Meaders bemoans the "reduction of Keynes" - the integration of his less radical ideas into a "bankrupt free-market nonsense he spent the latter half of his life attacking."
In truth, though, the reduction of Keynes hasn't gone far enough. The left should forget him. His impact upon leftist economic thinking has been wholly pernicious.
His big idea - the use of state spending to underpin aggregate demand - was the solution to what we now know was only a temporary problem.
Keynes recognized that strong demand, and full employment, required that capitalists be confident enough to invest - that their "animal spirits" be high.
Now, at the time he was writing, the main threats to confidence were a repeat of the great depression and a communist revolution. The way to forestall these, thought Keynesians, was for the state to guarantee demand, partly by buying off workers. As Toni Negri put it in the essay cited by Meaders:
The [Great Depression] has destroyed confidence and certainty in the the future, has destroyed capital's fundamental convention that results and consequences must match up to expectations. So Keynes' first imperative is to remove fear of the future...Investment risks must be eliminated, or reduced to the convention, and the state must take on the function of guaranteeing this basic convention of economics. The state has to defend the present from the future.
However, since the 1970s at least, the threat of revolution or collapsing demand have not been the main threats to animal spirits. Rather, the threats - as perceived by capitalists, which is all that matters - have been variously, union militancy, high taxes, regulation and foreign competition.
In the face of these dangers, capitalists can argue plausibly that the maintenance of animal spirits requires the shrinking of the state and the crushing of working class power.
And herein lies the poisonous legacy Keynes gave the left. In giving them the illusory hope that a little state intervention could ensure full employment, he left power in the hands of capitalists. And that meant the left had no intellectual resources to fight against capitalists' claims that the maintenance of animal spirits (and hence full employment) required a weaker working class.
Now, you might reply to this that Keynes welcomed the "euthanasia of the rentier."
True. But this was not a revolutionary demand, as chapter 24 of the General Theory makes clear. Keynes' thinking was simple. High investment would lead to a high capital stock. And the law of diminishing returns meant that a high capital stock would mean low returns on capital. This is similar to the "stationary state" anticipated by classical economists, and actively welcomed by Mill.
What Keynes wanted was to "depriv[e] capital of its scarcity-value within one or two generations."
And herein lies a paradox and a tragedy for the left.
The paradox is that just a few years ago, it looked as if free markets, rather than the state, would make capital super-abundant, as Raghuram Rajan and Luigi Zingales point out here (pdf).
The tragedy is that just as it looked as if capitalism itself would kill off the rentier, India and China entered the global economy, providing capital with a new reserve army of labour and tipping the balance of class power back in favour of the capitalists.
I don't know how this new balance of forces will play out, but I'm pretty sure that Keynes has no answers for the left any more.