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Perhaps, thankless as we human beings are, we did not realize then how firmly and surely the wave bore us. But whoever experienced that epoch of world confidence knows that all since has been retrogression and gloom.”
     
—STEFAN ZWEIG
     
     
     
     
    T he great English economist (born in 1883) grew up in a stable, prosperous and powerful Britain: a confident world whose collapse he was privileged to observe—first from an influential perch at the wartime Treasury and then as a participant in the Versailles peace negotiations of 1919. The world of yesterday unraveled, taking with it not just countries, lives and material wealth but all the reassuring certainties of Keynes’s culture and class. How had this happened? Why had no one foreseen it? Why was no one in authority doing anything effective to ensure that it would not happen again?
    Understandably, Keynes focused his economic writings upon the problem of uncertainty : in contrast to the confident nostrums of classical and neoclassical economics, he would insist henceforth upon the essential unpredictability of human affairs. To be sure, there were many lessons to be drawn from economic depression, fascist repression and wars of extermination. But more than anything else, as it seemed to Keynes, it was the newfound insecurity in which men and women were forced to live—uncertainty elevated to paroxysms of collective fear—which had corroded the confidence and institutions of liberalism.
    What, then, should be done? Like so many others, Keynes was familiar with the attractions of centralized authority and top-down planning to compensate for the inadequacies of the market. Fascism and Communism shared an unabashed enthusiasm for deploying the state. Far from being a shortcoming in the popular eye, this was perhaps their strongest suit: when asked what they thought of Hitler long after his fall, foreigners would sometimes respond that he did at least put the Germans back to work. Whatever his failings, Stalin—it was often said—kept the Soviet Union clear of the Great Depression. And even the joke about Mussolini making Italian trains run on time had a certain edge: what’s wrong with that?
    Any attempt to put democracies back on their feet—or to bring democracy and political freedom to countries which had never had them—would have to engage with the record of the authoritarian states. The alternative was to risk popular nostalgia for their achievements—real or imagined. Keynes knew perfectly well that fascist economic policy could never have succeeded in the long-run without war, occupation and exploitation. Nonetheless, he was sensitive not just to the need for countercyclical economic policies to head off future depression, but also to the prudential virtues of ‘the social security state’.
    The point of such a state was not to revolutionize social relations, much less inaugurate a socialist era. Keynes, like most of the men responsible for the innovative legislation of those years—from Britain’s Clement Attlee through France’s Charles de Gaulle to Franklin Delano Roosevelt himself—was an instinctive conservative. Every western leader in those years—elderly gentlemen all—had been born into the stable world so familiar to Keynes. And all of them had lived through a traumatic upheaval. Like the hero of Giuseppe di Lampedusa’s Leopard , they understood very well that in order to conserve you must change.
    Keynes died in 1946, exhausted by his wartime labors. But he had long since demonstrated that neither capitalism nor liberalism would survive very long without one another. And since the experience of the interwar years had clearly revealed the inability of capitalists to protect their own best interests, the liberal state would have to do it for them whether they liked it or not.
    It is thus an intriguing paradox that capitalism was to be saved—indeed, was to thrive in the coming decades—thanks to changes identified at the time (and