The great economist would strive to understand the other side and focus only on the future

WOULD John Maynard Keynes be a Brexiteer or a Remoaner? The great 20th-century economist started out as a free-trader. But he argued against “economic entanglement among nations” in an essay titled “National Self-Sufficiency” in 1933. Goods should be “homespun” wherever possible, he wrote, and “above all, let finance be primarily national.” By 1945 Keynes was an internationalist again.

If nothing else, Lord Keynes was a pragmatist (“When the facts change, I change my mind. What do you do?,” he apocryphally said.) What is certain is that he would be at the negotiating table.

How Keynes would handle Brussels today is clear from a speech to the House of Lords in December 1945 on Britain’s post-war financial dealings with America. In it, he sets out what it means to get the best deal possible, even in unfavourable circumstances.

Keynes was a seasoned negotiator. He represented Britain at the Versailles peace conference in 1919. And he led the delegation that set up the Bretton Woods system on exchange rates, the World Bank and the International Monetary Fund in the mid-1940s.

The 1945 speech, four months before he died at age 62, was in effect his “last words” to British policymakers. Keynes would have three tips for Britain’s negotiators today.

First, Keynes would encourage negotiators to understand the position of their counterparts in Brussels. He implored British politicians to understand the mood in Washington. “No one would easily accept the result of these negotiations with sympathy and understanding unless he could, to some extent at least, bring himself to appreciate the motives and purposes of the other side,” he stated. Hence, today’s negotiators should look beyond the facts to understand the Eurocrats’ motives and purposes, as well as their difficulties.

Keynes would encourage negotiators to understand the position of their counterparts in Brussels

Understanding their psychology—their “pride”, “temper” and “habit”—will strengthen Britain’s negotiating position, he argued. Britain should bear in mind that the major objective of negotiators in Brussels is the preservation of the European project. The European Union cannot afford to be too lenient on Britain, for fear that other countries will follow suit.

This idea—that the symbolism of a deal is as important as the deal itself—is something that Keynes would counsel Westminster today. In 1945 it was a recognition that the terms extended to Britain would form the expectations of other allies. “We naturally have only our own requirements in view,” he told his fellow peers, “but the United States Treasury cannot overlook the possible reaction of what they do for us on the expectations of others.” A good understanding of the other side will “minimise the causes of friction and ill will between nations” and maximise the chances of a just deal.

Second, negotiators should avoid using Britain’s past contributions to the EU as a negotiating tool, while at the same time being mindful not to expose Britain’s present weaknesses. Instead, Britain should focus on the future. Persuade Brussels of its future value to the EU, as a political ally as well as a trading partner.

As Keynes explained in 1945, reiterating Britain’s contribution to the war was not an effective negotiation tactic: “It was not our past performance or our present weakness but our future prospects…and our intention to face the world boldly that we had to demonstrate.”

Persuade Brussels of Britain’s future value to the EU, as a political ally as well as a trading partner.

Third, negotiators should demonstrate their commitment to the development of the international trading system, showing the EU that Britain remains a desirable trading partner. As Keynes declared: “Above all, this determination to make trade truly international and to avoid the establishment of economic blocs which limit and restrict commercial intercourse outside them, is plainly an essential condition of the world's best hope, an Anglo-American understanding, which brings us and others together in international institutions which may be in the long run the first step towards something more comprehensive.”

If Keynes were alive today, he would probably relish navigating the intellectual and political minefield that is Brexit. However, it is unlikely he would have supported it in the first place. Keynes often warned of the dangers of sacrificing present well-being for an uncertain future. “Our power of prediction is so slight, it is seldom wise to sacrifice a present evil for a doubtful advantage in the future”, wrote Keynes at age 21 in “The Political Doctrines of Edmund Burke” in 1904.

Keynes would certainly appreciate the difficulties of extracting Britain from the EU, and the risks of damaging the economy, society and the political climate. As to whether leaving the EU might provide long-term economic benefits—as Brexiteers claim—that’s a timescale in which Lord Keynes would gleefully note we’ll all be dead.

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Read Keynes’s speech: Anglo-American Financial Arrangements