. — Am I a Liberal? — Part I

Having buried the past, Keynes turns to the future. He identifies five domains in which the political imagination of his moment must now do its work: Peace, Government, Sex, Drugs, and Economics. Of Peace he is a measured pacifist, sceptical of pacts and entanglements but generous toward arbitration and disarmament. Of Government he calls — astonishingly, for 1925 — for the creation of semi-independent corporations and organs of administration, decentralised bodies to which new and old duties of governance might be entrusted without dissolving the sovereignty of Parliament. (Anyone who has thought seriously about modern public-private institutions, central banks, devolved authorities, or, for that matter, federated digital infrastructures, will recognise the prophecy here.)

Sex Questions — by which he means birth control, contraception, marriage law, the treatment of sexual offences, the economic position of women — are not yet political, Keynes says, but are about to be. He is unfashionably correct on this. Drug Questions, in his England, mean Drink, but the deeper question, he insists, is whether bored and suffering humanity can be allowed any escape, any sanctioned carnival, any permitted licence, that does not destroy the body or the purse.

And then he arrives at the largest question of all — the one on which, he says drily, he is “most qualified to speak.”

Here Keynes introduces the framework that gives this essay its title. Borrowing from the American institutionalist John R. Commons, he identifies three economic eras through which civilisation has moved.

Commons’s Three Eras — as Keynes Adopts Them

Era	Description
Scarcity	Up to the 15th–16th century. Inefficiency, custom, war, superstition. Minimum individual liberty; maximum communal, feudal, or governmental control through physical coercion. Rationing rather than bargaining.
Abundance	The 17th through 19th centuries. We fight our way out of bondage into the open air of laissez-faire and historic Liberalism. Maximum individual liberty; minimum coercive control by government; individual bargaining replaces rationing. The veterans of the Liberal party, Keynes notes affectionately, are still casting backward glances at this easier age.
Stabilisation	The era we are now entering, in 1925. Commons calls it “the actual alternative to Marx’s communism.” A diminution of individual liberty, but enforced now by economic sanctions through concerted action — the negotiated power of associations, corporations, unions, manufacturers, bankers, farmers. Its political abuses are Fascism on one side and Bolshevism on the other.

The argument, once stated, is devastating. Both Conservative laissez-faire orthodoxy and Socialist programmatics belong, says Keynes, to the philosophy of Abundance. Both assume that economic forces, if let alone or if owned outright, will yield the social goods. But abundance, in the technical Commons sense, is over. We have entered an epoch in which power has migrated from the price-system into the concerted action of organised blocs — labour, finance, industry, the state — and in which the old policy levers no longer connect to the wheels they appear to control.

Keynes is brutally specific. The 1925 coal crisis, in his diagnosis, is precisely an object-lesson in what happens when the Treasury and the Bank of England operate as if the laissez-faire mobility of capital and labour were still real, while the country and its trade unions have already moved decisively into the world of negotiated stability. The miners, says Keynes, ought not to be the victims of cruel economic forces they themselves never set in motion. To pretend otherwise — to alter the value of money and then leave the consequential adjustments to the market — is to govern the present with the “copybook wisdom” of fifty or a hundred years prior.

Half the copybook wisdom of our statesmen is based on assumptions which were at one time true, or partly true, but are now less and less true day by day. We have to invent new wisdom for a new age. — Am I a Liberal? — Part II

The closing call is famous, and famously unanswered: the true destiny of a New Liberalism, Keynes says, is to find new policies and new instruments to adapt and control the working of economic forces, so that they do not intolerably interfere with what we have come to regard as fit and proper in the interests of social stability and social justice. The transition will be enormous, technically and politically. He concedes this. He insists on it anyway.

And then, having proposed something that no party of his time had any intention of becoming, Keynes leaves the question of his own membership where he found it. He does not say whether he is a Liberal. He says only what Liberalism would have to be, in order for him to consent to the name.

II. A Life in Brief

The man behind the address

John Maynard Keynes was born in Cambridge on 5 June 1883, the son of John Neville Keynes — a Cambridge logician and political economist of moderate distinction — and Florence Ada Keynes, who would later become one of Cambridge’s first woman aldermen and, in 1932, its mayor. He grew up in a household where the categories of the academic study and the categories of public administration were, for practical purposes, the same household furniture. He never really left this furniture behind.

Educated at Eton, then at King’s College, Cambridge, where he read mathematics and was taken into the orbit of the philosopher G. E. Moore and the secret society known as the Cambridge Apostles, Keynes belonged from very early to two intersecting circles that would shape his sensibility for the rest of his life: Cambridge philosophical liberalism, with its preoccupation with truth, beauty, and the good as ends in themselves; and the literary and artistic milieu that would, after the First World War, congeal into Bloomsbury — Virginia and Leonard Woolf, Lytton Strachey, Duncan Grant (with whom Keynes maintained one of the most important relationships of his life), Vanessa Bell, Roger Fry, E. M. Forster.

This dual citizenship — economist by training, aesthete by temperament, civil servant by employment, Bloomsbury intimate by affection — is essential to reading him. He never wrote as a technician for technicians. He wrote as a man who believed that the purpose of economic analysis was to make possible a civilisation in which beauty, friendship, and the contemplation of truth could flourish. Economics was, for Keynes, instrumental. It was downstream of the question of how human beings ought to live.

1906 — 1914 — India Office & Early Cambridge

After Cambridge, Keynes entered the India Office in 1906, where he became fascinated by the Indian monetary system — a fascination that produced his first book, Indian Currency and Finance (1913). He returned to Cambridge as a Fellow of King’s, lecturing in economics, editing the Economic Journal from 1911, and developing the philosophical work that would become his Treatise on Probability (drafted before the war, published 1921).

1914 — 1919 — The War & Versailles

Brought into the Treasury for war finance, Keynes rose quickly to become its representative at the 1919 Paris Peace Conference. He resigned in protest. The reparations regime imposed on Germany struck him as not only morally indecent but technically incoherent. The book he wrote on his return, The Economic Consequences of the Peace, made him internationally famous and changed how educated Europeans understood what had just been done at Versailles.

1920 — 1929 — Public Intellectual, Private Investor

Through the 1920s Keynes became the most listened-to economic commentator in Britain. He wrote in The Nation and Athenaeum (which he chaired), edited the Economic Journal, ran an investment company, restored the finances of King’s College through speculation, and dined with Cabinet ministers. The 1925 address that anchors this book belongs to this period — as does his polemic against Churchill’s return to the gold standard.

1925 — Marriage to Lydia Lopokova

In the same year as Am I a Liberal?, Keynes married the Russian ballerina Lydia Lopokova, a star of the Ballets Russes. The marriage astonished and occasionally scandalised Bloomsbury. It seems to have made him, by all evidence, very happy.

1930 — 1936 — The General Theory

The Great Depression brought into the open everything Keynes had been arguing piecemeal through the 1920s. A Treatise on Money (1930) was his first systematic attempt at a new monetary economics; The General Theory of Employment, Interest and Money (1936) was the book that founded modern macroeconomics and broke, decisively, with the assumption that markets clear at full employment.

1937 — 1946 — Bretton Woods & the End

A heart attack in 1937 weakened him permanently, but did not slow him. He returned to the Treasury at the outbreak of the Second World War, devised the system of war finance set out in How to Pay for the War (1940), and led the British delegation at Bretton Woods in 1944, where his proposal for an International Clearing Union was outvoted by the American plan. He died at Tilton, Sussex, on 21 April 1946, aged sixty-two.

The shape of the life, then: a Cambridge mathematician who became a Treasury man who became the most consequential economic theorist of the twentieth century, who never stopped writing for newspapers, never stopped speculating in markets, never stopped dining with painters and dancers, and who held, through all of it, to a Cambridge undergraduate’s conviction that the point of all this technical machinery was to make a more humane civilisation possible.

The 1925 address sits, biographically, at a hinge. It is written by a man who has already buried the laissez-faire orthodoxy of his teachers (in The End of Laissez-Faire, the lecture immediately preceding our text) but has not yet built the macroeconomic framework that would replace it (the General Theory, more than a decade away). It is the address of a thinker working without a finished system, naming the problem in plain language because he has not yet developed the technical apparatus to disguise it. This is part of why it has aged so well.

III. The Works — A Catalogue of a Mind

1913 — Indian Currency and Finance London: Macmillan

His first book, drawn from his India Office years. A close study of the gold-exchange standard as practised in India — a system in which a peripheral economy stabilised its currency against an imperial centre without holding gold itself. Keynes treats this not as colonial curiosity but as a glimpse of a possible monetary future. The book’s technical argument is dated; its instinct — that monetary arrangements are a form of governance, and that imperial peripheries are laboratories for what cores will eventually adopt — never dates.

1919 — The Economic Consequences of the Peace London: Macmillan

Written in white heat after his resignation from the British Treasury delegation at Versailles. Keynes argues that the reparations regime imposed on Germany is mathematically impossible, politically suicidal, and morally indefensible. The book is a portrait gallery as much as a treatise — its sketches of Wilson, Clemenceau, and Lloyd George are some of the finest political writing in English. It made Keynes an international celebrity at thirty-six, and made the rise of fascism in Germany somewhat less surprising to readers of Keynes than to readers of statesmen.

1921 — A Treatise on Probability London: Macmillan

The doctoral-thesis-that-wasn’t, drafted before the war, finally published. Keynes argues that probability is not a frequency but a logical relation between propositions, and that much of life — including most economic decision-making — concerns judgements where the evidence is too thin for frequencies to mean anything at all. This conception of irreducible uncertainty would re-emerge, two decades later, as the famous distinction between risk and uncertainty in the General Theory.

1923 — A Tract on Monetary Reform London: Macmillan

The most quotable of his books, on account of one line: “In the long run we are all dead.” The line is a joke against economists who console themselves with long-run equilibria while short-run unemployment grinds on. The book itself is a sustained argument against returning to the pre-war gold standard, and a sustained argument for active monetary management aimed at price stability — at stabilisation, in the very Commons sense Keynes will later quote.

1925 — The Economic Consequences of Mr. Churchill London: Hogarth Press

Published months before our 1925 address, and explaining its anger. Churchill, as Chancellor, had returned sterling to the pre-war gold parity, requiring a deflationary squeeze that fell hardest on the export industries — coal above all. Keynes’s pamphlet predicted, with cold accuracy, the General Strike of the following year. The 1925 address is, in part, the political-philosophy version of the Churchill pamphlet: this is what happens when you govern the present with the assumptions of the past.

1925 — Am I a Liberal? · the present text Address to the Liberal Summer School, Cambridge, August. Published in The Nation and Athenæum, 8 & 15 August 1925; reprinted in Essays in Persuasion, 1931.

The address summarised in Chapter I above. A diagnosis of party politics in transition, organised around Commons’s three eras, and ending with a call for a New Liberalism whose task is to invent the policy instruments adequate to the Era of Stabilisation. The original speech contained passages on Labour and class war that Keynes excised before publication; what remained was nevertheless sufficient to make him, for a moment, the most important political thinker of the British centre.

1926 — The End of Laissez-Faire London: Hogarth Press

The companion piece. Keynes traces the genealogy of the laissez-faire doctrine from Locke and Hume through Bentham and the political economists, and pronounces it intellectually dead. Markets do not, as a matter of fact, achieve the social goods their advocates promised. He proposes, instead, an “agenda” and a “non-agenda” for the state — a distinction that anticipates much of post-war political economy and most of the institutional architecture of the modern mixed economy.

1930 — A Treatise on Money, 2 vols. London: Macmillan

Keynes’s first attempt at a complete monetary theory. The book is enormous, brilliant in places, and was felt by Keynes himself to fail at the level of integration. He spent the next six years rebuilding from scratch. The Treatise is now read mostly by historians of thought; but its theory of money as a social institution rather than a commodity remains influential, particularly among heterodox economists working in the post-Keynesian and Modern Monetary traditions.

1930 — Economic Possibilities for our Grandchildren essay; collected in Essays in Persuasion, 1931

A short, strange, beautiful piece in which Keynes, in the depths of the Depression, predicts that compounding productivity will solve the “economic problem” within a hundred years, and that humanity’s real difficulty will then be the harder one — what to do with our freedom. He estimated a fifteen-hour working week. The fifteen-hour week did not arrive. The reasons it did not are part of what this present essay calls illiberalism.

1931 — Essays in Persuasion London: Macmillan

The collected pamphlets. Keynes describes himself, in the preface, as “the croakings of twelve years — the croakings of a Cassandra who could never influence the course of events in time.” The line is too modest. It is a great book of public writing, and within it our 1925 address occupies its proper place: as the chapter in which the Cassandra most clearly named the structural problem her later technical books would attempt to solve.

1933 — Essays in Biography London: Macmillan

Portraits of Marshall, Edgeworth, Newton, Malthus, Ramsey, and others. Keynes is one of the great English biographical essayists of the twentieth century, and these pieces are where one sees most clearly his conviction that economics is made by particular human beings with particular vices and gifts, not by the operations of a depersonalised science.

1936 — The General Theory of Employment, Interest and Money London: Macmillan

The book that founded modern macroeconomics. Its central claim is heretical and, once stated, obvious: an economy can settle into a stable equilibrium at less than full employment, with no internal tendency to recover. The market does not, in general, clear. Aggregate demand can be insufficient, sustained insufficient, and the right answer is fiscal action by the state — public investment, deficit spending in slumps — to fill the gap. The book is technical, contradictory in places, and profoundly difficult. It changed how every government in the developed world conducted economic policy for the next forty years. The post-war boom is, in important measure, what its advice produced.

1940 — How to Pay for the War London: Macmillan

The applied General Theory in wartime. Keynes proposes a system of compulsory saving — “deferred pay” — to soak up wartime purchasing power, suppress inflation, and return as a windfall to working households after victory. The proposal was substantially adopted. It is the clearest case of his theoretical work directly determining policy, and it remains a model of how to think about resource mobilisation under emergency.

1944 — The Bretton Woods Negotiations delegate, July 1944

Keynes led the British delegation. He proposed an International Clearing Union with a supranational reserve currency, the “bancor,” that would have made it the obligation of both creditors and debtors to adjust trade imbalances — a structural answer to the destabilising power of surplus nations. The Americans, holding the cards, outvoted him. The IMF and World Bank as they exist are the residue of this defeat. Much of what one might wish to call the unfinished work of the twentieth-century international order is unfinished because Keynes was outvoted at Bretton Woods.

IV. Three Eras

Scarcity · Abundance · Stabilisation

Let us return now to the Commons framework Keynes adopts in 1925, because everything that follows in this essay depends on taking it seriously rather than as a rhetorical convenience. Commons did not invent the three eras as a literary device. He observed them as institutional facts — patterns of how scarcity, plenty, and the negotiated power of organised interests actually allocate goods, time, and labour in real economies.

In the Era of Scarcity, distribution proceeds by command. There is not enough; therefore someone must decide who gets what; therefore liberty is small and authority is large. The economic question and the political question are the same question.

In the Era of Abundance, technical productivity outruns the need for command. The price-system can be permitted to allocate, because the consequences of mis-allocation are no longer immediately fatal. Liberty expands. Government contracts. The economic and political questions detach. This is the world in which classical liberalism — the liberalism of Locke, Smith, Mill, Gladstone — makes sense as a complete philosophy.

The third era, Commons argues and Keynes agrees, is something genuinely new. Productive capacity continues to grow, but allocation no longer happens through individual bargaining among atomised actors. It happens through concerted action: collective bargaining by trade unions, administered prices by industrial cartels, lender-of-last-resort operations by central banks, public utility regulation, social insurance, supply-chain coordination by large firms. Liberty in the abundance sense diminishes, but it is not coercion that diminishes it — it is the negotiated power of organised blocs.

The transition from economic anarchy to a régime which deliberately aims at controlling and directing economic forces in the interests of social justice and social stability, will present enormous difficulties both technical and political. — Am I a Liberal? — Part II

Keynes’s diagnostic move — and it is, I think, the deepest move in the entire address — is to recognise that the political philosophies of his day were all formulated for the wrong era. Conservatism had become Die-Hard nostalgia for Abundance. Socialism imagined that collective ownership would simply hand Abundance to the workers. Laissez-faire pretended Abundance still ruled. None of them had a political theory of Stabilisation. None had thought clearly about how a polity governs itself when its dominant mode of allocation is neither markets nor commands but the cross-cutting bargains of organised interests.

The history of the century since 1925 can be narrated, with only mild violence to the facts, as the history of various incomplete answers to this question — and of what happens when the question itself is forgotten.

V. The Die-Hard and the Catastrophist

Two failures of political imagination

Keynes names two recurring figures in the political life of his moment: the Die-Hard and the Catastrophist. The Die-Hard belongs to the right wing of every Conservative party that ever existed. He is the man for whom every novel measure for safeguarding capitalism is indistinguishable from Bolshevism, and who therefore, by his own incapacity to update, ensures that capitalism cannot adapt and must eventually be replaced. Keynes is, here, almost lovingly cruel: he says that “if old-fashioned Capitalism was intellectually capable of defending itself, it would not be dislodged for many generations. But, fortunately for Socialists, there is little chance of this.”

The Catastrophist is the Die-Hard’s mirror. He belongs, says Keynes, to the left wing of every party of the working class — Jacobin, Communist, Bolshevist, by whichever name. He hates existing institutions and believes that great good will result merely from overthrowing them. Keynes’s judgement on this party is severe: its philosophy “in a diluted form permeates the whole Labour Party,” and a successful Labour leader must “be, or at least appear, a little savage. It is not enough that he should love his fellow-men; he must hate them too.”

This is rough talk, and it should make us uncomfortable, because Keynes is not balancing his criticisms with anything resembling fairness. (He admits as much.) The point of the typology is not fairness. The point is that both the Die-Hard and the Catastrophist are products of the same underlying failure: the failure to think politically about Stabilisation.

Two Mirror Failures

Figure	Failure
The Die-Hard	Refuses to believe Abundance has ended. Insists that markets, left alone, will deliver. Treats every policy of stabilisation as an attack on liberty itself. Defends institutions long past the point at which they continue to deliver the goods that justified them. Is, in the end, the most reliable producer of revolutionaries — because his refusal to adapt makes the system he loves unmaintainable.
The Catastrophist	Refuses to believe Stabilisation is possible by any route except total rupture. Treats existing institutions as nothing but obstacles. Mistakes the destruction of structures for the creation of justice. Is, in the end, the most reliable producer of reactionaries — because his programme produces the chaos that the Die-Hards will use to justify the iron hand.

The two figures need each other. The Die-Hard’s refusal to reform produces the conditions in which the Catastrophist’s case begins to seem reasonable; the Catastrophist’s threat of upheaval produces the panic in which the Die-Hard’s case begins to seem prudent. They constitute together a closed circuit of political failure, and every era of Stabilisation that has not been governed wisely has eventually collapsed into one or both of them.

Keynes, in 1925, named the circuit. He proposed that a New Liberalism — “disinterested as between classes,” free from both Die-Hardism and Catastrophism — could break it. The remainder of the twentieth century, in part, attempted this. The remainder of this essay is about what happens when the attempt is abandoned.

VI. Why Liberalism Becomes Illiberal

The argument of this book, stated plainly

We can now state the argument that has been gathering force throughout this essay. Illiberalism is not the failure of liberalism by external attack. Illiberalism is what liberalism becomes when it refuses to update its political philosophy to match the economic era in which it actually operates.

The mechanism is the one Keynes described in 1925, transposed forward by a century. When a polity remains formally committed to the institutions of liberal democracy — elections, parliaments, courts, a free press, civil rights — but governs its actual economic life with the policy instruments of an earlier era, the gap between the formal system and the operational system widens. Power migrates. It does not vanish; it relocates. It moves from the legislature into the bargaining-rooms of organised blocs; from electoral choice into the tacit preferences of credit markets; from public deliberation into the closed councils of central banks, supranational tribunals, platform monopolies, and the asset managers who are now, in many countries, the largest single owners of housing, infrastructure, and natural resources.

This is not, in Commons’s sense, an aberration. It is what Stabilisation looks like when it is left ungoverned. Concerted action by organised blocs is the dominant allocative mechanism of late-modern economies, exactly as Commons predicted in the 1920s and Keynes endorsed in 1925. The question Keynes posed is whether this concertation will be subjected to democratic political authority — disciplined by something resembling the public good — or whether it will continue to operate behind the formal facade of liberal politics, untouched and largely untouchable.

We have changed, by insensible degrees, our philosophy of economic life, our notions of what is reasonable and what is tolerable; and we have done this without changing our technique or our copybook maxims. Hence our tears and troubles. — Am I a Liberal? — Part II

Where the answer is the second — where Stabilisation operates unsupervised behind a liberal facade — three things follow with grim regularity, and we recognise each of them in our own moment.

First, the formal institutions of liberalism become hollowed. Elections continue, but their outcomes do not change the operating decisions of the political economy, because those decisions are made elsewhere. The voter notices. The voter is not stupid. The voter draws the conclusion that liberal democracy does not, in practice, deliver consequential choice — and looks elsewhere for somebody who promises to make consequential choices, however ugly.

Second, the rhetoric of liberalism — individual liberty, free markets, open exchange — becomes available as cover for what is, operationally, the consolidation of private power. The same vocabulary that once defended the small holder against the king now defends the platform monopoly against the regulator, the asset manager against the tenant, the patent holder against the patient. Liberalism becomes, in this idiom, the property-form of illiberalism. It is the lawful name under which unlawful concentrations of power present themselves at the customs counter.

Third, and here we arrive at the deepest of Keynes’s warnings, the political imagination collapses back into the closed circuit of Die-Hard and Catastrophist. The Die-Hard insists that the formal facade is the substance, that any criticism of liberal-democratic institutions is itself the threat, that all is well, that nothing must change. The Catastrophist insists that the substance has been so corrupted by the facade that only total rupture can rescue anything. Both are functions of a politics that has refused to do the slow, technical, unglamorous work Keynes called for in 1925: the invention of new policies and new instruments to adapt and control the working of economic forces.

This is what we mean, in this essay, by the economics of illiberalism. It is not primarily a story about strongmen, demagogues, or the anti-democratic right — though those figures certainly play their parts. It is a story about what happens to a political form when its underlying economic philosophy has been allowed to expire while its institutions go on operating, ghost-like, on the fumes of legitimacy left over from the era in which the philosophy was alive.

The diagnosis is ungentle, but it carries a hopeful corollary, which is also Keynes’s. If illiberalism is what liberalism becomes when it fails to do its homework, then the answer is not to abandon the liberal forms — the rights, the elections, the courts, the open press, the protections of conscience and assembly. The answer is to do the homework. To re-pose, in our own century, the question Keynes posed in 1925: which institutions and instruments of governance does the actual economic life of our era require?

This is not a question with a single answer, and the present essay does not pretend to one. But it is worth naming the questions it generates. By what mechanism will the algorithmic concertation of platform monopolies be brought under public deliberation? By what mechanism will the rentier capture of housing, of healthcare, of higher education, of the basic infrastructures of digital life, be reversed in favour of broader access? By what mechanism will compute, the new electricity, be governed as a commons rather than enclosed as a moat? By what mechanism will surplus nations and deficit nations both, as Keynes proposed at Bretton Woods, share the burden of adjustment, so that the international monetary order ceases to be a mechanism for the slow strangulation of the poor?

These are the questions of an Era of Stabilisation that has not yet learned to govern itself. They are the questions Keynes opened in 1925 and that the long twentieth century, despite its brief Keynesian summer, did not finally close. They are open still.

VII. Coda: The Long 1925

A note on what remains

It is easy, when reading a document a hundred years old, to mistake its persistence for prophecy. Keynes was not a prophet. He was a careful and slightly impatient observer who happened to be looking, in August 1925, at the early symptoms of a transition that would not complete itself for another generation, and whose eventual reversal — the slow unwinding of the post-war Keynesian settlement from roughly 1973 onward — would itself produce the conditions of the present.

What he saw, and what we should learn from him to see, is that the categories by which a society understands its political life lag the categories by which it actually conducts its economic life by something on the order of half a century. The party programmes of 1925 were the answers to the questions of 1875. The party programmes of 2025, by exactly the same lag, are the answers to the questions of 1975 — which is to say, the questions of the high Keynesian moment as it was about to be dismantled. Our political vocabulary is one full transition behind our economic situation. We are governing the third decade of the twenty-first century with the conceptual furniture of the third quarter of the twentieth.

The honest response to this is the response Keynes gave: to invent new wisdom for a new age, knowing that this will require us to appear “unorthodox, troublesome, dangerous, disobedient to them that begat us.” To do the slow work of building institutions adequate to an Era of Stabilisation we did not choose and cannot exit. To refuse, with equal firmness, the comforts of Die-Hardism and the seductions of Catastrophism. To accept that the question Am I a Liberal? is, properly understood, an ongoing question — never finally answered, always answered again in each generation by the work of inventing the institutions a humane civilisation actually requires.

This is not a glamorous programme. It is the programme Keynes recommended in 1925 and again, in different language, at every subsequent stage of his career: from the Treatise on Money through the General Theory through the deferred-pay scheme of How to Pay for the War through the bancor proposal at Bretton Woods. He did not always succeed. He was outvoted at Bretton Woods. He was ignored, for long stretches, by the governments of his own country. He did the work anyway.

One reads Am I a Liberal? a century after its publication, and one is struck by how little of it has gone out of date. This is not because Keynes was a wizard. It is because the work he proposed has not been done. The Era of Stabilisation has not been brought under democratic political authority. The instruments of governance adequate to it have not been invented at the scale and with the precision that would make liberal forms substantively, not merely formally, alive. We are still inside the long 1925, and the question Keynes asked at Cambridge that August evening is still, with all its mischief and all its precision, the right question to ask.

Notes & References

Keynes, J. M. Am I a Liberal? Address to the Liberal Summer School, Cambridge, August 1925. Published in The Nation and Athenæum, 8 and 15 August 1925; reprinted in Essays in Persuasion (London: Macmillan, 1931), Chapter IV.3, pp. 323–338. Collected Writings, vol. IX, pp. 295–306.
Commons, John R. The three-era framework — Scarcity, Abundance, Stabilisation — is drawn from Commons’s institutional economics, and was elaborated in his later Institutional Economics (1934). Keynes had encountered the typology in Commons’s earlier journal articles by 1925.
Skidelsky, Robert. John Maynard Keynes, 3 vols. (London: Macmillan, 1983–2000) is the indispensable modern biography and provides the chronological scaffolding used in Chapter II of the present essay.
Keynes’s 1925 marriage to Lydia Lopokova is discussed in Judith Mackrell, Bloomsbury Ballerina (London: Phoenix, 2008), and in Polly Hill and Richard Keynes, eds., Lydia and Maynard: The Letters of Lydia Lopokova and John Maynard Keynes (London: Andre Deutsch, 1989).
The omission from the published version concerning Keynes’s “real repulsion” from the Labour Party is noted in the editorial apparatus to The Collected Writings of John Maynard Keynes, vol. IX (Cambridge: Cambridge University Press, 1972).
The argument of Chapters V–VII is the present essay’s own reading of Keynes through subsequent institutional and political-economic literature; it is not in Keynes himself, though it draws its conceptual machinery from him. Particular debts include Karl Polanyi, The Great Transformation (1944); Carlota Perez, Technological Revolutions and Financial Capital (2002); and the contemporary work of Brett Christophers on rentier capitalism.
The full text of Keynes’s 1925 address used as the basis for this essay is hosted by The Economics Network and by the History of Economic Thought website (hetwebsite.net), both consulted in preparing this volume.