Keynes revisited

Eighty years ago, on April 19th, 1933, John Maynard Keynes, the greatest economist of the age, came from Cambridge to deliver the inaugural annual Finlay lecture at University College Dublin. Crowds flocked to the physics theatre in Earlsfort Terrace, where UCD was then located.

They were times not unlike the present. The Wall Street crash of 1929 had brought years of hectic prosperity to a dramatic close, so undermining the blind faith in free markets that had been the economic gospel of the booming 1920s. Various forms of state intervention, including tariff barriers, were being tried in different countries as a way out of the worldwide depression that had followed the crash.

In Ireland there was an added dimension. Éamon de Valera’s government, first elected in 1932, was locked in an economic war with Britain because it had reneged on the previous government’s commitment to pay annuities collected from farmers for holdings acquired from landlords with government funds under pre-independence Land Purchase Acts.

The British government took measures effectively closing its market to cattle, our main export earner. The Irish government retaliated and its supporters chorused the refrain: “Burn everything British except coal”.

In January 1933 de Valera was re-elected with an enhanced majority on a programme of economic self-sufficiency, features of which were industrial protection and the promotion of tillage to serve the home market and provide more employment in agriculture.

Keynes took as his subject “‘national self-sufficiency”. He was wavering in his former commitment to free trade which was then, as it has become again, the conventional wisdom of economists. De Valera, who was present, was doubtless gratified to hear the great economist say, “If I were an Irishman I would find much to attract me in the economic outlook of your present government towards greater self-sufficiency”.

This ringing endorsement survived in folk memory. It was forgotten, even by historians, that "as a practical man" Keynes had gone on to encourage the Irish to enter into an economic arrangement with Britain to retain her traditional market for agricultural products. He had added that "a terrible wound would have been inflicted on the fair face of Ireland if within two or three years her rich pastures were ploughed up and the result were a fiasco" – a remark that provoked de Valera's Irish Press to retort that "Mr Keynes's words show how unwise wise men can be when they speak on countries with economics different from their own".

But Keynes, for his part, had been more impressed meeting de Valera than by his predecessor Cosgrave whom Keynes described privately as “such a 19th-century liberal”. His counsels of caution were designed to guide rather than discredit the aspirations of an Ireland which, he remarked, had “lifted a lively foot out of the bogs to become a centre of economic experiment”. When he returned to England he nudged friends in government towards a settlement with de Valera.

Keynes was then inching his way towards his celebrated general theory that the stimulus provided by government expenditure rather than cutbacks or lower wages is the way to reduce unemployment. The Irish government, he counselled, should set out to make Dublin a splendid city fully endowed with all the appurtenances of art and civilisation to the highest standards of which its citizens were capable. Money thus spent, he added, would not only be better than any dole but would make such a dole unnecessary.

The Finlay lecture had been instituted by subscription to honour the Jesuit Tom Finlay who had just retired, aged 81, as professor of political economy at the college. Fr Finlay had, as a founder of the co-operative movement and in other ways, been a healing and constructive force in Irish life, often swimming against the prevailing tides of bigotry and extremism.

With Keynes as the inaugural lecturer, UCD was able to attract eminent economists to Ireland to give subsequent Finlay lectures. On the retirement in 1961 of the kindly Senator Professor George O’Brien, who had been the prime mover in instituting the lecture, friends and grateful graduates provided further funding. Henceforth it was the Finlay O’Brien lecture.

Sadly no Finlay O’Brien lecture has been held since 1996. It seems wrong that a series inaugurated by Keynes and commemorating two of the towering figures in the history of the college should have been allowed to lapse.