Chartbook on Shutdown: Keynes and why we can afford anything we can do.

To accompany a piece in the NYT ahead of the release of Shutdown.

Shutdown is out next week. Order it here (if in the US).

Shutdown is pacy. It is the shortest and most fast-moving book I’ve written. There are a lot of weighty themes that spin off from it - critical macrofinance, Treasury markets, fascism, universal owners and vaccine geopolitics etc, etc. A lot of stuff to mull over at more length in the newsletter.

This is the first in a series of Chartbook newsletters - under the rubric “Chartbook on Shutdown” - to accompany the release of the book and deepen parts of the discussion. To get regular emails from Chartbook sign up here:

This morning as a teaser, the New York Times published an essay distilled from Shutdown that sketches some of the political conclusions to be drawn from 2020.

At the heart of the essay, is the double-edged lesson that 2020 taught us about our capacities for collective action: We have huge capacities for crisis-fighting. We spent trillions on giant fiscal programs to put our economies on life support. We backed them up with huge central bank activism. Financial markets were stabilized. Crash programs of vaccine development produced a suite of vaccines that as of this week have allowed 5.29 billion doses to be distributed worldwide, providing 39 percent of the world’s population with at least one dose. Vaccines that many considered to be impossible as recently as the spring of 2020.

We can, as one of my favorite quotes from Keynes says, pay for ‘this and much more. Anything we can actually do we can afford.”

But the question is in the doing. Think of everything we have not done. The opportunities gone begging. The discovery of our financial freedom robs us of excuses. This is the hard political edge of the related schools of post-Keynesianism, functional finance and modern monetary theory. If we fail to do something, we should not blame lack of money.

It isn’t lack of money that accounts for the scandal that the US is preparing to contain the ongoing pandemic with a third round of shots, whilst only 1.7% of the population of low-income countries has received even one dose of vaccine. Check out these astonishing data by the heroic data-gatherers and analysts at Our World in Data.

This is not just selfish in a narrow sense. It is also staggeringly short-sighted as policy. We will not be safe until we are all safe. The IMF estimates gains in the order of trillions of $9 dollars from a comprehensive vaccine program. But we cannot find the commitment and funding to accelerate a program that might cost, at most, between $50 and $100 billion.

On the other hand, as I argued in Chartbook #34 on the Global War on Terror that too was something “we could afford”. The horrifying thing is that it was one of the few things that the American elite could actually agree to do together.


I first came across the quote - “Anything we can actually do we can afford.” - back in 2019 in Ann Pettifor’s book on the Green New Deal. It has not let go of me since. It is the pivot of the NYT essay. It is one of the strong lines running through Shutdown itself.

The fascination in the quote lies in the tense balance between the liberality of “assuredly we can afford this … we can afford anything” …. and the weighty counterbalance implied by “anything, we can actually do”.

Once you have cleared away the obfuscation of budgetary arithmetic, it is the doing that is the problem. 2020 has delivered a grim lesson on that score.

As Chuck Sabel my brilliant colleague at Columbia put it to me recently: In the actual doing, what counts is the recalcitrance of stuff and the recalcitrance of power. That dance between money, power and technical capacity, is the story sketched in the NYT piece and fleshed out in Shutdown.

For the NYT piece click here.

This morning, to celebrate the appearance of my homage to Keynes I would return to 1942 and the original source. The “Anything we can actually do we can afford”-quote comes from a BBC talk that Keynes gave on 2 April 1942.

It has the title, “How Much Does Finance Matter?” The text is reproduced in the collected works of Keynes, which are on line. It is also available from Brad DeLong’s blog.

I have not, so far, been able to track down a recording of the 1942 broadcast. To give you an idea of the tone, you might like to check out this newsreel of Keynes talking to a British audience about the huge possibilities opened up Britain’s exit from the gold standard in September 1931.

Clearly, Keynes had a bit of a line in turning disaster into opportunity.

You can sense even in this short clip the optimism that informed his entire political and economic thinking. Its kinda hilarious to see John Maynard’s zoom backdrop. He had a famously rich collection of antiquarian books. And look at that screen!

John Maynard Keynes is surely not the most radical critic of capitalist political economy. But precisely because his attachment to existing norms of civility and civilization was so deep and his sense of possibility was so great, he was the most devastating critic of the failure to improve the status quo and remedy its shocking stupidity and inefficiency. Unlike Marxist critics (forgive the short-hand) for whom the failure of government is depressing, but predictable and easily explained, for Keynes, who believed in the possibility of improvement, it was shocking, inexcusable and, ultimately, puzzling - like the $9 trillion in economic advantage left lying on the pavement for lack of an adequate global vaccine program. In the large, in the long-run, a Keynesian would insist that “no one” really benefits from that failure. There may be some minor sectional interest here or there, but, in the large, you cannot reasonably say that this is in the interest of capital accumulation as a whole. And yet no adequate action results.

Not for nothing, for Keynes a “muddle” was a term of art. Untangling “muddles” was what his kind of reformist politics was about. “How Much Does Finance Matter” is very much in that spirit.


Keynes delivered the talk in April 1942 as part of a BBC series on postwar planning. The moment was significant. The first half of 1942 was in many ways the absolute low point of the British war. After Dunkirk in 1940 there had been some recovery. Between June and December 1941 German aggression brought first the Soviet Union and then the United States into the war on Britain’s side. The strategic prospects were much improved. But Japan’s assault on the European empires in Asia dealt a body blow to the Empire. In February 1942, only weeks before Keynes spoke, the great naval base of Singapore surrendered to the Japanese.

Nevertheless, at the urging of the Labour Party, Churchill’s partners in his wartime coalition , thinking about postwar planning was in motion. In the first half of 1942 Keynes was engaged in behind-the-scenes discussions of the Beveridge Report. Drafted by a fellow economist and liberal, William Beveridge, the Report would provide the blueprint for Britain’s postwar welfare state.

It was these discussions in mind that Keynes gave his BBC address in April 1942.

It is a brilliant essay in persuasion, painting an optimistic but also realistic vista of what might and might not be possible.


“For some weeks at this hour you have enjoyed the day-dreams of planning. But what about the nightmare of finance? I am sure there have been many listeners who have been muttering: 'That's all very well, but how is it to be paid for?'

Let me begin by telling you how I tried to answer an eminent architect who pushed on one side all the grandiose plans to rebuild London with the phrase: ' Where's the money to come from?' 'The money?' I said. 'But surely, Sir John, you don't build houses with money? Do you mean that there won't be enough bricks and mortar and steel and cement?'

'Oh no', he replied, 'of course there will be plenty of all that'.

'Do you mean', I went on,' that there won't be enough labour? For what will the builders be doing if they are not building houses?'

'Oh no, that's all right', he agreed.

'Then there is only one conclusion. You must be meaning, Sir John, that there won't be enough architects'. But there I was trespassing on the boundaries of politeness. So I hurried to add: 'Well, if there are bricks and mortar and steel and concrete and labour and architects, why not assemble all this good material into houses?'

But he was, I fear, quite unconvinced. 'What I want to know', he repeated, 'is where the money is coming from'.

To answer that would have got him and me into deeper water than I cared for, so I replied rather shabbily: ' The same place it is coming from now'. He might have countered (but he didn't): 'Of course I know that money is not the slightest use whatever. But, all the same, my dear sir, you will find it a devil of a business not to have any'.”

Keynes clearly enjoyed his witticism. But had he, he wondered, given a really adequate answer? Was money a real issue? Did finance matter?

“if it was some technical problem of finance that was troubling him, then my answer was good and sufficient … It would be out of place to try to explain it in a few minutes on the air, just as it would be to explain the technical details of bridge- building or the internal combustion engine or the surgery of the thyroid gland. As a technician in these matters I can only affirm that the technical problem of where the money for reconstruction is to come from can be solved, and therefore should be solved.”

For the question of how Keynesian liberalism plays on the line between the technical and the political - a question brilliantly analyzed by Geoff Mann in the most important book on Keynes in many years - this is a striking passage.

But what - Keynes goes on - if his architect colleague did not mean the question of finance? What if money was not the issue? What if he actually meant the physical resources that might be available to devote to capital projects that did not yield immediate returns? What if the problem was not the paying for, but the actually doing. “Here is a real problem", Keynes admits, “fundamental yet essentially simple”.

“The first task is to make sure that there is enough demand to provide employment for everyone. The second task is to prevent a demand in excess of the physical possibilities of supply, which is the proper meaning of inflation. For the physical possibilities of supply are very far from unlimited. Our building programme must be properly proportioned to the resources which are left after we have met our daily needs and have produced enough exports to pay for what we require to import from overseas. ….

Having prepared our blue-prints, covering the whole field of our requirements and not building alone—and these can be as ambitious and glorious as the minds of our engineers and architects and social planners can conceive—those in charge must then concentrate on the vital task of central management, the pace at which the programme is put into operation, neither so slow as to cause unemployment nor so rapid as to cause inflation.

It was, Keynes admitted, extremely difficult to predict in advance “scale and pace” on which giant construction projects could be carried out. He urged patience. Not motivated by fear and conservative caution, but by profound optimism.

“In the long run almost anything is possible. Therefore do not be afraid of large and bold schemes. Let our plans be big, significant, but not hasty. Rome was not built in a day. The building of the great architectural monuments of the past was carried out slowly, gradually, over many years, and they drew much of their virtue from being the fruit of slow cogitation ripening under the hand and before the eyes of the designer.

As he wrote this, Keynes might have been thinking of the soaring magnificence of King’s College chapel. The heartbreakingly beautiful center piece of the College to which Keynes devoted so much of his life (my own alma mater), was built over the course of a century from 1446 to 1531, in three separate stages. That reflected real capacity constraints and the politics of a dynastic shift. The later part of the Chapel is adorned with Tudor regalia. These are the kind of constraints that truly limit what we can actually do. Mundane, practical, technical stuff. As Keynes said:

You cannot improvise a building industry suddenly or put part of it into cold storage when it is excessive. Tell those concerned that we shall need a building industry of a million operatives directly employed—well and good, it can be arranged. Tell them that we shall need a million-and-a-half or two million—again well and good. But we must let them have in good time some reasonably accurate idea of the target.

How much would the UK be able to put annually towards reconstruction projects? As Keynes admitted in April 1942 he had “no adequate data on which to guess”. Over the following months he would go on to remedy that deficiency in intensive collaboration with the pioneering economic statistician Richard Stone. But Keynes was not a man to leave his audience gasping for an answer:

if you put me against a wall opposite a firing squad, I should, at the last moment, reply that at the present level of prices and wages we might afford in the early post-war years to spend not less than £600 million a year and not more than £800 million on the output of the building industry as a whole.

Note that money enters in here not as a budgetary constraint, an accounting limit of what can be done but as a convenient measure of what the construction sector can digest in the way of orders in a twelve month period. As Keynes admits

Now these are very large sums. Continued, year by year, over a period of ten years or more, they are enormous. We could double in twenty years all the buildings there now are in the whole country. We can do almost anything we like, given time. We must not force the pace—that is necessary warning. In good time we can do it all. But we must work to a long-term programme.

What sort of projects should be built? What should be the criteria? On this too Keynes was clear. It was not “economics” as conventionally understood, the “nightmare of finance” that mattered:

Where we are using up resources, do not let us submit to the vile doctrine of the nineteenth century that every enterprise must justify itself in pounds, shillings and pence of cash income, with no other denominator of values but this. I should like to see that war memorials of this tragic struggle take the shape of an enrichment of the civic life of every great centre of population.

The priority was housing, industrial reconstruction, transport and “re-planning the environment of our daily life”. But Keynes was a great aficionado of the arts. Until early in the war he personally supervised the booking of acts for the Cambridge Arts Theatre. Yup you read that correctly. The architect of Bretton Woods was booking acts for his college town theater!

Little surprise then that he could see no reason why 50 million pounds (one twelfth of his fantasy budget) should not be set aside for raising schools and local government buildings to the dignity of ancient universities or European princely capitals. “And above all perhaps, to provide a local centre of refreshment and entertainment with an ample theatre, a concert hall, a dance hall, a gallery, a British restaurant, canteens, cafes and so forth.” (A British restaurant was the name chosen by Churchill for communal dining facilities set up in 1940 to provide bombed out families and anyone else in need with an affordable meal.)

What Keynes wanted in short was communal cultural wealth and material satisfaction for the entire population. And it is after that proposal - 50 million for arts centers and affordable eating out that he delivers his wonderful line:

"Assuredly we can afford this and much more. Anything we can actually do we can afford. … We are immeasurably richer than our predecessors. Is it not evident that some sophistry, some fallacy, governs our collective action if we are forced to be so much meaner than they in the embellishments of life?

And then comes the rousing coda:

We shall, in very fact, have built our New Jerusalem out of the labour which in our former vain folly we were keeping unused and unhappy in enforced idleness.”


It is a truly beautiful essay. Lucid, constructive and right.

It is also seductive. It strips away the money veil to reveal the material and political reality. But it is not an operation that one should or can ever fully complete. If money is a technicality. Technicalities matter. They have to be done right. As we have learned in macrofinance, financial plumbing really matters. In March 2020 it almost blew the system up. Again!

Keynes’s message is not that we can simply ignore the question of how to finance things. But what we should not do is to fetishize it. And, as he says elsewhere, we should beware the mechanisms, such as a gigantic and oversized financial system, which take on a gigantic life of their own, making it more and more difficult to assert the primacy of real priorities.

Over the following months Keynes himself was deeply immersed in financial and economic calculations. He took the lead amongst those defending the Beveridge welfare plan against the notoriously hawkish experts of the UK Treasury. That involved, it should be said, Keynes arguing for reductions in Beveridge’s ambition, cutting back his budget. The very last thing you could accuse Keynes of being, was irresponsible when it came to Britain’s macroeconomic constraints.

Patience was truly the crucial factor, a patience sustained by optimism and clarity about how the project was to be accomplished. Better macroeconomic policy would stabilize the production and employment and ensure a much higher level of efficiency. Ultimately, he also counted on growth. Going back to the Keynes of the 1940s, alongside the inspiration for functional finance, there is also rather more of the MIT “new Keynesian” than I expected to find.

In technical terms, the effort to define what was possible would drive the development of macroeconomic accounting in Britain and the first attempt in that country to balance the basic macroeconomic factors of consumption, investment and export. It was a national program in the first instance. But it was shaped from the outset by an understanding of British dependency on US Lend-Lease funding and took shape simultaneously with Keynes’s trans-Atlantic diplomacy that set the stage for the Bretton Woods conference in the summer of 1944. In other words Keynes was formulating a comprehensive program for reformist action that recognized both national and global possibilities and constraints.

A short-hand like this simplifies. It risks rendering the vastly complex character of Keynes as a cartoonish super hero. It is ironic to find myself here. I wrote a whole book dedicated to freeing the history of modern economic knowledge from the long shadow of John Maynard Keynes. Also my celebration of the 1942 essay reflects my mood this morning. Much of Shutdown is dedicated to arguing that we should resist any confusion between our moment and that moment of the Keynesian welfare state in the 1940s. More on that in the next post in this series - out at the weekend. But as a political and intellectual actor, the scale of Keynes’s vision and the scope of his action continues to amaze and inspire.

In any case, in concluding the NYT essay with a call for a “progressive globalism” that seeks to multiply crisis-fighting networks away from the narrow confines of central banking into the fields of medical research and vaccine development, renewable energy and so on and - at the same time - to make them more democratic, transparent and egalitarian, it is Keynes I am thinking of.

Thanks for reading.

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