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PaperclipPerfector  1yr ago (text post)   33485 thread views

Culture War Roundup for the week of June 19, 2023

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a large bout of “military Keynesianism” and a major war would cure the country’s seemingly insurmountable economic problems

Keynes played no small role in the start of World War 2, but contrary to how this anonymous FDR advisor is supposedly invoking him here, it was due to his outsized concern with the economic destructiveness of the post-war order as being too harsh on Germany. The Economic Consequences of the Peace significantly shaped the perception of Versailles in the US as being incredibly unfair, though this was largely a myth. A young French economist, Étienne Mantoux demonstrated that Keynes' dire predictions had fallen apart almost immediately:

In opposition to Keynes he held that justice demanded that Germany should have paid for the whole damage caused by World War I, and he set out to prove that many of Keynes' forecasts were not verified by subsequent events. For example, Keynes believed European output in iron would decrease but by 1929 iron output in Europe was up 10% from the 1913 figure. Keynes predicted that German iron and steel output would decrease but by 1927 steel output increased by 30% and iron output increased by 38% from 1913 (within the pre-war borders). Keynes also argued that German coal mining efficiency would decrease but labour efficiency by 1929 had increased on the 1913 figure by 30%. ...

Keynes also believed that Germany would be unable to pay the 2 billion marks-plus in reparations for the next 30 years, but Mantoux contends that German rearmament spending was seven times as much as that figure in each year between 1933 and 1939.

Despite this, Keynes' book became a significant influence on the subsequent post-war policy of the United States, to strip back many of the reparations owed by Germany. This both enabled Germany's rearmament while lending credence to false, conspiratorial narratives of economic persecution. Summed up in a review of Förster's The Treaty of Versailles: a reassessment after 75 years, excerpted:

To begin with economics: it is even more clear now than it was at the time that, in terms of its resources, Germany could have paid the sums demanded of it. Indeed, as Schuker has argued in his 1988 book, American 'Reparations' to Germany, 1919-1933, if one takes into account the reductions in the reparations burden initiated by the Dawes and Young Plans (in 1924 and 1929 respectively), American credits to Germany for fulfilling its liability, the default on these obligations, and the de facto cancellation of outstanding reparations payments in 1932, it is reasonable to conclude that Germany paid no net reparations at all.

Keynes' narrative on the war has been particularly sticky in the US education system, to the point where his takes are reproduced uncritically even to this day. Mantoux fought for the Free French Forces and died in Bavaria, 1945, eight days before the German surrender.

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