Keynes, Russian Economic Thought, and Contemporary Policy.

• Author: Johnson, Marianne
• Position: John Maynard Keynes

From Lenin through the Brezhnev era, Western examinations of Russo-Soviet interpretations of the work of John Maynard Keynes provided a lens by which to understand Russian economic thought and policy (Lange 1945; Zauberman 1949-50; Meek 1959; Turner 1969; Campbell 1971; Letiche 1971). Contemporary Russian treatment illustrates the extent to which domestic interpretations of Keynesianism continue to shape national economic discourse. The financial crisis of 2008-9 sparked global calls for the "return of the master" (Skidelsky 2009) to guide government economic policy. In Russia, the crisis spurred a longer and more fundamental reckoning with the dominant economic paradigm than that seen in the West. Keynesianism as the solution to the systemic instabilities generated by the "unregulated neoeconomy" (Nureev and Alpidovskaya 2016, 4, from the introductory abstract in English) (1) attracted attention from both academics and policy makers. In January 2020, the reshuffling of the Russian government for the first time in almost a decade made international news. Some headlines were very specific, identifying a shift in Russian economic policy from liberalism to Keynesianism (Arkhipov and Andrianova 2020; Doff and Pismennaya 2020; Eckel 2020).

To call the new Russian government "Keynesian" is somewhat surprising considering the atmosphere of the past decade in Russia, which was characterized by complicated relations with the West and the desire for a national economic paradigm emphasizing Russian uniqueness (Zweynert 2018). Some have seen the changes in the government more narrowly as a promise to shift the fiscal policy from austerity to spending, but others have seen them more broadly as a declaration of the end of liberalism in the postcommunist transition. In this paper, we examine the degree to which it is justified to describe the current Russian economic policy and economic system as "Keynesian." We conclude that Keynesianism in Russia, as in the West, has "been successful in at least one sense: convincing too many economists and policy makers that market systems cannot be relied upon to function effectively without significant government intervention" (Butos 2020, 553-54).

To understand contemporary Russian views of Keynes, we trace Keynes and his magnum opus, The General Theory of Employment, Interest, and Money (1936), through the background of Russian economic thought. This history is important to understanding how Keynesianism emerged in recent years as a consolation prize of sorts--the compromise between mainstream economics and the Soviet political economy tradition. The gulf between most conventional readings of Keynesianism and readings of Marxism-Leninism only serves to highlight the role of such shaped histories in underpinning thought and policy and to illustrate why reconsidering the classics of political economy remains a valuable task (Whaples 2020, 485).

What becomes apparent is that Keynes now holds a position of increased popularity across Russian economists from different ideological backgrounds. Despite this interest, we conclude that it would be an exaggeration to declare the latest transformation of Russian economic policy "Keynesian." Instead, the adoption of the language of Keynesianism signals primarily a change in viewpoint on the economic role of government from the liberalism of the 1990s to state economic management in the twenty-first century. Yet even among the supporters of statism, there is wide skepticism regarding the sufficiency of Keynesian methods to lead Russia out of stagnation because Russia's fundamental problems are on the supply side of the economy and require deep institutional, structural, and geopolitical transformations to create the proper business environment for the private sector.

Keynes in Historical Perspective

Keynes as Archetype

Following the Russian Revolution in 1917, Marxism was elevated from dissent to orthodoxy. The 1920s were "the heterodox decade par excellence in the USSR" (Barnett 2006, 113); ideas were openly debated, and international exchange was common. With Vladimir Lenin's support, fourteen different translations of Keynes's works were published in the Soviet Union (Shirokorad and Zweynert 2012, 656). This heterodoxy was a practical manifestation of the absence of a blueprint for socialist economic planning. Lenin had read much of Keynes's economic theory; Economic Consequence of the Peace {1919) was particularly congenial because of its recommendations to cancel all war debts and to normalize trade relations with Russia. According to Lenin, Keynes's polices were all the more "edifying" for being "given by an avowed bourgeois, a ruthless opponent of bolshevism" (qtd. in Turner 1969, 10). "Such a 'heterogeneous' valuation by the leader ... became very convenient for the Soviet economists, who, depending on the current moment, could name either approving or critical comments of Lenin toward Keynes" (Makasheva 2007, 31).

By the time The General Theory was published in 1936, the political and ideological atmosphere of the Soviet Union had undergone dramatic change. Joseph Stalin had consolidated power and implemented a new constitution. His collectivization and industrialization policies and his theory of the exacerbation of class struggle under socialism dominated economic thought. Keynes's theories of how to mitigate unemployment or how to leverage the multiplier had little obvious relevance to Stalinist planners. It was at this time that the formerly generally favorable description of Keynes in the Great Soviet Encyclopedia was replaced with a negative one: "English vulgar bourgeois economist, ideologist of imperialistic reaction and wars, unmasked by V. I. Lenin in 1920 as an avowed bourgeois, a ruthless opponent to bolshevism, which he, as an English philistine, pictures in an ugly, savage and brutal manner" (translated in Turner 1969, 13). (2)

The decision to translate and publish The General Theory was made by Stalin (Makasheva 2007). Although the publication sparked much discussion on Keynesian economics, most of that discussion was highly politicized and "interesting more as a reflection of the degree of ideologization of the Soviet economic science rather than [of] the positive information about the theory" (Makasheva 2007, 33). Izrail Blyumin, the leading Russian historian of economic ideas, wrote the introduction to this first Soviet translation of The General Theory by Nickolai Lyubimov in 1948. The book would be interesting to the Soviet reader, Blyumin argued, because "it glaringly demonstrates all meanness of the contemporary bourgeois economists, their absolute inability to solve the current problems of the capitalist economy" (1948, ix). Blyumin stated that The General Theory lacked a historic approach, had a static methodology, exaggerated the power of psychological factors, understated the differences in consumption and saving patterns between capitalists and workers, and promoted lavish expenditures by the rich. (3) Blyumin's characterization of Keynes was shared widely by other Soviet academics and was reflected in both the Great Soviet Encyclopedia and the curriculum at Moscow State University in the 1950s.

Keynes and Developed Socialism: The 1970s

Thirty years elapsed between the first and second translation of The General Theory in the Soviet Union. The Brezhnev era ushered in a policy of "developed socialism," which ironically would be later called the "era of stagnation," characterized by the irreconcilable gap between the official Soviet line and the actualities of daily economic life (Sandle 2002, 165). In the West by the late 1960s, Samuelsonian formalism, Arrow-Debreu general equilibrium, game theory, and large-N econometrics had come to dominate economic thought. Russian economists were familiar with these innovations to varying degrees (Turner 1969); Soviet economic thought was never wholly monolithic, even under Stalin. However, the 1960s and 1970s brought a new era of theorizing (Katsenelinboigen 2016) and academic exchange (Diippe 2016) in the Soviet Union. Much of the new activity was centered around Soviet mathematical economics and operations research, led by individuals such as Leonid Kantorovich and those associated with the newly established Central Economic Mathematical Institute. The invitation to the Dutch American economist Tjalling Koopmans to visit the Soviet Union in 1965 further highlighted the work of Russian economists on optimization theory and input-output analysis. This "freer intellectual environment" (Letiche 1971, 446) was the background for the second translation of Keynes's General Theory in 1978, with a preface penned by Abram Mileikovsky and Irina Osadchaya (1978).

Mileikovsky was known for his "revolutionary idea" that "bourgeois economic science" can be not only apologetic but practical; aspects related to technical efficiency were particularly deserving of study (Avtonomov 2016, 125). Osadchaya was a doctoral student of Blyumin and had become the leading Soviet expert on Keynesian economics. She authored Contemporary Keynesianism (1971) and edited the third volume of Blyumin's Criticism of the Bourgeois Political Economy (1962). (4) Both worked as economists for the Institute of World Economy and International Relations (IMEMO) of the Russian Academy of Sciences, the mission of which was to analyze global trends and find information that could be used to improve the efficiency of the Soviet economy. IMEMO researchers had to conform to ideological constraints on publishing, but by now work-arounds had emerged so that the "prepared" reader could receive valuable information about "real processes that were taking place in modern capitalism" but that could not be openly described in traditional Soviet political economy writing (Cherkasov 2004, 9-10).

Osadchaya (1971) on Keynes had a different tone than Blyumin (1948, 1962); she also included significantly more detailed...