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In 1933, in the context of Britain going off the gold standard and De Valera coming to power in Ireland on a protectionist platform, Keynes gave a lecture in Dublin on 'National Self Sufficiency', an important social event attended by the leading members of both the main political parties. According to Skidelsky's account, as they gathered for this address by the most famous British economist, the Treatyites were looking self confident while the anti-Treatyites looked uncomfortable, but as the talk progressed the 'smiles faded from one side and appeared on the other.' (8)

(8) Skidelsky: Keynes, vol ii, p.479, quoting James Meehan: George O'Brien, a biographical memoir, Gill and Macmillan, 1980. The talk was the first Finlay Lecture delivered at University College, Dublin, on April 19, 1933, published as John Maynard Keynes: 'National Self sufficiency', The Yale Review, Vol. 22, no. 4 (June 1933), pp. 755-769. It is (March 2021) accessible on the internet at  

Keynes began by evoking his own formation as a free trader but quickly went on to say:

'It is a long business to shuffle out of the mental habits of the pre-war nineteenth century world. It is astonishing what a bundle of obsolete habiliments one's mind drags round even after the centre of consciousness has been shifted.'

Among those 'obsolete habiliments' was the idea of international free trade as a means of solving the problem of poverty, serving 'the great cause of liberty, of freedom for personal initiative and individual gift' as well as 'international concord and economic justice between nations, and the diffusion of "the benefits of progress."'

But the results, he went on to say, had been disappointing so that:

'it does not to-day seem obvious that a great concentration of national effort on the capture of foreign trade, that the penetration of a country's economic structure by the resources and the influence of foreign capitalists, that a close dependence of our own economic life on the fluctuating economic policies of foreign countries are safeguards and assurances of international peace. It is easier, in the light of experience and foresight, to argue quite the contrary.

'The protection of a country's existing foreign interests, the capture of new markets, the progress of economic imperialism - these are a scarcely avoidable part of a scheme of things which aims at the maximum of international specialisation and at the maximum geographical diffusion of capital wherever its seat of ownership. Advisable domestic policies might often be easier to compass, if the phenomenon known as "the flight of capital" could be ruled out. The divorce between ownership and the real responsibility of management is serious within a country, when, as a result of joint stock enterprise, ownership is broken up between innumerable individuals who buy their interest to-day and sell it to-morrow and lack altogether both knowledge and responsibility towards what they momentarily own. But when the same principle is applied internationally, it is, in times of stress, intolerable. I am irresponsible towards what I own and those who operate what I own are irresponsible towards me.' 

With the general diffusion of specialist knowledge and skills a much greater degree of self sufficiency was now possible:

'over an increasingly wide range of industrial products, and perhaps of agricultural products also, I become doubtful whether the economic loss of national self-sufficiency is great enough to outweigh the other advantages of gradually bringing the producer and the consumer within the ambit of the same national, economic and financial organisation. Experience accumulates to prove that most modern mass-production processes can be performed in most countries and climates with almost equal efficiency. 

'Moreover, with greater wealth, both primary and manufactured products play a smaller relative part in the national economy compared with houses, personal services and local amenities which are not equally available for international exchange; with the result that a moderate increase in the real cost of the former consequent on greater national self-sufficiency may cease to be of serious consequence when weighed in the balance against advantages of a different kind. National self-sufficiency, in short, though it costs something, may be becoming a luxury which we can afford, if we happen to want it.'

He goes on to argue why we should want it:

'The nineteenth-century free-trader's economic internationalism assumed that the whole world was, or would be, organised on a basis of private competitive capitalism and of the freedom of private contract inviolably protected by the sanctions of law in various phases, of course, of complexity and development, but conforming to a uniform type which it would be the general object to perfect and certainly not to destroy.'

'Rule-based international order', anyone? But:

'I have become convinced that the retention of the structure of private enterprise is incompatible with that degree of material well-being to which our technical advancement entitles us, unless the rate of interest falls to a much lower figure than is likely to come about by natural forces operating on the old lines. Indeed the transformation of society, which I preferably envisage, may require a reduction in the rate of interest towards vanishing point within the next thirty years. But under a system by which the rate of interest finds a uniform level, after allowing for risk and the like, throughout the world under the operation of normal financial forces, this is most unlikely to occur. Thus for a complexity of reasons, which I cannot elaborate in this place, economic internationalism embracing the free movement of capital and of loanable funds as well as of traded goods may condemn my own country for a generation to come to a much lower degree of material prosperity than could be attained under a different system.'

He goes on to condemn the reliance on commercial profit as the criterion of successful policy:

'The whole conduct of life was made into a sort of parody of an accountant's night-mare. Instead of using their vastly increased material and technical resources to build a wonder-city, they built slums; and they thought it right and advisable to build slums because slums, on the test of private enterprise, "paid," whereas the wonder-city would, they thought, have been an act of foolish extravagance, which would, in the imbecile idiom of the financial fashion, have "mortgaged the future"; though how the construction to-day of great and glorious works can impoverish the future, no man can see unless his mind is beset by false analogies from an irrelevant accountancy ...

'If I had responsibility for the Government of Ireland to-day, I should most deliberately set out to make Dublin, within its appropriate limits of scale, a splendid city fully endowed with all the appurtenances of art and civilisation on the highest standards of which its citizens were individually capable, convinced that what I could create, I could afford and believing that money thus spent would not only be better than any dole, but would make unnecessary any dole. For with what we have spent on the dole in England since the war we could have made our cities the greatest works of man in the world. Or again we have until recently conceived it a moral duty to ruin the tillers of the soil and destroy the age-long human traditions attendant on husbandry, if we could get a loaf of bread thereby a tenth of a penny cheaper.'

He concludes:

'once we allow ourselves to be disobedient to the test of an accountant's profit, we have begun to change our civilisation. And we need to do so very warily, cautiously and self-consciously. For there is a wide field of human activity where we shall be wise to retain the usual pecuniary tests. It is the State, rather than the individual, which needs to change its criterion. It is the conception of the Minister of Finance as the Chairman of a sort of joint-stock company (9) which has to be discarded. Now if the functions and purposes of the State are to be thus enlarged, the decision as to what, broadly speaking, shall be produced within the nation and what shall be exchanged with abroad, must stand high amongst the objects of policy.'

(9) Or, in the modern form of this absurdity, Angela Merkel's Swabian housewife - the comparison of the state budget to the household budget.

Actually, that isn't quite how he concludes. He concludes with some warnings against a too extreme and uncompromising economic nationalism, with Russia as the prime example. He sees dangerous tendencies in 'the blond beasts of Germany' but thinks it is still too early to judge.