Encuesta sobre la Cultura de la Seguridad del paciente

The stabilization of commodity prices is not commonly regarded as an important theme within Keynes’s broader concern for macroeconomic stability. Yet, for two full decades, between 1923 and 1943, Keynes repeatedly addressed this issue, analysing the wide fluctuations of prices and stocks of staple goods, condemning the ensuing problems for both producers and consumers, investigating the causes of those fluctuations and the ineffectiveness of speculation in reducing them, and suggesting possible remedies, particularly in the form of buffer-stock schemes. The continuity of his interest for the matter and the originality of his contributions have been

appropriately emphasized by Sabbatini (1989) and by Dimand and Dimand (1990).3 However, those authors overlook several relevant writings, both published and unpublished, which span over two decades and may help appreciate more fully the peculiarity of Keynes’s explanation for commodity price fluctuations and the rationale for his buffer-stock proposals.4 Here we shall attempt to provide a general review of all the various writings, both academic and political, that Keynes dedicated to this issue, together with the peculiar instances that occasioned them, in order to be able, in the next two sections, to analyse their content and the policy indications that they suggest.

As an economist, Keynes was particularly concerned with the stability of the economic system as a whole. However, his interest for the functioning of commodity markets began as a practitioner rather than as a theoretician (Fantacci, Marcuzzo and Sanfilippo 2010). Already in 1920, he started to invest in various commodities, ranging from metals to cotton to wheat. His first written contribution on the subject came only a few years later, in March 1923, with an article in The Manchester Guardian Commercial, European Reconstruction Series, entitled ‘Some Aspects of Commodity

Markets’ (Keynes 1923a). At the same time, Keynes started to edit a series of Special MemorandaonStocks of Staple Commodities for the London and Cambridge Economic

Service. He produced altogether seven issues between April 1923 and September 1930, where he collected and commented periodical data on the volume of surplus stocks throughout the world, with a view to provide information ‘of the utmost importance both to businessmen and to economists’ (Keynes 1923b: 267).

From his practical acquaintance with commodity markets, both as an investor and as the editor of these enquiries, Keynes must have drawn quite early the impression that competitive markets did not provide adequate incentives for the private storage of raw materials that could have contributed to even out fluctuations in their production. In fact, only three years passed before he published a further article, this time discussing the scope for government intervention on commodity markets. It was written in reaction to a declaration by Herbert Hoover, then US Secretary of Commerce, who criticized all forms of output or price control. Keynes’s contribution appeared in The Nation and Athenaeum in June 1926 with the title ‘The Control of Raw Materials by Governments’

3 _{Brief accounts of Keynes’s interest for commodity policy, mainly focused on the schemes he developed}

during World War II, are provided also by Tonveronachi (1981) and by Kaldor (1983) in their reviews of vol. XXVII of the Collected Writings.

4 _{We have already suggested (Fantacci, Marcuzzo, Rosselli and Sanfilippo 2012) the strong coherence}

between those proposals and the theoretical framework developed by Keynes, particularly in the

(Keynes 1926), and aimed at underlining the peculiar merits of buffer-stock schemes, with respect to other commodity policies, in supplementing the lack of private storage.

Keynes stressed the chronic insufficiency of commodity stocks also in crucial passages of his major theoretical writings. Chapter 29 of the Treatise on Money

indicates the obstacles to the accumulation of stocks of raw materials as a factor that aggravates the trade cycle. In a special section, he also discusses the role of forward markets, arguing that their existence does not help to reduce the fluctuations of commodity prices on spot markets. Chapter 17 of The General Theory discusses the

advantages of money with respect to commodities as a means of storing wealth, and the depressing consequences on investments and employment.5 These two texts provide a thorough analysis of the problem of the insufficient incentives to the private holding of stocks, but they do not mention buffer stocks as a possible solution.

It was in 1938 that Keynes turned to advocate ‘The Policy of Government Storage of Foodstuffs and Raw Materials’ in an article published under this title in the September issue of The Economic Journal. The occasion was provided by the Essential

Commodities Reserve Bill being approved by the House of Commons in May with the purpose of building up strategic reserves in the prospect of war. Keynes argued that a similar policy would be equally desirable to ‘tackle the problems of peace’ (Keynes 1938: 463), and developed a detailed scheme to promote private storage of raw materials in public warehouses. Due to Keynes’s health problems, the paper was read by Gerald Shove at the August meeting of Section F of the British Association for the Advancement of Science, and received positive comments both by participants and in several newspaper articles, ‘nearly all expressing cautious agreement’ (letter from Keynes to Shove, 23 August 1938, in JMK 30/PS/6/249-50).6 Most prominently, Keynes’s proposal was presented and discussed in the cover article of The Economist on

August 20, 1938, significantly entitled ‘The New Joseph’, as it credited Keynes for having raised an issue that ‘since the days of Joseph […] has hardly received the attention it deserves’. Keynes also sent copies to a number of authorities, hoping that his proposal might be put into practice, yet to no avail.7

The design and negotiation of post-war economic arrangements offered Keynes a further occasion. Already in the early drafts of the proposal for a Clearing Union, he

5 _{Keynes’s views in this respect will be more widely discussed in the next section.}

6 _{References beginning with JMK are to the documents preserved in the papers of John Maynard Keynes,}

Modern Archive, King’s College, Cambridge UK.

7 _{In particular, he sent copies of the paper to Oliver Stanley, President of the Board of Trade, to Sir} Thomas Inskip, Minister for the Co-ordination of Defence, and to Henry Wallace, US Secretary of Agriculture, and author of a similar scheme for wheat, ‘the ever-normal granary’ (CWK XXI: 470-6).

envisaged a role for international buffer stocks (Keynes 1941: 39-40). Harrod encouraged him to work on a parallel scheme, entirely devoted to commodities (Harrod 1951: 531). Between January 1942 and February 1943, Keynes produced a plan for the international regulation of primary products, elaborating nine successive versions in the attempt to take account of major criticisms and to win broader support for the proposal.8 The last draft was eventually endorsed by the British government, but it was even less successful than the Clearing Union within Anglo-American post-war planning. In fact, the buffer-stock plan not only was not adopted, but it was never put forward as a formal British proposal (Skidelsky 2000: 239). Perhaps even the commitment of Whitehall was not all so strong, if it is true, as Meade reports, that, when the buffer-stock plan was taken in front of the Cabinet, ‘Churchill, who was preoccupied with aspects of the war itself, took little notice and was heard to ask afterwards “What’s all this about Butter Scotch?”’ (Williamson 1983: 132). However, let us proceed in order and, before describing Keynes’s proposed solution to commodity price fluctuations and how it failed to be adopted, let us consider his explanation of their causes and effects.