Discover how Freudian psychoanalytic thought revolutionized John Maynard Keynes' economic theories. Explore the profound influence of Freud's ideas on Keynes' heterodox economic vision, from his early writings during WWI to the groundbreaking General Theory. Uncover the psychological approach to economic analysis, the psychoanalytic conception of money, and the integration of behavioral factors that challenged orthodox economics. Learn how Keynes' work was shaped by Freud's pioneering insights into human psychology and the unconscious, and understand the lasting impact on modern economic thought.
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[...] To what extent has Freud's analysis of the unconscious and human psychology influenced John Maynard Keynes' heterodox economic conception? According to economist J.A. Schumpeter: 'Taking into account all the "implicit" assumptions, one can say that the current value of the national income is "determined" by three functions or three curves, which Keynes honored with the title of "psychological laws": the consumption function, the investment function and the liquidity preference function.'" Through this famous quote, Schumpeter highlights the primacy accorded by Keynes to the psychological determinants of human behavior at the very heart of his economic theory with the General Theory, a primacy strongly influenced by the pioneering psychoanalytic approach of Freud on human psychology and the unconscious. [...]
[...] His ideas have been refined over the course of writing and numerous successive versions. It is in this context that the famous chapter 35, entitled 'The Auri sacra fames' is inscribed. In the heart of his economic exposition, Keynes explicitly refers to psychoanalytic theses on the nature of money. He directly quotes Freud, noting that according to the Viennese psychoanalyst, 'certain deeply rooted reasons in our subconscious want gold, and not another material, to satisfy powerful instincts and serve as a symbol'. [...]
[...] Indeed, according to Schumpeter, who perfectly identifies the essence of Keynes' contribution, these three laws, namely the consumption function, the investment function, and the liquidity preference, 'determine' the value of national income. They are therefore the fundamental and structuring elements. What is truly revolutionary in Keynes' approach is that he explicitly gives them a 'psychological dimension'. By presenting them as 'psychological laws', Keynes clearly anchors his analysis in the field of psychology. It is this very qualifier of 'psychological' that reveals the influence of the psychological discipline on his conceptualization. Beyond the technical term of he attributes to them a psychic scope. [...]
[...] The Early Writings of Keynes: A Psychological Approach to Economic and Political Questions Since his early writings during World War one can discern in Keynes' work an influence of Freudian psychology that only grows stronger over time. Several elements attest to this early but profound influence of Freud on the heterodox economic thought developed by Keynes. First, as early as 1919, the psychological portraits sketched in The Economic Consequences of the Peace The direct reference to notions from the emerging Freudian thought is directly mentioned. In his in-depth analysis of Woodrow Wilson, Keynes explicitly mentions "Freudian complexes". [...]
[...] And a few months later, he publishes an article praising the 'genius' of Freud in which he recognizes the contribution of his theories. His persistent references, sometimes anonymous, testify to his constant interest in Freud's thought. This interest is manifested in an even more evident way at the very heart of his economic writings. As early as 1930, in the Treatise on Money, Keynes explicitly refers to the psychoanalytic conception of money developed by Freud. This reference lays the groundwork for his future monetary theory. [...]
