In Keynes and His Critics: Treasury Responses to the Keynesian Revolution, 1925–1946, G. C. Peden offers a comprehensively annotated collection of Treasury writings drawn from the interwar years through to the end of World War II, one that should interest scholars from range of disciplines. He traces the evolution of debates between Keynes and Treasury officials over the gold standard, the “Treasury View” of fiscal policy, Keynes's General Theory itself, “how to pay for the war,” and proposed postwar domestic and international orders. In the process, Peden provides not only a truly important collection of primary sources but also a running commentary that offers key insights into the ideological, institutional, and political forces that shaped Treasury positions.

Peden's analysis will be of particular interest to scholars interested in the role of ideas and socialization in policy debates. Indeed, one of the most important factors that Peden highlights is the intellectual background of Treasury officials themselves. These officials were for the most part not professional economists. Among the top Treasury personnel, only Sir Ralph Hawtrey had a formal background in the discipline. This leads Peden to downplay the ideological importance of classical economic theories in explaining opposition to early Keynesianism. He argues instead that Treasury officials’ concerns stemmed from their institutional fears of the politicization of the budgetary process. Peden argues that Treasury officials saw themselves as having “inherited a tradition, going back to Sir Robert Peel and William Gladstone, whereby, at least in theory, the state should be politically neutral as between different economic interests and should interfere with market forces as little as possible” (3).

In this light, Peden suggests that Treasury officials engaged not so much in a head-on theoretical debate with Keynes as they criticized deficit spending from a “public finance” vantage. For example, in discussing the Treasury reaction to the June 1929 Labour plan for a fiscal stimulus, Peden cites the reaction of Sir Richard Hopkins that “according to the time-honoured principles of public finance, [expenditure] should be paid out of revenue” (87). Into 1944, Peden notes that Sir Wilfred Eady countered calls for the postwar deficit spending, arguing that “unproductive expenditure may be pushed unduly, merely because it puts men to work” (319). Emphasizing the importance of investments that could be recouped over the long run, Eady stressed the need to consider “the present and future value of that employment” rather than ostensible macroeconomic effects on aggregate demand (319).

To be sure, Keynes himself devoted considerable efforts to overcoming these biases, seeking to persuade Hawtrey—as, again, the sole professional economist on the Treasury staff—in order to reshape the views of other Treasury officials. Yet, Keynes ultimately found himself incapable of getting his arguments across (154–55). Peden recounts that Keynes had found Hawtrey's comments on his Treatise on Money “tremendously useful.” Yet, Keynes was later to be “disappointed by the paper … that Hawtrey wrote for internal Treasury use” on The General Theory. Keynes felt that “there were many passages that indicated that Hawtrey had not rightly understood his argument” and that the Treasury view would remain unchanged (154).

Nevertheless, while Peden offers a real contribution in “rescuing” Treasury views from oblivion, it is somewhat ironic that his representation of Keynesianism itself is often more in accord with what might be termed a “Neoclassical Keynesianism” than with Keynes's own views. Peden treats Keynesianism as primarily a theory regarding the use of fiscal policy to prevent falling demand from “result[ing] in general unemployment” (5). Yet, Keynes's own view of his theory amounted to far more than a mere “fiscalism.” Keynes's arguments stemmed from a fundamental view of market actors as essentially social agents. He saw economic actions and choices as driven more by social convention than unambiguous market incentives. In the General Theory, Keynes argued that—for private agents and public officials alike—“knowledge of the factors which will govern the yield of an investment some years hence is usually very slight and often negligible.” For this reason, market agents would “fall back on what is, in truth, a convention” or assume that “the existing state of affairs will continue indefinitely” (J. M. Keynes, The General Theory of Employment, Interest, and Money [New York, 1935], 149, 152). This provided the justification for more than simple fiscal activism, legitimating wider efforts to define varied wage, price, and investment guidelines; stabilize expectations; and contain market excesses. Of course, to be fair, Peden's narrow representation of Keynesianism may simply be a function of his historical focus—on internal Treasury debates, rather than broader academic controversies.

Taken as a whole, this volume not only fills an important gap in scholarly understandings but also contains an innovative—albeit implicit—argument regarding the importance of institutional forces in economic policy making. By highlighting the reliance that Treasury officials placed on not formal models but rather institutional imperatives, Peden's analysis speaks directly to debates over the bases of economic interests. The Treasury economists thereby appear to have been much more political economists than is often recognized. In sum, Peden offers an impressive contribution to scholarly understanding of Keynes, his critics, and the emergence of the postwar macroeconomic order.