Capistalism - Keynes “the end of laissez-faire”

Wondering what the best system for men would be, is part of human nature. Many economists and thinkers have tried to identify such system – John Maynard Keynes is one of them. He wrote some texts about this, including “the end of laissez-faire” and “the general theory of Employment, Interest and Money”, which we are going to deal with.

The first one deals with capitalism – he tries to identify the pros and cons of our current system. The second one deals with economy. In this text, Keynes proposes some economic and political solutions to fix some of the problems engendered by capitalism. I will show that Keynes, although a supporter of capitalism, thinks that it could be improved by some State regulation.

First, we will see that according to Keynes, capitalism is the best possible production system, despite some limits. Then, we will analyse the negative effects engendered by capitalism. Finally, we will observe what solutions Keynes proposes to improve capitalism.

1. Capitalism has good as bad effects on our society

According to Keynes, capitalism is the most efficient system in terms of productivity. He compares capitalism with natural selection, because the lucky or skillful can improve his situation at the expense of the less fortunate. Keynes says that there is no alternative system with a better productivity and efficiency, because the love of money-making is the most powerful driving-force to make people manage their whole potential. So, in capitalism, people try to reach their highest productivity, in order to serve their self-interest. Moreover, there are some activities which “require the motive of money making for their full fruition”. But this system purports that self-interest always coincides with social interest, and that, if everyone serves its own interest, it will eventually serve the common interest better. Therefore, Keynes calls this system “laissez-faire”. But Keynes explains that “laissez-faire” is not that good, because common interest is not reached by the aggregate of self-interests. Thus, it is a mistake to think that letting “individuals act independently for their own advantage will produce the greatest aggregate of wealth”. In other words, unrestrained “laissez-faire” would have negative effects on social interest, such as offshoring of production and consumption. Although irreplaceable in terms of productivity, capitalism is not a perfect system – it has some limits, due to its negative effects. So, what kind of bad consequences does capitalism have on our society?

2. The negative effects engendered by capitalism

Capitalism has some ethical and economical limits. According to Keynes, the worst fault of capitalism is “its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes”. But why? First, our economic society allows some people to become wealthy at the expanse of others. Consequently, it is impossible to avoid some inequalities of wealth between individuals. Nevertheless, competition through money-making canalises the human’s need for self-aggrandisement, which would otherwise “find its outlet in cruelty”. Secondly, we have seen that “private and social interest do not always coincide”. Effectively, letting people act for their own interest -not caring about others’ interest-

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