Keynes’s state planning: from Bolshevism to the General Theory by João Sicsú published by IE/UFRJ (2020)
“On 14 March 1932, Keynes stated: “There is a new conception in the air today – a new conception of the possible functions of government…” (Keynes 2013f, 84). Keynes was referring to state planning. His enthusiasm was due to his belief that the state could use planning as an instrument to reach extraordinary goals, such as full employment and income distribution, to provide the economy with purchasing power to maintain itself in the quasi-boom state.2 The forces behind his notion of state planning were mostly drawn from Bolshevist Russia: “The Russian Five-Year Plan has assaulted and captured the imagination of the world” (Keynes 2013f, 84-85).3 According to Nove (1992, 127), Soviet planning theorists and practitioners were the pioneers.
Keynes visited Russia three times between 1925 and 1936, and his wife was Russian. He knew Russia, the country’s economy, and its political regime very well. He admired and praised that Russia had managed to implement a planned economy. However, he disapproved of Russia having a totalitarian regime. Keynes believed that state planning was necessary, and therefore it should be applied in a country where political liberties are upheld. He believed capitalism “… suffer[s] a chronic failure to live up to the opportunities of our technical capacity to produce material goods” (Keynes 2013f, 87). In other words, entrepreneurs are capable of producing goods, but there must be consumers capable of buying these goods; otherwise, economies will suffer chronic failures…”
