11. Review of the Veritas Foundation, Keynes at Harvard

11. Review of the Veritas Foundation, Keynes at Harvard

April 6, 1961

Dr. Ivan R. Bierly

William Volker Fund

Dear Ivan:

The Veritas Foundation’s Keynes at Harvard²⁷ is an absolute, unmitigated, and unbounded disgrace, an affront to the principles of scholarship or research, and deserving of the severest condemnation. It is also an unfortunate symptom, a symptom of what has been happening to a large element of “right-wing” and conservative opinion in recent years.

Increasingly, the “Right” has tended to substitute for discussion of the merits or demerits of the issues, attacks on the people who sponsor or advocate these issues. Increasingly, the syllogism being adopted is this: the Communists approve (or disapprove) of Policy X; Mr. Jones approves (or disapproves) of Policy X; therefore, Mr. Jones is a Communist, a “dedicated and conscious agent of the Communist conspiracy,” and/or a “Communist dupe.”

The result of this mischievous logic is not only to make wild and absurd charges of Communism, but also to decide issues solely on the ground of whether or not the Communists approve or disapprove: in short, to abandon one’s own thought in favor of the Communists’ (in reverse). “Anti-Communism” then seems to require taking a position diametrically opposed to that of the Communists at all times, anyone not doing so then becoming a “Communist dupe,” etc. Then, if the Communists are opposed to nuclear war, or war between the United States and Russia, or opposed to protective tariffs, then “anti-Communists” are duty bound to favor nuclear war, support protective tariffs, etc.

Buttressing this view is the wildest forms of “guilt by association”; thus, if Mr. X wrote a book favorably noticed in a Fabian magazine, then X is a Fabian, anyone connected with X is a Fabian, etc.

Keynes at Harvard is an exemplar of the worst of this tendency, with the addition of a special absurdity coined in recent years by Sister Margaret Patricia McCarran, in her fantastic, fortunately “suppressed” manuscript, “Fabianism in America” (a striking contrast to the sober, judicious Fabianism in the Political Life of Britain). This addition is what we may call “Fabian-baiting,” which applies the same anti-Communist logic and guilt by association to Fabians, adding these “Fabians” in as a separate link to the Communists in what the Veritas people, who offer a condensed version of Sister McCarran’s manuscript, like to refer to as the “Communist-Fabian-Keynesist political underworld.” The operating principle is that, since Keynes was a member of the Fabian Society at one time, every Keynesian becomes a “Fabian”; since the Webbs were pro-Soviet, every Fabian (or “Fabian” by extension) becomes pro-Soviet; since the Fabians set up the London School of Economics, anyone teaching there becomes a Fabian, therefore a pro-Communist, etc., in virtually endless ramifications.

Using the McCarran-Veritas logic, it is possible to construct a view, for example, making you or me members of the “Communist-Fabian” underworld, and this can be done very readily. (Note: this is not a caricature, since it exemplifies precisely the methods used by these authors.) For example: F.A. Hayek taught for many years at the Fabian-founded London School of Economics. Therefore Hayek is a Fabian. The William Volker Fund gives scholarships for students of Hayek at Chicago; therefore the Volker Fund is part of the Fabian “transmission belt.” Ivan R. Bierly works for the Volker Fund, etc.

(As far as I know, the modern founder of this sort of approach was Mrs. Elizabeth Dilling, whose book The Red Network proved, in similar ways, that Henry Hazlitt and H.L. Mencken were part of the “Red network.” Adding “Fabianism” to the stew, of course, permits the inclusion of virtually everyone.)

The major difference between Sister McCarran and the Veritas authors is that, while the plan and purport of her work are absurd, her factual details are generally accurate. But the Veritas authors are overwhelmingly ignorant and slipshod about even the details of their own material.²⁸

Let us turn now to some details of Keynes at Harvard. The authors purport to be undertaking a study of “Keynesism” in the Harvard economics department.²⁹ Yet the most striking fact about this “study” is that there is almost nothing here about the Harvard economics department. Instead, nine-tenths of the booklet is devoted to a Sister McCarran-style “history” of the Fabian movement and its alleged American wing, with emphasis heavily laid on the Harvard connections of Felix Frankfurter, the Harvard alumni status of Walter Lippman, etc., all of which are of course irrelevant to the Harvard economics department.

There is, furthermore, no discussion of Keynesian thought whatsoever—the authors loftily refusing to discuss it. The authors, not knowing anything of Keynesian theory, therefore persist in attributing “Keynesist” views to Keynes all of his life. Politically, of course, Keynes was always an interventionist, and with socialistic tendencies, but this hardly makes him always a “Keynesian” in the proper sense. As a result, there are numerous ludicrous references to someone, in 1914, say, spreading “Keynesist” ideas at Harvard or in the United States, when of course there was no Keynesianism in existence until the General Theory was published in 1936.

There are only very scant references to the Harvard economics department. Harris and Hansen are mentioned as leading Keynesians, but they are treated only cursorily, the authors preferring lengthy quotations from “Fabians” (i.e., socialists) like George Soule and Stuart Chase, who the authors like to believe are leading Keynesian thinkers. Of course they are not, but they are much easier targets for demolition than Hansen and Harris.

Galbraith is barely mentioned at all, simply being referred to one or two times as a “leading Keynesian economist”—which he most certainly is not. (Leading economist yes, and Keynesian yes, but he is not known for his Keynesianism and has made no contributions at all to Keynesian thinking.)

The only other Harvard economist mentioned, and he is dealt with in some detail, is Joseph Schumpeter, who is incredibly designated many times as “lifelong old socialist,” “leading neo-Marxist socialist,” etc. This is a ludicrous desecration of Schumpeter’s views and stature. Schumpeter, insofar as he had definite political views, was procapitalist and conservative, aristocratic and skeptical. Far from being a top Keynesian, Fabian, et al., Schumpeter was a distinguished anti-Keynesian, and, for all his eccentricities, a truly distinguished economist. Veritas’s mudslinging at Schumpeter is truly disgraceful. One reason that Veritas treats Schumpeter as a “leading socialist” is because, in the Schumpeter memorial volume, all of his Harvard colleagues joined in essays in his honor. Granted that many of these men were left-wingers. But the Veritas authors are clearly incapable of believing that friends and admirers of differing political persuasions might want to get together to honor someone whom they believed to be a great man.

Another fantastic point is the Veritas’s treatment of Alfred Marshall as a well-known Fabian socialist. This Marshall was most emphatically not, even though he was hardly a partisan of laissez-faire. To bolster their absurd claim (even Sister McCarran did not claim that Marshall was a Fabian member), they cite a passage in Sister McCarran’s book, which they completely misinterpret in their typically ignorant fashion. The passage refers to the Fabians, in their economics, using Marshall as the economist whose theories they followed. But this was simply the Fabians adopting the economic theory that was regnant at the time; they never cared about economic theory as such.

For some reason, the Veritas authors miss the story about Shaw being converted from Marxism to Austrian-Jevonsism by Wicksteed. If they had known this, they undoubtedly would have accused Menger and Böhm-Bawerk as being “well-known Fabians,” and of course Mises as their disciple.... Their other “proof” on Marshall is the citation of the fact that Marshall didn’t believe in laissez-faire. I am hardly the one to criticize laissez-faire, but it is ludicrous to call anyone who doesn’t believe in laissez-faire a “Fabian socialist.” (A methodology similar to calling a non-laissez-faire person a “Communist.”) It is indeed no wonder that the Veritas authors see virtually everyone as part of the Communist-Fabian-Keynesist political underworld. (Query: if virtually everyone is a part of this network, how can it be called an “underworld”? It would be more accurate, if impolite, to call the Veritas-McCarran group the “underworld.”)

But now for some details, to convey some of the flavor of this incredible performance. Perhaps the essence of the Veritas thesis encapsulated on page 39, as follows:

Hansen, Harris and Galbraith, besides being Fabian type socialists, are considered the leaders of American Keynesism. The pattern is the same although the names and labels keep shifting. Fabian socialism uses Keynesism as a political weapon. The Kremlin followers use the Fabian organizations as a cover for their operations. Keynesism is used to snare the unwary and bring them by degrees into a socialistic turn of mind. The communists then work hard to propel such socialistic converts along the road to Soviet socialism.

Some further statements:

• “You find clerics like Reinhold Niebuhr supporting the worst of the communists.” (A gross distortion, of course.)
• “That is why you will find Hitler, Mussolini, and Stalin all enthusiastically embracing the Keynes system of economics.” (Stalin was of course, fervently anti-Keynesian.)
• Seymour Harris’s simple and correct statement that detailed economic problems are “intricate and cannot be fully understood even by the intelligent minority,” is taken, by itself, as a call for rule by a totalitarian elite.
• “Keynesism is not an economic theory. It is a weapon of political conspiracy.” (It is about time that the whole “conspiracy” terminology be dropped. If you and I agree on something, or on some objective, it is sound and proper agreement. If someone whom we dislike and his friend agree on something, then this is defined as a “conspiracy.”)
• “Taussig took Joseph Schumpeter, an old time socialist of the Austro-German socialist school, into his own home and used his influence to build up Schumpeter as an international authority in the field of economics.” (Since Schumpeter was a far greater economist than Taussig, this was not difficult to do.)
• “Harry F. Ward acquired his socialism in Harvard before 1898. There were many such instances of individual indoctrination...” (But from whom, since the first discussion of socialist activity at Harvard, by any faculty, refers to considerably after 1900?)
• Theodore Roosevelt’s hotheaded letter to Felix Frankfurter linking the latter with the “Bolsheviki” is taken by the authors as authoritative evidence of the correctness of the charge.
• “Thus forty years ago Harvard spawned left-wing bureaucrats, socialist-Marxists and socialist-Fabians (Keynesians) who acted as ‘transmission belts’ for communist penetration of the nation.”
• Havelock Ellis, famous sexologist, is mentioned as having achieved “notoriety” in a book “frequently banned on charges of obscenity.”
• “The Labor Party policies have since been continuously determined by the Fabian Society.” (Absurd exaggeration.)
• “Lange, with his background as graduate of the London School of Economics, had no difficulty in passing himself off as a Fabian socialist. The London School of Economics was founded by Sidney Webb, head of the Fabian Society.”
• Aid toward conscientious objectors in World War I is called “extremist,” “Fabian,” etc.
• Keynes’s fine work, The Economic Consequences of the Peace, is considered a product of the Fabian conspiracy, to preserve “German socialism” from reparations.
• “The New School for Social Research, which operates as an accredited educational institution,” (as do all schools) “has been sold to the general public as an independent and politically neutral institution. Actually the New School was established by men who belong to the ranks of near-Bolshevik Intelligentsia.” Here the authors quote from the Lusk Committee Report. They then add, slyly, “Keynes lectured there.” (So did Alfred Schutz, late sociologist and friend of Mises, and A. Wilfred May of the Commercial and Financial Chronicle.)
• The League for Industrial Democracy is termed “the parent movement connecting the various Fabian ‘fronts’ in America to this day,” which seems to me a lot of nonsense; no evidence is offered.
• Galbraith “aids communism.”
• “In Britain the Keynesian theories... became a standby of Fabianism throughout the world as early as 1919.” (They originated in 1936.)

This covers the more egregious statements in the first half of the book. There is no need to pursue the matter further.