‘To cut spending in a slump is just wrong’: Lord Skidelsky on austerity and why Keynes matters

Interview in House Magazine
By Geoffrey Lyons

In a 2015 article for Project Syndicate, historian Niall Ferguson accused Lord Robert Skidelsky of being “un-Keynesian” for refusing to admit that George Osborne’s austerity policies worked. Skidelsky’s position, Ferguson argued, wasn’t true to the great economist-statesman’s view that one ought to adjust their beliefs in the face of changing facts.

Ferguson must have known this was a critical hit. It’s not that Skidelsky has come to identify his views with those of “the Master” that makes “un-Keynesian” such a biting characterization, but rather that he is arguably the greatest living authority on the twentieth-century economist. Besides being a prolific writer and lecturer on economic issues, Skidelsky is perhaps best known for his acclaimed three-volume biography of Keynes, a project he laboured over for nearly three decades. Still, he didn’t take Ferguson’s remarks personally.

“Niall and I are quite good friends and actually go back a long way,” he says with a smile. “But we’ve sort of diverged on this. He doesn’t actually say in what respect I should have changed my mind, so it’s a nice throwaway line.”

The House meets Skidelsky in his book-cluttered office opposite Parliament. Sunlight pours through a window on the far wall, illuminating dust hovering between stacks of paper and family photos. Keynes’s name is everywhere. The spine of a colossal hardback blares “KEYNES” in typeface nearly triple the width of most the other books.Roughly a dozen new softcover copies of The Essential Keynes, a volume Skidelsky edited for Penguin, sit untouched on the windowsill.

Having saturated himself in John Maynard Keynes’s life and work, Skidelsky is absolutely certain that if Keynes were alive today he would be strongly opposed to austerity. “I followed him very loyally and faithfully in that respect, not because I’m a disciple of his in every way, but because he had absolutely the right idea,” he says.

“[Keynes] said in a depression you can’t cut public spending as that would just deepen the depression. What you should actually do is cut government spending in a boom. The idea that you should cut government spending in a slump is just economically wrong.”

Skidelsky’s reasoning channels one of Keynes’s core arguments: that economies function best when they’re stabilised through government intervention. Far from being some ivory tower concoction, this idea changed the course of modern history. The policy response to the 2008-09 financial crisis, including the UK’s £500 billion bank rescue plan and the America’s Troubled Asset Relief Program, was a textbook example of demand-side Keynesian economics. In October 2008, Alistair Darling invoked Keynes before announcing a big infrastructure stimulus, and a month later Indian prime minister Manmohan Singh deferentially quoted him to a G20 audience. It’s as if Keynes foretold his own legacy when he said practical men often unwittingly become “the slaves of some defunct economist.”

But Skidelsky says Keynes remains misunderstood. His oft-quoted assertion that “in the long run we’re all dead,” is used by critics as evidence of moral bankruptcy. Some, including Ferguson, have even pointed to Keynes’s homosexuality as proof that he didn’t care about the long-run (Ferguson later issued an apology for his “stupid” and “insensitive” comments). But Keynes did care about the long-run, Skidelsky argues, he just happened to care about the short-run, too.

“What Keynes said was it’s the present generation that should be the care of our rulers,” he says. “So we shouldn’t impose too much sacrifice on them for a future which we may never know.” Indeed, as Keynes himself wrote in a 1937 article for the New Statesman: “It is our duty to prolong peace, hour by hour, day by day, for as long as we can….I have said in another context that it is a disadvantage of ‘the long run’ that in the long run we are all dead. But I could have said equally well that it is a great advantage of ‘the short run’ that in the short run we are still alive.”

Skidelsky is adamant about getting this right, as if this one insight by Keynes, properly understood, would solve most the world’s problems. “It actually governed his attitude toward war,” he says, passion building in his voice. “In deciding to fight for something, Keynes said you have to try and work out not only that you’ll improve the position in the long run, but that that improvement will make up for the damage you inflict on this generation in the short run. And I’ve…I’ve always been influenced by that,” he says, softening his tone. “I think the Second World War was justified but not the First. I mean you think of the millions who were…”

Skidelsky pauses. His hands are frozen mid-gesture as he looks down, his eyes welling up with tears. He tries to say “it brings tears to my eyes” but can’t get the words out. “It’s…it’s emotional,” he says meekly, wiping his eyes. Asked whether he had family in the war, he replies “no, no. It’s just the idea of it.” He says it’s the lack of empathy that gets to him. “It’s this idea that outside the circle in which they live and move, [people in power] don’t really have much ability to empathise with ordinary people.”


The day we meet is Skidelsky’s 80th birthday, which he’s celebrating in two parts: a family holiday to the Greek island of Hydra – from which he’s just returned, slightly sun-tanned – and a dinner party later in the evening. “We’ve got about 25 people coming,” he says.

Eighty years just barely predates the official start of World War II, but in Skidelsky’s Manchurian birthplace the conflict had already been well underway. Born to British parents of Russian descent in the city of Harbin, the “breadbasket of China,” Skidelsky was just three when he and his family were interned by the Japanese. He says he doesn’t remember any of it, and within a few months a prisoner swap put him on a ship heading to England. “It was quite a civilised thing,” he says. “I was surprised that sort of exchange went on in war.”

The Skidelskys, Xie Jie Si in mandarin, moved into Manchuria in 1895 when Skidelsky’s great-grandfather won a contract to build a segment of the Trans-Siberian railway. The family later became well-known in the region for leasing its largest private coal-mine, making them one of Manchuria’s biggest employers. Although he’s written that his family history has mostly been a matter of “supreme indifference,” Skidelsky says he’s become increasingly interested in how his father’s side, a “very rich Jewish family,” helped open the Far East. “It’s contrary to the stereotype that Jews were very heavily persecuted,” he says. “Some undoubtedly were, but some were able to flourish.” In a 2006 article for Prospect, he describes his family’s success in Manchuria as “a microcosm of the first wave of globalisation – based on the railway, steamship and telegraph – which opened up east Asia to the world market over a century ago.”

“We tend to think of globalisation in terms of Europe and the United States,” he tells The House. “But there was also a big expansion of Russia eastward toward the Pacific. It’s what made Russia an empire.” Although Skidelsky was a direct product of this expansion, he doesn’t feel it has moulded his views on globalisation, a topic on which he’s written and spoken extensively. “After all, I was brought up in England since I was three, and I went through the whole English educational system,” he says. Still, he admits to having always felt like a bit of an outsider, looking at Britain from “a slightly distanced point of view.”

As he ages, Skidelsky says he “feels less partisan about things.” This is evident. For a man who has been involved in three political parties, one of which – the Social Democratic Party – he helped form, he seems positively sick of them. He distances himself from Labour by qualifying his involvement (“I wasn’t that active”), and although he says he enjoyed being a founding member of the SDP and has always been close to the Gang of Four (David Owen, Bill Rodgers, Shirley Williams, and the late Roy Jenkins), he regrets taking the Conservative whip when the party collapsed. “I’ve learned a lesson,” he says timidly. “I’ve concluded that the crossbenches are the place for me.”

The crossbenches are a nice fit not just because Skidelsky has never felt at home in any of the major parties, but also because it squares with his views about the House of Lords in general. “The place of an intellectual in the House of Lords is to be alongside politics but not in politics,” he says. “It’s to give advice to anyone willing to receive it and to try to influence public debate by the quality of what you’re saying rather than by emphatic partisanship.” Skidelsky says he understands the democratic case for reforming the Lords, but remains ambivalent. “The House of Lords is there and it’s not broken, or at least not fatally broken, so I would more or less leave it as it is,” he says. “If you tried to make the Lords directly accountable to voters rather than appointing them, you lose the kind of people who really know what they’re talking about.” Skidelsky undoubtedly counts himself among those kinds of people. He’s right to imply that by losing those like him, the Lords and indeed Parliament would be a different kind of place.