Paul Krugman, the Nobel-winning economist and self-proclaimed liberal antithesis of Barry Goldwater’s “conscience of a conservative” while being a nemesis of liberals such as Obama, is feeling pressured to move to the right in the face of the budget debate rather than do the “right” thing (I am proud of the persistence of my 2003 thesis across political contexts).
Krugman in his New York Times blog “Conscience of a liberal” implies that the cult of centrism is fading in a ramble of a blog article when he is really working to save the tactical political opportunism of Clinton (Obama) to save the country from being taken over by the Goldwater conservatives. He appears to want a centrist-Democrat throne at the seat of American power (center-left as the president wants) than the right returning to the people’s seat in Washington. For a good writer (Peddling Prosperity, in my view, his best book), his choice of words is disappointing.
Centrism was not the political innovation of either Bill Clinton or Tony Blair. Theirs was neo-centrism, similar to neoclassical economics. Krugman’s hero, John Maynard Keynes invented neo-classical economics after his proclamation of ending classical economics in a tome (Krugman confessed that he has a framed picture of John Maynard Keynes in his Princeton office).
As an English liberal bi-sexual elite, who was married to a Russian ballerina, Keynes’ other less known work: The End of Laissez-Faire: The Economic Consequences of the Peace (after World War II) is the founding thesis for John Rawls’ A Theory of Justice (Obama’s Harvard conscience) and for Clinton and Blair. This is the tenuous political center that was formed as an ideology across the pond in the ‘90s.
Keynes was a man of genius. His singular accomplishment is to forever weave government into the fabric of economics by inventing macroeconomics and by reinventing political economy. In doing so, he saved English contribution to classical economics and civilization from Hume to himself, about 300 years of thinking, from the assault of Marxism on the consequences of the industrial revolution.
Without Keynes there would be no macroeconomics and perhaps no economics as Western Civilization knows it. His role in founding the International Monetary Fund and the World Bank at Bretton Woods in New Hampshire is a side show, albeit a remarkable one.
The trouble with Keynes, however, is the political implication of his economics. The role of government in political economy in classical economics is alien to the British elites, comfortable in a constitutional monarchy where social classes by birth live comfortably in economic tension, a problem Blair attempted to resolve after Thatcher and Major by working to lift the commoners economically. But the role of government in classical economics is inalienable and self-evident to the United States. John Maynard Keynes had corrupted American economics by distorting its politics and philosophy.
Keynes, as much as he saved English intellectual heritage in economics, created the conditions for a political coup in the United States worse than the War of 1812. The White House has been burning down because the purpose of Keynesianism is for the government to play a stabilizing role (known as stabilization policy in macroeconomics) in the economic cycle. His solution to the business cycle, the unavoidable foundation of classical economics, was government, just as later Milton Friedman’s was money supply as has been implemented by the Federal Reserve since 1987 by Alan Greenspan. Stabilization policy is the raison d’etre of neo-classical economics.
The period from 1763 to 1789 and into the early 19th century, but climaxing in the Declaration of Independence in 1776, was an intellectual ferment in American history which produced the American enlightenment. Newt Gingrich, the historian, calls it a different civilization taking birth. Without 1776 there would be not be a Constitution in 1787.
The American enlightenment created a viable form of representative democracy with a well-defined role for government, the most persistent since the direct democratic experiment of Athens in antiquity. This structural break in historical data, a concept any econometrician must well understand, also expounded at great depth, publicly by the nomdeplume of publius, by three founding fathers, Alexander Hamilton, James Madison and John Jay, writing in unison for The Independent Journal in New York, a newspaper to reach the people, about the meaning of the Constitution for the polis and the oeikos.
Government has a strong but limited role both in the public square and in the economy. And this is the great American center. It is not a cult. It is a group of sensible people with deeply held personal convictions who knew how to sit around a table to resolve issues in civility, despite disagreements, to create a civil society.
America has not yet moved right enough to its rightful center of 1776 since its socialization by the left after World War II. In doing so, it would also reform, at the zenith of its power as the hub of civilization, the multilateral institutions, which John Maynard Keynes had helped found, to move the rest of the world toward that same center.