Keynes and Freud: Psychoanalysis and Keynes's Account of The "Animal Spirits" of Capitalism

Keynes and Freud: Psychoanalysis and Keynes's Account of the "Animal Spirits" of Capitalism
Author(s): E. G. WINSLOW
Source: Social Research, Vol. 53, No. 4 (WINTER 1986), pp. 549-578
Published by: The New School
Stable URL: http://www.jstor.org/stable/40970433
Accessed: 12-03-2015 01:44 UTC
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
http://www.jstor.org/page/info/about/policies/terms.jsp
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content
in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship.
For more information about JSTOR, please contact [email protected].
The New School is collaborating with JSTOR to digitize, preserve and extend access to Social Research.
http://www.jstor.org
This content downloaded from 168.176.5.118 on Thu, 12 Mar 2015 01:44:03 UTC
All use subject to JSTOR Terms and Conditions
Keynesand Freud:
and
Psychoanalysis
Keynes'sAccount
ofthe
"AnimalSpirits" /
ofCapitalism* / BY E. G. WINSLOW
In the preface,Keynes describesthe compositionof the
as "a longstruggleof escape . . . fromhabitual
GeneralTheory
modesof thoughtand expression."This paper examinesthe
that this included a struggleof escape fromthe
possibility
oforthodoxeconomics.In
motivational
utilitarian
assumptions
is
that
its
central
thesis
his
economicsis based on the
particular,
assumptionthat,to quote Keynes,"theessentialcharacteristic
of capitalism"is "the dependenceupon an intenseappeal to
and money-loving
instincts
ofindividualsas
themoney-making
the main motive force of the economic machine."1This
assumptionabout motivationis part of an approach to
economicswhich emphasizesthe role of the irrationalin
economiclife.I shallattemptto showthatKeynes'saccountof
bears a
capitalistmotivationand of the role of irrationality
close resemblanceto what he himselfcalled "the Freudian
theoryof thelove of money."2
1
30 vols.
John Maynard Keynes,Essaysin Persuasion(1931), in The CollectedWritings,
(London:Macmillan,1971-80),9: 292.
2
John Maynard Keynes,A Treatiseon Money:The AppliedTheoryofMoney(1930), in
6: 258-259.The consistency
Collected
of Keynes'spsychological
Writings,
premiseswith
SOCIAL RESEARCH, Vol. 53, No. 4 (Winter1986)
550
SOCIAL RESEARCH
As we shallsee, Keyneshad readyaccess to psychoanalytic

theorythroughBloomsbury.In June 1925 he reportedto
thebrotherof LyttonStracheyand one of the
JamesStrachey,
main sourcesof psychoanalytic
ideas in Bloomsbury,
thathe
in
of
the
whole
of
was the process reading
Freud'sworks.3In
of
he
wrote
a
letter
to the Nationand
the
same
year
August
Athenaeum
defendingFreudfromhisEnglishcriticsand calling
him "one of the greatdisturbing,
innovatinggeniusesof our
"to
our
intuitionsas containing
age" whose theoriesappeal
and
true
about
the
new
way in which human
something
psychologyworks."4Keynes, however,nowhere explicitly
indicates that his economics is based on psychoanalytic
premises.Whatwe do findin hiseconomics,as I
psychological
shall attemptto demonstrate,is a close correspondence
betweenhis accountof the natureand operationof business
motivesand psychoanalysis.
The paper is dividedintofourparts.The firstattemptsto
documentKeynes'sabandonmentof the beliefthat"human
of thisforhis
natureis reasonable,"examinestheimplications
and
then
to
economic
analysis,
pointsto the direct
approach
evidenceof Freud'sinfluenceon Keynes.The secondbriefly
summarizesthe Freudiantheoryof the capitalistspirit.The
of thistheory
thirdattemptsto demonstratethe consistency
The
withKeynes'saccountofthe"animalspirits"ofcapitalism.
of theagreementbetweenthis
finalpartprovidesillustrations
viewsand the three
of
interpretation Keynes'spsychological
factorsoftheGeneral
It pays
fundamental
Theory.
psychological
psychoanalysishas been noted by others. See N. O. Brown, Life AgainstDeath: The
Meaning of History(Middletown, Conn.: Wesleyan UniversityPress,
Psychoanalytic
1985), passim,particularlypp. 303-304; George J. W. Goodman ("Adam Smith"), The
Money Game (New York: Dell, 1969), passim; and B. Sharratt, discussion of "The
Significanceof 'Bloomsbury'as a Social and Cultural Group" by Raymond Williams,in
Derek Crabtree and A. P. Thirlwall, eds., Keynesand theBloomsbury
Group(London:
Macmillan, 1980), pp. 93-94.
3
Freud: The
James Strachey,in PerryMeisel and Walter Kendnck, eds., Bloomsbury/
1924-1925 (New York: Basic Books, 1985), p. 289.
Letters
ofJamesand Alix Strachey
4
in CollectedWritings,
28:
Writings,
John Maynard Keynes,Social,Politicaland Literary
392-393.
KEYNES AND FREUD
551
particularattentionto the role playedby "the psychological

in Keynes'stheoryof monetarycrises.
attitudeto liquidity"
Keyneson theIrrationalin EconomicLife
As R. B. Braithwaite
has pointedout,5Keynes'sautobiographical memoir,"My EarlyBeliefs,"reportshis abandonmentof
the beliefthat"human natureis reasonable."Keynesclaims
thisbelief"was flimsily
based . . . on an a prioriviewof what
humannatureis like,bothotherpeople'sand our own,which
was disastrouslymistaken."In particular,it ignored the
"deeperand blinderpassions,"the "vulgarpassions."6Rejecting thisearlybelief,he now claimsthatthereare "insaneand
irrational
springsof wickednessin mostmen."7
I believethischange had an importanteffecton Keynes's
economics.In particular,it led to an emphasison the role
in economicbehavior.Accordingto
played by irrationality8
has two sources,one subjectiveand
Keynes,thisirrationality
one objective.The subjectivesourceis personalincapacityfor
rationality.
Keynesassumesthatmostpeople have littleinnate
for
capacity reason.This is thebasisof his supportfora wide
economic,political,and socialarrangerangeof authoritarian
5 R. B.
Braithwaite,"Keynes as a Philosopher," in Milo Keynes, ed., EssaysonJohn
Mamar Keynes(Cambridge: Cambridge UniversityPress, 1975), p. 245.
6
10: 449-450.
(1933), in CollectedWritings,
John Maynard Keynes,Essaysin Biography
1
Ibid.,p. 447.
8 I willfollow
Keynes in using the term"irrational"to describebeliefswhichare held
forinadequatereasons. "If a man believessomethingfora reason whichis preposterous
or for no reason at all, and what he believes turnsout to be true for some reason not
knownto him,he cannot be said to believe it rationally,
although he believes it and it is
in fact true. On the other hand, a man may rationallybelieve a proposition to be
when it is in factfalse.The distinctionbetweenrationalbeliefand mere belief,
probable,
therefore,is not the same as the distinctionbetween true and false beliefs" (John
8: 10). According
[1921], in CollectedWritings,
Maynard Keynes,A Treatiseon Probability
to psychoanalysis,conscious ideas which are irrational in this sense are often the
outcome of what Keynes, in the Treatiseon Probability
(ibid., p. 15), calls "irrational
associationsof ideas"- irrationalassociationsbetween the conscious ideas, on the one
hand, and the unconscious ideas which theysymbolize,on the other.
SOCIAL
552
RESEARCH
merits,fromcorporatism,9to elitistpoliticalpartystructures,10
to eugenics.11Keynes once said of Marxism: "How can I adopt
a creed which, preferringthe mud to the fish, exalts the
boorish proletariatabove the bourgeois and the intelligentsia
who, with whatever faults,are the quality in life and surely
carrythe seeds of all human advancement?"12
In Keynes's economics, the assumption that most people
have littlecapacityforreason is mostin evidence in his analysis
of behavior in stock markets. In the Treatiseon Money,for
example, he claims thatthe "mob," the "vast majority"of those
who participatein such markets,
knowalmostnothingwhateveraboutwhattheyare doing.They
ofwhatis requiredfora valid
do notpossesseventherudiments
of
and fearseasilyaroused
the
and
are
hopes
prey
judgement,
eventsand as easilydispelled.This is one of theodd
bytransient
of the CapitalistSystemunder whichwe live,
characteristics
which,when we are dealing withthe real worldis not to be
overlooked.13
The objective source of irrationalityis the impossibility,
given the nature of the social world, of finding rational
decision criteriain manyareas, notjust of economic life,but of
life in general. In a 1938 letter to H. Townshend, Keynes
writes:
I thinkit importantto emphasisethe pointthatall thisis not
an economic
problem,but affectsevery rational
particularly
choiceconcerningconductwhereconsequencesenterinto the
rationalcalculation.Generallyspeaking,in makinga decisionwe
none of whichis
havebeforeus a largenumberof alternatives,
in
the sense that
than
the
'rational'
more
others,
demonstrably
we can arrangein order of meritthe sum aggregateof the
obtainablefromthecompleteconsequencesof each. To
benefits
avoid being in the positionof Buridan's ass, we fall back,
9
Keynes,Essaysin Persuasion,p. 291.
10Ibid., 295-296.
pp.
"Ibid.. D. 292.
12Ibid., 258.
p.
13
p. 323.
Keynes, Treatiseon Money:TheAppliedTheory,
KEYNES AND FREUD
553
and necessarilydo so, on motivesof anotherkind,

therefore,
whichare not'rational'in thesenseof beingconcernedwiththe
evaluationof consequences,but are decided by habit,instinct,
preference,desire, will, etc. All this is just as true of the
as oftheeconomicman.Butitmaywellbe, as you
non-economic
that
when
we rememberall this,we have to abate
suggest,
somewhatfromthetraditional
pictureof thelatter.14
In a well-knownpassage from his 1937 Quarterly
Journalof
Economicsarticle, "The General Theory of Employment,"
Keynes makes the same point with respect to the problem of
forecastingthe outcome of a long-runinvestmentdecision. In
this case "there is no scientificbasis on which to form any
calculable probabilitywhatever.We simplydo not know."15
Keynes claims this has important implications for the
motivationalassumptionswhich are appropriate in economics.
We are required "to abate somewhat" from the "traditional
picture" of economic man. This same conclusion is drawn in
the QJE article. There he says that "the hypothesis of a
calculable future leads to a wrong interpretation of the
principlesof behavior which the need for action compels us to
adopt."16 In particular,it leads to "an underestimationof the
concealedfactors of utter doubt, precariousness, hope and
fear."17 This repeats the claim made in the letter to
Townshend that, since we are unable to deal with these
decisions rationally,we must fall back "on motivesof another
kind, which are not 'rational' in the sense of being concerned
withthe evaluation of consequences, but are decided by habit,
instinct,preference,desire, will,etc."
What are the "principles of behavior," the "motives of
another kind," which orthodox analysis underestimates?As I
shall now attemptto demonstrate,the account of the irrational
14
in Collected
John Maynard Keynes, The GeneralTheoryand After:A Supplement,
29: 294.
Writings,
15
in
John Maynard Keynes, The GeneralTheoryand After:Defenceand Development,
14: 114.
CollectedWritings,
16Ibid.. d. 122.
17Ibid.;
my emphasis.
SOCIAL
554
RESEARCH
aspects of capitalist behavior found in Keynes corresponds

closely to the psychoanalytic theory of the anal-sadistic
character.Keynes was acquainted withthisaspect of psychoanalytictheory.He provides a bibliographyof what would then
have been the major writings in the area in a footnote
referenceto "the Freudian theoryof the love of money" in a
section of Volume 2 of the Treatiseon Moneyentitled "Auri
Sacra Fames."18
Keynes had access to Freudian ideas through Bloomsbury,

which numbered among its associates and relations four
practicingpsychoanalystsall of whom had studied withFreud
in Vienna. These individualswere: Adrian Stephen,brotherof
Vanessa Bell and Virginia Woolf and one of the original
members of Bloomsbury; Karin Stephen, Adrian Stephen's
wife;James Strachey,brotherof LyttonStracheyand general
editor of the StandardEditionof Freud in English, one of the
worksin the InternationalPsychoanalyticLibrarypublished by
the Woolfs' Hogarth Press; and Alix Strachey,19James
Strachey'swife. Though opinions as to the value of Freud's
theories were mixed in Bloomsbury,several members other
than Keynes did make use of psychoanalysisin theirown work.
This was particularly true of Leonard Woolf and Lytton
As Jan Goldsteinnotes,the membersof Bloomsbury
Strachey.20
18
pp. 258-259.
19In addition to
being analyzed by Freud, Alix Strachey was analyzed by and
became a translatorof the work of Karl Abraham, whose account of the relation
between manic-depressivepsychosis,obsessional neurosis, and the anal-sadisticstage
of libidinaldevelopmentcan be shown,I believe,to have significantechoes in Keynes's
account of the psychologyof capitalism. See E. G. Winslow,"The Philosophical and
PsychologicalPresuppositionsof Keynes's Economics," Ph.D. diss., York University,
Downsville,Ont., Canada, 1985, pp. 379-384 and 440-458.
20The fullestaccounts of the relationbetween
Bloomsburyand psychoanalysisare
Meisel and Kendrick,Bloomsburyl
Freud,and J. Goldstein, "The Woolfs' Response to
Freud: Water-Spiders, Singing Canaries and the Second Apple," Psycho-Analytic
43 (1974): 438-476. Additional informationcan be found in M. Holroyd,
Quarterly
2 vols. (London: Heinemann, 1968), particularly2:
A CriticalBiography,
Strachey:
Lytton
442, 585-586, 615. Holroyd reproduces a letter from Freud congratulatingLytton
Stracheyon the depth of psychologicalinsightin Elizabethand Essex(ibid.,pp. 586-587,
615-616).
KEYNES AND FREUD
555
ofthe'newpsychology',
were"important
as it
laydisseminators
was called,in England."21
In a June 18, 1925 letterto hiswife,whowas thenin Berlin
in analysiswithKarlAbraham,JamesStracheyreports,rather
thatin a recentconversation
dismissively,
Maynard said he was engrossed in the Case Histories [Volume 3
of Freud's CollectedPapers which the Stracheys had recently
translated and published], & made complimentaryremarks
about the translation.According to him he's going through the
whole of the Dr.'s works,so as to get a real grasp of the subject.
Ahem . . . But I see a dim possibilityof using him (or Lydia) as
a means of screwing5000 out of Sam Courtauld for a clinic.22
On August29 of thesameyear,in a pseudonymous

letterto
the editor under the pen name "Seila," Keynes entereda
debate whichhad been ragingin the letterscolumnof the
Nationand Athenaeum
over the meritof psychoanalysis.23
In
thatletterhe makesthefollowing
overallevaluationof Freud's
work:
ProfessorFreud seems to me to be endowed, to the degree of
genius, with the scientificimaginationwhich can body forthan
abundance of innovatingideas, shatteringpossibilities,working
hypotheses,which have sufficientfoundation in intuitionand
common experience to deserve the most patient and unprejudiced examination, and which contain, in all probability,both
theories which will have to be discarded or altered out of
recognitionand also theories of great and permanent significance.
But when it comes to the empirical or inductiveproof of his
theories, it is obvious that what we are offered in print is
hopelessly inadequate to the case- that is to say, a very small
number of instances carried out in conditions not subject to
objective control. Freudian practitionerstell us that they are
personallyacquainted witha much greater number of instances
than those which have been published. But they must not
21Goldstein,"The Woolfs'
Response," p. 443.
22
Freud,p. 289.
James Strachey,in Meisel and Kendrick,Bloomsburyl
23
Keynes,Social,Politicaland LiteraryWritings,
pp. 392-393.
556
SOCIAL
RESEARCH
merelyon whatis before

complainifothersbase theircriticisms
them.
I ventureto say thatat the presentstage the argumentin
favourof Freudiantheorieswouldbe verylittleweakenedif it
wereto be admittedthateverycase publishedhitherto
had been
whollyinventedby ProfessorFreud in order to illustratehis
ideas and to makethemmorevividto themindsof his readers.
That is to say,the case forconsideringthemseriouslymainly
dependsat presenton the appeal whichtheymaketo our own
as containingsomethingnew and trueabout theway
intuitions
in whichhumanpsychology
works,and verylittleindeedupon
so faras thelatterhavebeen
theso-calledinductive
verifications,
publishedup-to-date.
I suggestthatFreud'spartisansmightdo well to admitthis,
and, on the otherhand,thathis criticsshould,withoutabating
seriousand
allowthathe deservesexceptionally
theircriticism,
if
because
he
does seem
consideration,
only
entirely
unpartisan
to presenthimselfto us, whetherwe likehimor not,as one of
the greatdisturbing,
innovatinggeniusesof our age, thatis to
a
sort
of
devil.
as
say
As I have said, thereis no directevidence,in the formof

explicitindicationby Keynesof such use, thatthisacquainled Keynes
tancewithand positiveevaluationof psychoanalysis
to use psychoanalytic
premisesin his economics.
psychological
between
is a close correspondence
Whatcan be demonstrated
Keynes'saccount of the nature and operationof business
motivesand the psychoanalytic
theoryof the anal-sadistic
thatI now turn.I will
character.It is to thisdemonstration
Freudian
of
"the
brief
with
a
theoryofthelove
summary
begin
on the itemslistedby
of money,"a summarybased primarily
footnotereferenceto thetheoryin
Keynesin hisbibliographic
the Treatiseon Money.
The FreudianTheoryoftheCapitalistSpirit
In the Freudianscheme,consciousinterestshave connectionswithunconsciousprimaryinterests;

theyare transformations of these primaryinterests.Followingan argumentof
KEYNES AND FREUD
557
Ernest Jones24in a paper cited by Keynes in his footnote,

can be divided into two stages,a stage of "true
transformation
symbolformation"and a stage of "sublimation."In attempting
to pursue primary interests directly, children encounter
hostilityand opposition fromparentsand others- thatis, from
"Repression,""true symbolformation,"and "sublimaauthority.
tion" are mechanismsof self-adjustmentbrought into play by
the desire to avoid this opposition and hostility.
Primaryinterestsare repressed; theybecome unconscious in
the Freudian sense. At the conscious level, theirplace is taken
by objects and activitieswhich, while preserving a symbolic
connectionwith the objects and activitiesof primaryinterest,
do not provoke hostility and opposition. "True symbol
formation"is Jones's term for the firstprimitivestage of this
process. A true symbol is one which not only represents a
repressed primaryinterestbut, in addition, draws its entire
meaning fromthe repressed interest.In the second stage, part
of the results of this first stage are undone. The primary
interests are "sublimated." This has both intellectual and
affectiveaspects.
Intellectually,the objects and activitiesto which interesthas
been redirectedbegin to arouse intereston theirown account;
attention is directed to them because of their own real
properties and not merely because of their connection with
unconscious interests.Interestin them becomes progressively
more "rational." Affectively,some part of the emotional
investment originally attaching to the objects of primary
interestis transferredto the replacementobjects.Althoughthe
symbolic connection remains, the secondary objects and
activitiesare no longer "true symbols"of the primaryones.
This process can be more or less complete. In the process of
some part of the primaryinterests
progressivetransformation,
left
behind"fixated"at an earlier stage. Moreover,
may get
24 Ernest
Jones,Paperson PsychoAnalysis,5th ed. (London: Bailleire,Tindell, 1948),
pp. 158-183.
558
SOCIAL RESEARCH
interestmay "regress"to an earlierstage when pursuitof a

later transformation
productencountersseriousobstaclesin
In thiswaytruesymbolstatuscan
the externalenvironment.
be restored.Note thatthe transformation
processproducesa
elementsin motivation;
that
mixof "rational"and "irrational"
and
thismix will varyamong individualsfor environmental
constitutionalreasons; and that it will also vary within
individualsin consequenceof periodicregressions.
The threebusinessmotiveswhichKeynesemphasizes-love
and a sadisticlove of
of money,love of money-making,
power- are,as we shallsee, verysimilarto thedominanttraits
of the anal-sadisticcharacter.Psychoanalysis
explains these
ofanal erotismand the
traitsas theproductof transformations
deathinstinct.
Freud describesthe anal characteras "exceptionally
orderly,
are
the
"first
and
most
These
traits
and
obstinate."
parsimonious
of anal erotism."He claims,
constantresultsof thesublimation
connectionsbetween
in addition,thatthereare far-reaching
"thetwocomplexesof interestin moneyand of defaecation."
In particular,"whereverarchaicmodes of thoughtpredominate or have persisted-in ancient civilizations,in myth,
fairytaleand superstition,in unconscious thoughts and
dreams,and in the neuroses-moneycomes into the closest
relationwithexcrement."25
The anus and the anal canal are erotogeniczones; thatis,
they are capable of givingrise to sexual sensationswhen
stimulated.
AccordingtoJones,childrenmakeuse of thisfact
by postponingdefecationas long as possible in order to
maximizethepleasuretheyobtainfromit.26Repressionof this
interestleads to its replacementby the followingsymbolic
equivalents:the interestin postponementreappears as the
"retaining"tendency,as the instinct"to possess"or "to heap
25
Sigmund Freud, Characterand Culture,ed. Philip Rieff (New York: CrowellCollier, 1963), pp. 27, 29, 30, 31.
26
Analysis,pp. 533-534.
Jones, Paperson Psycho-
KEYNES AND FREUD
559
up"; the interestin evacuationreappears as the "ejecting"

as theinstinct
"to create,produce,or giveout." It is
tendency,
repressionemphasizingthe firstaspect of this interest,the
whichis thesourceof whatKeynescalls
tendency,
"retaining"
instinct.
the"money-making"
The interestin excrementis morecomplex.It is associated
in thetechnicalpsychoanalytic
with"narcissism"
sense:
as partofhimself,
The infant
and attaches
regardshisproduct
. . . theinfant's
to it a strongsenseof valueand possession
naturaltendencynotalwaysindulgedin- is to keepand play
withthematerial
inquestion,
thetwotypical
forms
ofwhichare
In thisstagetheinfant
andsmearing.
willproduceand
molding
smearwithexcretaas a tokenof affection
and pleasure,a
demonstration
and not
usuallymisinterpreted
bytherecipient
at itspropervalue.27
appreciated
Repressionof thisinterestis the sourceof whatKeynescalls
the"money-loving"
instinct.
In anotherof the papers citedby Keynesin his footnote,
Sandor Ferencziprovidesan accountof the processby which
this interestis transformed
into an interestin moneyand
In describingwhathe calls the "collecting"
wealth.28
stageof
thisprocess,he says: "The characterof capitalism,however,
not purely practical and utilitarian,but libidinous and
irrational,is betrayedin this stage also: the child decidedly
in itself."29
Towardtheend ofthisprocess
enjoysthecollecting
oftransformation,
contentsbecomes
"pleasurein theintestinal
of
...
is seen to be
which,
however,
enjoyment money,
nothingotherthanodourless,dehydratedfilththathas been
made to shine.Pecunianonolet."30
Finally,
in correspondence
withthe development
of the organ of
has been proceeding
in the
thoughtthatin the meanwhile
27Ibid., 542.
p.
28Sandor Ferenczi,Sex in
(New York: Dover, 1956), pp. 269-279.
Psycho-Analysis
29Ibid., 275.
p.
30Ibid., 276.
p,
560
SOCIAL
RESEARCH
interest
in moneygets
theadult'ssymbolic
oflogicality,
direction
but
extendednotonlyto objectswithsimilarphysicalattributes,
value or possession
to all sortsof thingsthatin anywaysignify
(paper money,shares,bankbook,etc). But whateverformmay
be assumed by money,the enjoymentat possessingit has its
and
deepestand amplestsourcein coprophilia.Everysociologist
whoexaminesthefactswithoutprejudicehas
nationaleconomist
to reckonwiththisirrationalelement.Social problemscan be
of humanbeings;
thereal psychology
solvedonlybydiscovering
speculationsabout economicconditionsalone willneverreach
thegoal.31
The third of the traitsemphasized by Keynes is a sadistic
love of power. Freud explains this as the outcome of the
repressionand sublimationof what he calls the death instinct.
According to Abraham, it is particularly prominent in
character types associated with the anal-sadistic phase of
libidinal development. It enters into each of the three anal
traits.For example, "compulsiveorderlinessis at the same time
an expressionof the patient'sdesire fordomination. He exerts
power over things. He forces them into a rigid and pedantic
system. And it not seldom happens that he makes people
themselvesenter into a systemof this kind."32All systemsof
authoritarianrules "not onlytestifyto an obsession fororder in
its inventor,but also to his love of power which is of sadistic
origin. . . . Allusion may be made here to the pleasure these
neurotics take in indexing and registering everything,in
making up tabular summaries,and in dealing withstatisticsof
everykind."33
Both Ferenczi and Jones make a particular point of
connecting anal interests with capitalist motivation and
irrationality.Ferenczi claims that it is
not improbablethat the capitalisticinterest,increasingin
standsnotonlyat thedisposalof
withdevelopment,
correlation
31Ibid.,DD. 276-277.
32 Karl Abraham,Selected
(London: Hogarth Press, 1927), p.
Paperson Psycho-Analysis
430.
33Ibid., 377.
p.
KEYNES AND FREUD
561
therefore-but
practical,egoisticaims- of the reality-principle,
also thatthe delightin gold and in the possessionof money
representsthe symbolicreplacementof, and the reactioni.e. thatitalso satisfies
the
formation
to,repressedanal-erotism,
pleasure-principle.
The capitalisticinstinctthus contains,according to our
an egoisticand an anal-erotic
component.34
conception,
to
Jones,in a passagecitedbyKeynesin hisfootnotereference
the theory,makesthe same claim withspecificreferenceto
moneyillusionand themoderninfluenceof "aurisacrafames":
knowthattheidea ofwealthmeanssimply'a
Moderneconomists
lien on futurelabour',and thatanycounteron earthcould be
used as a convenientemblem for it just as well as a 'gold
standard'.Metal coins, however,and particularlygold, are
unconscioussymbolsfor excrement,the materialfromwhich
mostof our sense of possession,in infantiletimes,is derived.
The ideas of possessionand wealth,therefore,obstinately
adhereto theidea of 'money'and goldfordefinitepsychological
reasons,and people simplywill not give up the 'economist's
fallacy'of confoundingmoneywithwealth.This superstitious
afterthe
attitudewillcostEnglandin particularmanysacrifices
War, when effortswill probablybe made at all costs to
a gold standard.35
re-introduce
In his footnotereferenceKeynessaysthis"prophecy,written
byDr. Jonesin 1917,maybe reckoned,perhaps,a successfor
method."36
thepsycho-analytic
34 Ferenczi,Sex in
PsychoAnalysis,p. 279.
35
pp. 171-172.
Jones, Paperson Psycho-Analysis,
JO
Keyness quotation does not include the tirsttwo sentences or this passage. In
addition, it omits,withoutindication,the followingassertion from the part which is
quoted: "and people simplywill not give up the 'economist'sfallacy'of confounding
money withwealth." Elsewhere, Keynes claims that,although it is a "barbarous relic"
4: 138), "the gold standard,withitsdependence on pure chance, its
(CollectedWritings,
faithin 'automatic adjustments,'and its general regardlessnessof social detail, is an
essentialemblem and idol of those who sitin the top tierof the machine" (ibid.,9: 224).
In pointingto superstitionas part of the explanation for this,he says that "gold still
enjoys the prestigeof its smell and colour" (ibid.,4: 132). Pecunia nonlet.
562
SOCIAL RESEARCH
Keyneson Capitalist"AnimalSpirits"
A large proportionof our positive activitiesdepend on

expectaspontaneousoptimismratherthanon a mathematical
tion,whethermoralor hedonisticor economic.Most,probably,
of our decisionsto do something
positive,thefullconsequences
of whichwillbe drawnout overmanydaysto come,can onlybe
takenas a resultof animal spirits-of a spontaneousurge to
action rather than inaction,and not as the outcome of a
benefits
byquantitamultiplied
weightedaverageofquantitative
tiveprobabilities.
Enterpriseonlypretendsto itselfto be mainly
in itsownprospectus,
howevercandid
actuatedbythestatements
and sincere.Onlya littlemorethanan expeditionto the South
to come.Thus
Pole,is itbasedon an exactcalculationofbenefits
iftheanimalspiritsare dimmedand thespontaneousoptimism
falters,leavingus to depend on nothingbut a mathematical
enterprisewillfade and die- thoughfearsof loss
expectation,
mayhave a basis no morereasonablethanhopes of profithad
before.
It is safe to say that enterprisewhichdepends on hopes
as a whole.
into the futurebenefitsthe community
stretching
willonlybe adequate whenreasonable
But individualinitiative
calculationis supplementedand supportedbyanimalspirits,so
thatthethoughtof ultimatelosswhichoftenovertakespioneers,
as experienceundoubtedlytellsus and them,is put aside as a
healthyman putsaside theexpectationof death.
not only that slumps and
This means, unfortunately,
in
are
exaggerated degree, but that economic
depressions
prosperityis excessivelydependenton a politicaland social
atmospherewhichis congenialto the averagebusinessman. If
the fear of a Labour Governmentor a New Deal depresses
enterprise,thisneed not be the resulteitherof a reasonable
calculationor of a plot withpoliticalintent;-it is the mere
consequenceof upsettingthe delicatebalance of spontaneous
we must
the prospectsof investment,
optimism.In estimating
and even the
to thenervesand hysteria
have regard,therefore,
digestionsand reactionsto the weatherof those upon whose
it largelydepends.37
spontaneousactivity
I turn now to an examination of the consistencyof Keynes's
account of these "animal spirits"withpsychoanalysis.
37
and Money(1936),
Interest
ofEmployment,
John Maynard Keynes, The GeneralTheory
7: 161-162.
KEYNES AND FREUD
563
As we have seen, Keynes claims in "The End of Laisofcapitalism"

is "the
sez-Faire"that"theessentialcharacteristic
to
the
and
money-making
dependenceupon an intenseappeal
of individualsas themainmotiveforce
instincts
money-loving
to theseinstincts
References
occur
oftheeconomicmachine."38
his
As
as
for
1919,
early
writing.
frequentlythroughout
ofthePeace39
example, in a sectionof TheEconomicConsequences
of Society,"he says,in explanationof

entitled"The Psychology
the fact that "the new rich" of the nineteenthcentury
"preferredthe power which investmentgave them to the
pleasures of immediate consumption,"that saving and
of
had becomethe focusfor"all thoseinstincts
accumulating
itselffromthe
whichin otherages has withdrawn
puritanism
worldand has neglectedtheartsof productionas wellas those
Furtheron he claimsthat "the nineteenth
of enjoyment."40
38
39 In Collected
2: 11-12. TheEconomicConsequences
Writings,
ofthePeace also contains
one of the few explicituses of psychoanalysisby Keynes. The passage also points to a
reason for avoiding explicitindicationof such use, particularlywhen what is involved
is the theory of the anal-sadistic character. With some audiences, such explicit
indicationmight"touch on the raw a Freudian complex." Keynes says of Woodrow
Wilson that "in the language of medical psychology,to suggest to the President that
the Treatywas an abandonmentof his professionswas to touch on the raw a Freudian
complex. It was a subjectintolerableto discuss,and everysubconsciousinstinctplotted
to defeat its furtherexploration" (ibid.,p. 34).
Keynes's "long struggle of escape" from the psychological habits of mind of
conventional economics seems, therefore, to have begun very early. Meisel and
Kendrick claim that psychoanalysiswas firstbrought fullyto the attentionof James
Strachey,who (it seems reasonable to assume) was initiallythe main point of contact
between psychoanalysisand Bloomsbury, in 1912 when the Society for Psychical
Research,of whichStracheywas a member,asked Freud to contributea paper to the
They also claim that even before this his "interestin
Society'sNovember Proceedings.
psychologywas notorious"and point in evidence to a response he made in July1912 to
a partyinvitationfromKeynes: "It's verynice of you to ask me. D'you reallythinkI'd
bettercome, though? It mightmake your partypsychological- whichis alwaysa thing
to be avoided" (Bloomburyl
Freud,p. 27).
40 In A Treatiseon
vol. 5),
Money:ThePure Theory
ofMoney(1930; in CollectedWritings,
Keynes associates puritanismwith unconscious guilt- "suppressed reactions against
the distastefulnessof capitalism"- and a consequent unconscious wish for punishment.These he claimsare the rootsof the irrationalbeliefon the part of the "puritans
of finance" that "the real wealth of the communityincreases faster, in spite of
appearances to the contrary,during a depression than during a boom" {ibid.,p. 246).
564
SOCIAL RESEARCH
of the species in a
centurywas able to forgetthe fertility
of the dizzyvirtuesof compoundinterest."41
contemplation
The thesisof psychoanalysis
is, of course,thatthe interestin
at compoundinterestis partlyderivedfromthe
accumulation
and the sublimationof sexual
repression(the "forgetting")
ofthespecies").This associationbetween
instincts
("thefertility
and
fertility compoundinterestpointsto a deeper parallelism
between"sexuallove"and the "loveof money":
and Darwinism
The parallelism between economic laissez-faire
to be very close indeed. Just as Darwin
... is now seen ...
invoked sexual love, acting through sexual selection, as an
adjutant to natural selectionby competition,to direct evolution
along lines which should be desirable as well as effective,so the
individualistinvokes love of money, acting through the pursuit
of profit,as an adjutant to natural selection,to bring about the
productionon the greatestpossible scale of what is moststrongly
measured by exchange value.42
In the Tracton Monetary

Reform
Keynesexplainswhat he
claims is an irrational"violentprejudice" on the part of
as
investors
againsttheuse of a capitallevyin placeofinflation
This belief hides the real source of their "gloomy satisfaction,"namely, their
unconscious belief that "the speculative and business losses, the low prices, and the
high real wages, accompanied, however, by unemployment,which characterisethe
typicaldepression" constitutejustified punishment.In a review of the Treatisein the
EconomicJournalof September 1931, D. H. Robertson (whose view on this matter
Keynes, in the Treatise,had favorablycontrastedwith the belief of the "puritans of
finance")expressed some sympathywiththe puritanview. He suggested that,even in
the absence of what Keynes had called "commodityinflation,"the use of monetary
restraintto curtailan investmentboom was "in truthan essentialphase of the clinical
treatmentof the trade cycle" ratherthan "a mere relic of sadisticbarbarism"(Dennis
Robertson,"Mr. Keynes' Theory of Money," EconomicJournal,September 1931, pp.
410-411). The original galleys of Keynes's "Rejoinder" to this article had a final
paragraph claimingagain thatthe viewwithwhichRobertsonhad expressed sympathy
was "a mere relic of sadistic puritanism" and suggesting, in addition, that an
understanding of the view required psychoanalysisrather than economic analysis:
"Mr. Robertson'slast paragraph of all- yes! a mere relicof Sadistic- well,not so much
barbarism as puritanism. But at this point psycho-analysismust take charge and
and
economic analysiswithdrawdiscreetly"(John Maynard Keynes, The GeneralTheory
13: 238).
After:Preparation,
41
p 13.
Keynes,EconomicConsequences,
42
KEYNES AND FREUD
565
the means of preventingthe rentier income of the inactive

classes from becoming an excessive burden on the active by
pointing to "the deep instinctsby which the love of money
protectsitself."43In his biographical essay on William Stanley
Jevons, he claims a mistaken argument of Jevons was
irrationallyrooted in "a psychologicaltrait,a certainhoarding
instinct, a readiness to be alarmed and excited by the
exhaustion of resources."44 In the General Theory,liquiditypreferenceis identifiedwith the "propensityto hoard." "The
concept of hoardingmay be regarded as a firstapproximation
Indeed if we were to
to the concept of liquidity-preference.
substitute'propensityto hoard' for 'hoarding' it would come
to substantiallythe same thing."45In "A Short View of Russia"
he says that
the moral problemof our age is concernedwiththe love of
money,withthe habitualappeal to the moneymotivein nine
of life,withthe universalstrivingafter
tenthsof the activities
individualeconomicsecurityas the primeobjectof endeavor,
with the social approbationof money as the measure of
constructive
success,and withthe socialappeal to the hoarding
instinctas the foundationof the necessaryprovisionfor the
familyand forthefuture.46
As I pointed out above, this emphasis on the love of money
along with the division of the money-motives into the
"money-making"and "money-loving"instinctscloselyparallels
the Freudian description of the anal-sadistic character.
Psychoanalysispointsto repressed and sublimatedanal erotism
as the source of thispassion. It also provides an interpretation
foreach of its two aspects. The "money-making"instinctis the
43 Kevnes. Tracton MonetaryReform,
d. 55.
44
Keynes,Essaysin Persuasion,p. 117. This instinctalso found expressionin Jevons's
mania for paper and book collecting (Keynes, Essays in Biography,pp. 117, 140).
Keynes also attributesto him the two other anal traits- extreme orderliness and
obstinacy(ibid., pp. 147-148). His biographical essay on Foxwell emphasizes these
same three traits(ibid.,dd. 275-276, 283-285).
45
Keynes, The GeneralTheory,
p. 174.
46
Keynes,Essaysin Persuasion,pp. 268-269.
/
SOCIAL RESEARCH
566
product of repressionand sublimationof the interestin

pleasurein the anal canal by postponingdefecaintensifying
tionand allowingfecalmatterto "collect"or "accumulate"in
instinctis the product of
the canal. The "money-loving"
of theinterestin excrementitself.
repressionand sublimation
Pecunia non let.
Karl Abraham,in explanationof a numberof phenomena

(one of whichis what Keynesin the Treatiseon Moneycalls
of personalities
domicharacteristic
poverty47)
"psychological"
nated by the interestsof the anal-sadisticphase of libidinal
of libido and
development,points to an "identification
" and a
of
sexual
and
pecuniary'power'
consequent
moneywithdrawalof libido fromall other objectsin the external
world.48A passage fromKeynes'sreviewof H. G. Wells'sThe
in very
Worldof WilliamClissolddescribesbusinessmotivation
similarterms:
Whydo practicalmenfinditmoreamusingto makemoneythan
tojoin theOpen Conspiracy?I suggestthatit is muchthesame
reasonas thatwhichmakesthemfindit moreamusingto play
bridgeon Sundaysthanto go to Church.They lack altogether
thekindof motive,thepossessionof which,iftheyhad it,could
be expressedby sayingthattheyhad a creed. They have no
no creed whatever.
creed, these potentialopen conspirators,
or artists,
That is why,unlesstheyhave theluckto be scientists
the
substitute
on
the
back
fall
motive,
perfectErsatz,
grand
they
theanodyneforthosewho,in fact,wantnothingat all- Money.
Clissold charges the enthusiastsof Labour that they have
"feelingsin the place of ideas." But he does not denythatthey
have feelings.Has not, perhaps, poor Mr. Cook something
which Clissold lacks? Clissold and his brotherDickson,the
advertising
expert,flutterabout the worldseekingfor some47
p. 197; see also The GeneralTheory,

pp. 92-93, 319.
48Abraham, Selected
Papers, p. 148. As I mentioned above in noting Abraham s
connectionwithAlix Strachey,a numberof aspects of Keynes'seconomics,particularly
his account of the psychologyof the trade cycle,are consistentwithAbraham's account
of the relation between manic depressive psychosis,obsessional neurosis, and the
anal-sadistic phase of libidinal development. See Winslow, "Philosophical and
PsychologicalPresuppositions,"pp. 440-458.
KEYNES AND FREUD
567
thingto whichtheycan attachtheirabundantlibido.But they

have not foundit. They wouldso liketo be Apostles.But they
cannot.They remainbusinessmen.49
In the GeneralTheoryKeynes adds to these money-motives
the third of the three aspects of the capitalist motivational
complex- a sadisticlove of power. The passage also pointsout,
in agreement withAbraham and, as we shall see, with Freud,
thatthe other anal-sadistictraits,in thiscase the love of money
and money-making,can take on a sadisticcoloration:
can be canalised into comparDangerous human proclivities
harmless
channels
the
existenceof opportunities
for
by
atively
and privatewealth,which,if theycannot be
money-making
in thisway,mayfindtheiroutletin cruelty,
satisfied
thereckless
of
and otherformsof
pursuit personalpowerand authority,
It is betterthata man should tyrannise
self-aggrandisement.
overhisbankbalancethanoverhisfellowcitizens;and whilstthe
formeris sometimesdenouncedas being but a means to the
at leastit is an alternative.50
latter,sometimes
As I pointed out above, Freud's final theoryof the instincts
makes sadism the product of the repressionand sublimationof
the "death instinct."In Civilizationand Its DiscontentsFreud
makes use of this theoryin an argument very similar to this
argumentof Keynes's:
But I am able to recognizethatthe psychological
premisseson
which the system[communism]is based are an untenable
illusion.In abolishingprivatepropertywe deprivethe human
love of aggressionof one of itsinstruments,
a strong
certainly
not the strongest;
but we have in no way
one, thoughcertainly
altered the differencesin power and influencewhich are
misusedby aggressiveness,
nor have we alteredanythingin its
nature.Aggressiveness
was not createdby property.It reigned
almostwithoutlimitin primitive
times,whenpropertywas still
and
it
shows
itselfin the nurseryalmost
veryscanty,
already
beforeproperty
has givenup itsprimal,anal form;it formsthe
basisof everyrelationof affection
and love amongpeople (with
49
5U
p. 374.
568
SOCIAL
RESEARCH
the singleexception,perhaps,of the mother'srelationto her

male child). If we do awaywithpersonalrightsover material
wealth,there stillremainsprerogativein the field of sexual
which is bound to become the source of the
relationships,
and the mostviolenthostility
dislike
amongmen who
strongest
in otherrespectsare on an equal footing.If we wereto remove
thisfactor,too,byallowingcompletefreedomof sexuallifeand
thus abolishingthe family,the germ-cellof civilization,we
cannot,itis true,easilyforeseewhatnewpathsthedevelopment
couldtake;butone thingwe can expect,and thatis
ofcivilization
featureof human naturewillfollowit
thatthisindestructible
there.51
Keynesmakesit veryclear thathe viewsthese motivesas

perverse.As in Marx, the capitalistis onlyjustifiableas a
means:
Regarded as a means he [the businessman]is tolerable;regarded
At any rate to me it
as an end he is not so satisfactory....
seems clearer every day that the moral problem of our age is
concerned withthe love of money. ... A revolutionin our ways
of thinkingand feeling about money may become the growing
purpose of contemporaryembodimentsof the ideal.52
A passage from"EconomicPossibilitiesfor Our Grandchildren"is even moreemphatic.Keyneslooksforwardto a time

when
we shall be able to affordto dare to assess the money-motiveat
its true value. The love of money as a possession- as
distinguished from the love of money as a means to the
enjoymentsand realitiesof life- willbe recognized forwhat it is,
a somewhat disgusting morbidity,one of those semi-criminal,
semi-pathological propensities which one hands over with a
shudder to the specialistsin mental disease.53
Then, although
there will still be many people with intense unsatisfied
purposiveness who will blindlypursue wealth- unless they can
find some plausible substitute,... the rest of us will no longer
51
and ItsDiscontents
(London: Hogarth Press, 1963), pp.
Sigmund Freud, Civilization
50-51.
52
53Ibid., 329.
p.
KEYNES AND FREUD
569
be underanyobligationto applaudand encouragethem.Forwe

shall inquiremore curiouslythan is safe today into the true
withwhichin varyingdegrees
characterof this"purposiveness"
Naturehas endowedalmostall of us.54
Note that many of these discussions contain passages very
suggestive of the psychoanalytic account of the process
throughwhich the irrationalbecomes establishedin conscious
mentallife. In particulartheypoint to the unconscious rootsof
"purposiveness" and to the mechanisms which create the
unconscious and tie it to consciousness: repression and
sublimation. Keynes seems, in other words, to treat the
money-motivesas "furtiveFreudian cloaks"55for other more
"vulgar passions" hidden beneath the surface.
The Three Fundamental PsychologicalFactors
In the GeneralTheorythe general conception of the capitalist

spirit which we have just examined is resolved into "three
fundamental psychologicalfactors,namely, the psychological
propensityto consume, the psychologicalattitudeto liquidity
and the psychological expectation of future yield from
capital-assets."56According to Schumpeter, these factors
constitutethe essence of Keynes's "vision."57
54ibid.
55
p. 291.
56
pp. 246-247.
57 A.
ofEconomicAnalysis(London: Allen & Unwin, 1954), pp.
J. Schumpeter,History
41-42. Although Schumpeter does not, of course, connect Keynes's "vision" to
psychoanalysis,he does say elsewhere that psychoanalysishas "vast possibilitiesof
application to sociology . . . and economics": "The old idea of a subconscious
personality and its struggles with the conscious ego was elaborated and made
operational withunsurpassable effectivenessby Freud. Again I cannot- and perhaps
need not- do more than point to the vast possibilitiesof application to sociologypoliticalsociologyespecially- and economics that seem to me to loom in the future:a
Freudian sociologyof politics(including economic politics) may some day surpass in
importance any other application of Freudism. [In a footnote to this Schumpeter
adds:] It occurs to me that my few sentences on Freud might be interpretedin a
570
SOCIAL
RESEARCH
Keynes's discussions of each of them point to significant

aspects which are interpretablein psychoanalyticterms.58For
example, Keynes, as we have seen, points to the "love of
money"and the "hoarding instinct"as importantaspects of the
motivation behind saving. One consequence of this is his
rejection of Marshall's claim that interestis the "reward of
waiting." "Interest to-day rewards no genuine sacrifice,any
more than does the rentof land."59Since Marshall had pointed
to "waiting"(a term deliberatelychosen as a replacement for
Senior's "abstinence") as the only sacrifice involved in
production other than labor, this will explain Keynes's
adoption of the major premise of the labor theoryof value:
I sympathise,therefore,with the pre-classicaldoctrinethat
is produced
bylabour,aided bywhatused to be called
everything
artand is now called technique,by naturalresourceswhichare
or abundance,and
freeor costa rentaccordingto theirscarcity
in
embodied
of
the
results
assets,whichalso
labour,
past
by
or abundance.It is
commanda priceaccordingto theirscarcity
preferableto regardlabour,including,of course,the personal
as thesole factor
and hisassistants,
servicesof theentrepreneur
of technique,
in
environment
a
of production,
given
operating
demand.60
naturalresources,capitalequipmentand effective
We have already seen that Keynes regards expectations"of
the futureyieldof capital assets" as necessarilywithoutrational
foundations.He points to "convention"rather than reason as
the ground for these expectations.61 In "Some Economic
Consequences of a Declining Population," Keynes makes it
clear that these conventions do not provide a rational
foundation for expectations.62They are "a substitutefor the
derogatorysens. Nothingcould be furtherfrommyintention.All greatachievements
are but finalacts of birththat are preceded by long prenatal histories"{ibid.,p. 798).
58 For detailed examinations of the relation between
psychoanalysisand each of
Keynes's three factors,see Winslow, "Philosophical and Psychological Presuppositions,"chs. 10, 11, 12.
59
p. 376.
60Ibid.. on. 213-214.
61
pp. 114-115.
Keynes, The GeneralTheoryand After:Defenceand Development,
62Ibid.,
124-125.
pp.
KEYNES AND FREUD
571
knowledgewhichis unattainable."Indeed, whatKeynescalls

has people at timesadoptbeliefswhich
the"chief"convention
thereis "good reason"to believeare false.Though "thefuture
never resemblesthe past- as we well know," the chief
to all likelihood,that
has people "assume,contrary
convention
thefuturewillresemblethepast."This convention"continues
to influenceour mindseven in thosecases wherewe do have
good reasonto expecta definitechange."The functionof the
conventionsis to provide, not a rational foundationfor
but "peace and comfortof mind."They do this
expectations,
by enablingus to "hide fromourselveshow littlewe foresee."
providesan explanationas to why"peace and
Psychoanalysis
of mind"requirethatwe should"hidefromourselves
comfort
how littlewe foresee."In addition,its theoriesof symbolism
and mass psychologyexplain why,in order to satisfythis
listedby
peopleadopt theparticularconventions
requirement,
Keynes.63
to "thepsychological
attitudeto liquidity."
We come,finally,
are mostobviously
This is the area where "money-motives"
An
of
one
examination
involved.
aspect of this factor,the
will serve to illustratethe consistency
of
liquidity-premium,
importantparts of Keynes's analysis with psychoanalytic
theory.
The 1937 QJE article provides an explanationof this
premiumwhich is readily interpretablein psychoanalytic
terms.Keyneswrites:
Money,it is well known,servestwo principalpurposes. By acting
as a money of account it facilitatesexchanges withoutits being
necessary that it should ever itselfcome into the picture as a
substantiveobject. In this respect it is a convenience which is
devoid of significanceor real influence.In the second place, it is
a storeof wealth.So we are told,withouta smileon the face. But
in the world of the classical economy, what an insane use to
whichto put it! For it is a recognisedcharacteristicof moneyas a
store of wealth that it is barren; whereas practicallyevery other
63See Winslow,
and Psychological
ch. 11.
"Philosophical
Presuppositions,"
572
SOCIAL
RESEARCH
or profit.Whyshould
formofstoringwealthyieldssomeinterest
wish
to
use
a
lunatic
outside
asylum
moneyas a storeof
anyone
wealth?
Because, partly on reasonable and partly on instinctive
grounds,our desire to hold moneyas a storeof wealthis a
of our own calculations
barometerof thedegreeof our distrust
thefuture.Eventhoughthisfeeling
and conventions
concerning
or instinctive,
itoperates,so to
aboutmoneyis itselfconventional
It
of
our
motivation.
takes
a
level
at
chargeat the
speak,
deeper
momentswhen the higher,more precariousconventionshave
weakened.The possessionofactualmoneylullsour disquietude;
and thepremiumwhichwe requireto makeus partwithmoney
is themeasureof thedegreeof our disquietude.64
Note thatKeynespointsto both"reasonable"and "instinctive"groundsforthefactthat"our desireto hold moneyas a

storeof wealthis a barometerof thedegreeof our distrustof
our owncalculationsand conventions
concerningthe future."
The reasonablegroundsare explainedin Keynes'sdiscussion
in chapter17 of the GeneralTheory.
of the liquidity-premium
is
the
There
premium connected to Keynes's Treatiseon
notionof the"weight"of an argument.65
Weightis a
Probability
of
evidence
of
the
amount
relevant
measure
upon which
probabilityestimatesare based.66 It is, in other words, a
of our owncalculations
measureof "thedegreeof our distrust
The greateris thisevidence,the
. . . concerning
thefuture."67
greateris theweightattachingto estimatesbased upon it.
makes
Accordingto Keynes,thepassageoftimecontinuously
to
the
formation
of
rational
irrelevant
the
evidencefrom past
in thepresent.The reasonforthisis that
businessexpectations
the characterof the
of
economicsthe material
particlarly
human agents upon whom economic forces act- is not
64
Keynes, The GeneralTheoryand After:Defenceand Development,
pp. 115-116.
65
p. 240.
66 Keynes, Treatiseon Probability,
ch. 6.
67 I have excluded "conventions"from this
passage because, as suggested above, I
believe Keynes,in distinguishingthemfrom"calculations,"meant to indicatethatthey
are a nonrationalbasis forexpectations.As such, weightcannot measure the degree of
our distrustin them.
KEYNES AND FREUD
573
constantand homogeneousthroughtime.68In consequence,

whichhavebeen observedin thepastmaycease to
regularities
whichcan reasonablybe
providea guide to the regularities
in
to
observable
be
the
future.
The weightattaching
expected
to argumentscan suddenlydrop as changed circumstances
make portionsof the evidence accumulatedin the past
to estimatesof futureprobabilities.
irrelevant
relation
Changesin weightor confidencehavethefollowing
to changesin thedesireto hold moneyas a storeof wealth.If
the conditionwhichKeynesspecifies,namely,"contractsare
fixed,and wages are usuallysomewhatstable,in termsof
theholdingof moneyis a relatively
is satisfied,
safe
money,"69
of keepingoptionsopen. The
wayof avoidingcommitment,
this
will
of
to
desirability doing
dependon theweightattaching
The smalleris thisweight,the moredesirableit
expectations.
willbe to keep optionsopen and, therefore,
thegreaterwillbe
as a storeofwealth.In turn,thegreater
money'sattractiveness
thegreaterwillbe theliquidity-premium.
is thisattractiveness,
The conceptof "weight"and the assumptionsabout money
thusenable us to explainthe holdingof moneyas a storeof
wealthin certaincircumstances
as a rationalway of dealing
withpartialignorance.70
There remainwhatKeynescallsthe"instinctive"
grounds.It
in
that
are
is these
terms.On a
interpretable psychoanalytic
of themoney-motives,
Freudianinterpretation
moneyis more
other
forms
of
wealth
in
than
the sense thatit has a
"liquid"
68 Kevnes. The GeneralTheorxand After:Defenceand Development,
n. S 1fi.
69
p. 236.
70 Even this rational basis for the
liquidity-premiumhas connections with
however.To begin with,rationalforecastingseems to be largelyconfined
irrationality,
by Keynes to "speculation"- "the activityof forecastingthe psychologyof the market"
(Keynes, TheGeneralTheory,
p. 158), of "aping unreason proleptically"(Keynes, Treatise
on Money:TheAppliedTheory,
pp. 322-324). To be rational,such activitymustbe based
on reasoned understandingof the irrationalbehavior of the "mob" which dominates
outcomes in speculativemarkets.Second, money provides a reasonable refuge to the
rationalspeculatoronlyif "contractsare fixed,and wages are usuallysomewhatstable,
in termsof money."This, in turn,may require widespread irrationality
on the part of
otherswithrespect to money and money values.
SOCIAL
574
RESEARCH
closer symbolic connection with the unconscious interests

which lie behind the money-motives.This alone provides an
irrational or instinctiveground for the willingnessto pay a
premiumin order to hold money. Freud also argues, however,
a later or more
thatwhen, in pursuitof itsaim of gratification,
form
of
an
unconscious
interest
encounters
highlydeveloped
powerful external obstacles, it "will find itself led into a
regression."71ErnestJones explains thisphenomenon in terms
of his notion of "true symbolism":
Wheneverthereis a failurein thisprocessofsublimation
thereis
a tendency
toregresstowardstheprimary
complexA, or,rather,
thiscomplex,being no longer indirectly
relieved,once more
tendsto reassertitself.Inhibitingforcespreventitsdoingso in
itsoriginalform,and as a resultof thisintra-psychical
conflict
it
may expressitselfby means of one of its originalsymbolical
manner,the
equivalents. . . whichthencarries,in a substitutive
of A and is itssymbol.72
significance
As I indicated above, Keynes argues that expectations are
not usuallyarrivedat by means of rationalcalculation. Instead,
theirfoundationsare "conventionalor instinctive"in the sense
that theyare rooted in the unconscious and serve primarilyto
alleviate anxiety. If we mean by "the feeling about money"
money's capacity to serve as a true symbol of unconscious
interests(an interpretationwhich is consistentwith Keynes's
descriptionof the feeling as "conventionalor instinctive"and
with his claim that it operates "at a deeper level of our
motivation"),then the foundations of expectations, whether
rational calculations or irrational conventions, are "higher"
than this feeling,meaning by this that they involve a greater
degree of sublimation.What Jones refersto as a failurein the
process of sublimationwould, therefore,in this case, take the
71
Lectureson Psychoanalysis
(London: Penguin,
Sigmund Freud, New Introductory
1973),p. 384.
72
Analysis,p. 183.
Jones,Paperson Psycho-
KEYNES AND FREUD
575
formof a weakeningof "the higherand more precarious

conventions"
expectations.
underpinning
of the
Keynes'sdiscussion,elsewherein the QJE article,73
and
of
the
conventions
expectations
psychologunderpinning
ical role these conventionsplay is also consistentwiththis
of a weakeningor collapseof the
interpretation
psychoanalytic
conventionsas a failurein the processof sublimation.The
conventionsare said to have the role of lulling"vague panic
fearsand equally vague and unreasonedhopes." However,
a foundationfor
because the conventions
provideso "flimsy"
theyare "liableto collapse."In consequence,"the
expectations,
fears
and equallyvagueand unreasonedhopesare
vaguepanic
notreallylulledand lie buta littlewaybelowthesurface"from
whencetheyreemergewhenthe conventions
collapse- when,
thatis, thereis a failurein the processof sublimation.
A weakeningor collapse of "the higher,more precarious
conventions"-a failure in the process of sublimationprecipitatesregression,the reassertionof the primarycomplex. This servesthe functionof alleviatinganxiety.For the
reason given by Jones, regressiontakes the form of the
of the true symbolstatus of one of the
reestablishment
unconscious
interest's
"originalsymbolical
equivalents."
Keynes's
in these terms.The loss of
accountis readilyinterpretable
confidencein the conventionalfoundationsof expectations
restoresmoneyto itstruesymbolstatus.As Keynesputsit,"the
feelingabout moneytakeschargeat the momentswhen the
higher,more precariousconventionshave weakened." He
also says that the functionserved by this regressionis the
alleviationof anxiety."The possessionof actual moneylulls
our disquietude;and the premiumwhichwe requireto make
us part with moneyis the measure of the degree of our
disquietude."
Thus, on Keynes'saccountof the irrationalelementsin a
monetarycrisis,the crisis is precipitatedby a collapse of
73
and After:Defenceand Development,

Keynes, The GeneralTheory
pp. 114-115.
576
SOCIAL RESEARCH
expectations.For psychologicalreasons, this leads to an

to hoard."In theabsenceofanyincrease
increased"propensity
in the money supply, the increased propensityto hoard
increasesinterestrates.Both the collapseof expectationsand
the increase in interestrates work to decrease intended
investment
expenditureand this in turn leads to increased
unemployment.
Conclusion
What we appear to find in Keynes,therefore,is a very

unorthodox(fromthe perspective,at least,of conventional
economics)view of the nature and operationof business
motives. Keynes's view was importantlyshaped by his
abandonmentof the beliefthathuman natureis reasonable.
The problem with this belief was that it overlookedthe
"deeper and blinder,"the "vulgar,"passions. There are,
Keynes came to believe, "insane and irrationalspringsof
wickednessin mostmen." For thisreasonand forthe reason
thatrationalbeliefand behaviorin economicaffairsare often
unattainableon objectivegrounds,economistsmust "abate
somewhat"fromthe "traditionalpicture"of economicman.
The view that behavioris alwaysand everywhererational
of the principlesof behavior
"leads to a wronginterpretation
whichtheneed foractioncompelsus to adopt."
Keynes'saccount of the "animal spirits"of capitalismis
with"the Freudiantheoryof the love of money."
consistent
and
The motivesto which he points-"the money-loving
the
and
instincts"
"proclivities"which, in
money-making
uncanalizedform,expressthemselvesin "cruelty"and "the
recklesspursuitof personalpowerand authority"-are those
character.His discussions
of whatFreudcallstheanal-sadistic
of the
oftheirnatureand operationpointto aspectssuggestive
Freudiannotionsof the unconscious,repression,sublimation,
and regression.
KEYNES AND FREUD
577
indicate
As I have pointedout, Keynesdoes not explicitly
of
his
economics
are
connected
thatthepsychological
premises
to psychoanalysis.
itself,however,pointsto a
Psychoanalysis
reason whyhe would have wished,had he made use of the
character,to keep suchuse hidden.
theoryof theanal-sadistic
interests
is accompaniedbywhatFreud
of
Repression primary
calls "resistance."Individuals resist the making of the
repressed unconsciousconscious. In the articlescited by
that"itis the
ErnestJonesclaims,first,
Keynesin hisfootnote,
which
calls
forth
the
'resistance'
of
greatest
interpreting symbols
work" and which is "the centre of the
in psycho-analytic
strongestopposition to psychoanalysisin general"74and,
of anal-erotictraitswhich
second, that it is interpretations
of
resistance.75
Freudclaims
storms
such
the
greatest
produce
forpersuasive
has important
thefactof resistance
implications
in
Romersholm
could
makeno
In
Ibsen
writing. explainingwhy
explicitreferenceto an incestuousrelationbetweena central
character,Rebecca,and her father,he pointsto whathe calls
"lawsof poeticaleconomy":
thiswayof presenting
the
Laws of poeticaleconomynecessitate
setforth,
forthisdeepermotivecould notbe explicitly
situation,
ithad to be dissimulated,
keptfromthedirectperceptionof the
suchseriousresistances,
otherwise
based
or
the
reader;
spectator
on mostpainfulemotions,wouldhave arisenthatthe effectof
thetragedymighthavebeen imperilled.76
In an unsigned
polemicist.77
Keyneswas a self-conscious
to the programfora season of fourIbsen plays
introduction
presentedby the CambridgeArtsTheatreon the occasionof
itsopeningin February1936, Keyneshimselfpointsto what
Freudcalls"poeticaleconomy."Havingsaid of the playsthat,
at one level, they can be seen "as tragediesof character,
74Ernest
5th ed. (Boston: Beacon Press, 1961), p. 87.
Jones,Paperson Psychoanalysis,
75Ibid., 413.
p.
/o
Sigmund Freud, Some Character-Types Met with in Psycho-Analytic Work"
(1915), in CollectedPapers,vol. 4 (London: Hogarth Press, 1925), p. 339.
" See, for
example, Keynes,Essaysin Biography,
p. xvn.
578
SOCIAL RESEARCH
exploringthedepthsand oftenthecranniesof humanmotive

and
ofa poetand theinsightofa novelist"
withtheimagination
.
.
.
been feltto be painful
because
thatthey"havesometimes
Ibsencan penetratetoo deeplyintoregionswhichwe preferto
he goes on to point to
keep concealed fromourselves,"78
Ibsen's"poeticaleconomy":
to theartofthedramaas
The playsareofgreatimportance
DuringthisperiodwhenIbsenwas
essaysin a newtechnique.
himself
as
exclusively
engagedon prosedramashestillregarded
a poet.Theseplayscanbe readas poemsofthepurestaesthetic
rulesofcomposition.
Ibsen'suseof
tostrict
content
conforming
andsymbols,
in
andcertain
recurrent
leit-motiv
phrases
especially
and 'The Master Builder' becomeshighly
'Romersholm'
and inviolable
law.
obeya strict
developed.. . . [His symbols]
or interfere
The senseoftheunseenworldmustneverconflict
naturalistic
and
withthe realismof real lifeand a perfectly
It isan overtone
feltandheardby
senseinterpretation.
common
which
willbeoutofproportion
andalmost
thesensitive,
vulgarif
and
to
be
obvious
itis sufficiently
inescapable.79
emphasized
As we have seen,Keyneswas of theviewthatin hisowndayit
was not "safe"to "inquiremore curiously. . . into the true
withwhichin varyingdegrees
characterof this'purposiveness'
Naturehas endowedalmostall of us."
78
p. 327.
Keynes,Social,Politicaland LiteraryWritings,
79Ibid.,
pp. 327-328.
* Earlier versionsof this paper were presented to the Marx CentenaryConference

at the Universityof Manitoba in March 1983 and to the annual conference of the
SocietyforSocialistStudies at the Universityof BritishColumbia in June 1983. I wish
to express my gratitudeto Louis Lefeber for his advice, encouragement,and support
over many years. I also wish to thank Mildred and David Bakan, Fraser Cowley,
Stephen Marglin, Lorie Tarshis, Sally Zerker, the editor of this journal, and an
anonymous reviewerfor helpfulcommentsand suggestions.

Keynes and Freud: Psychoanalysis and Keynes's Account of The "Animal Spirits" of Capitalism

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Keynes and Freud: Psychoanalysis and Keynes's Account of The "Animal Spirits" of Capitalism

Uploaded by

Copyright:

Available Formats

Keynes and Freud: Psychoanalysis and Keynes's Account of the "Animal Spirits" of Capitalism

John Maynard Keynes,A Treatiseon Money:The AppliedTheoryofMoney(1930), in

As we shallsee, Keyneshad readyaccess to psychoanalytic

KEYNES AND FREUD

particularattentionto the role playedby "the psychological

Keynes,Essaysin Persuasion,p. 291.

KEYNES AND FREUD

and necessarilydo so, on motivesof anotherkind,

aspects of capitalist behavior found in Keynes corresponds

Keynes had access to Freudian ideas through Bloomsbury,

KEYNES AND FREUD

On August29 of thesameyear,in a pseudonymous

merelyon whatis before

As I have said, thereis no directevidence,in the formof

In the Freudianscheme,consciousinterestshave connectionswithunconsciousprimaryinterests;

KEYNES AND FREUD

Ernest Jones24in a paper cited by Keynes in his footnote,

interestmay "regress"to an earlierstage when pursuitof a

KEYNES AND FREUD

up"; the interestin evacuationreappears as the "ejecting"

KEYNES AND FREUD

A large proportionof our positive activitiesdepend on

KEYNES AND FREUD

As we have seen, Keynes claims in "The End of Laisofcapitalism"

of Society,"he says,in explanationof

In the Tracton Monetary

KEYNES AND FREUD

the means of preventingthe rentier income of the inactive

product of repressionand sublimationof the interestin

Pecunia non let.

Karl Abraham,in explanationof a numberof phenomena

p. 197; see also The GeneralTheory,

KEYNES AND FREUD

thingto whichtheycan attachtheirabundantlibido.But they

the singleexception,perhaps,of the mother'srelationto her

Keynesmakesit veryclear thathe viewsthese motivesas

A passage from"EconomicPossibilitiesfor Our Grandchildren"is even moreemphatic.Keyneslooksforwardto a time

KEYNES AND FREUD

be underanyobligationto applaudand encouragethem.Forwe

In the GeneralTheorythe general conception of the capitalist

Keynes's discussions of each of them point to significant

KEYNES AND FREUD

knowledgewhichis unattainable."Indeed, whatKeynescalls

Note thatKeynespointsto both"reasonable"and "instinctive"groundsforthefactthat"our desireto hold moneyas a

KEYNES AND FREUD

constantand homogeneousthroughtime.68In consequence,

closer symbolic connection with the unconscious interests

KEYNES AND FREUD

formof a weakeningof "the higherand more precarious

and After:Defenceand Development,

expectations.For psychologicalreasons, this leads to an

What we appear to find in Keynes,therefore,is a very

KEYNES AND FREUD

exploringthedepthsand oftenthecranniesof humanmotive

* Earlier versionsof this paper were presented to the Marx CentenaryConference

You might also like