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When Keynes went to America

The first Bretton Woods meeting was intended to establish a postwar money regime and secure funds fo

The night the Mount Washington Hotel opened in 1902, its builder, the New Hampshire coal and railroad magnate Joseph Stickney, raised a glass to “the damn fool who built this white elephant”. With its octagonal towers and 300 yards of wooden verandah, its 234 rooms each with its own bath, its telephone and mail system, and its interminable corridors, set in endless New Hampshire wilderness, this colossal monument to the Gilded Age somehow survived the Depression and wartime shortages to its appointment with financial history in July 1944.

As allied armies fought their way into Normandy, some 730 finance ministers, delegates and clerks from all 44 allied countries, including China and the Soviet Union, gathered for three weeks at the Mount Washington to plan the postwar monetary and trading order.

The United Nations Monetary and Financial Conference, better known from the hotel's railway stop and mail address as the Bretton Woods conference, established a currency regime and two powerful institutions, the International Monetary Fund and the World Bank. The role of Bretton Woods in the postwar recovery is, as always with economists, disputed but the name still evokes, for men such as Gordon Brown or Nicolas Sarkozy, an idea of order in a chaotic financial world.

The gestation of the Bretton Woods conference, as the long-serving US diplomat Dean Acheson put it, "about doubled that of elephants". It arose in the minds of two men of different temper and background but equal brilliance and arrogance: the British economist John Maynard Keynes and Harry Dexter White of the US Treasury. At their backs, like a ghost, was the German banker who served the Nazis till he fell out with Hitler in 1938: Hjalmar Schacht.

The Victorian system for settling international transactions, known as the international gold standard, had come to grief in the Depression of the 1930s. A succession of countries, led by Britain, detached their currencies from gold rather than be forced by a fixed exchange-rate to cut demand and add further to unemployment. Britain erected a trade tariff round the British empire, known as Imperial Preference, while other countries devalued their currencies to export at any price. By the summer of 1941, when Keynes retired to his country house in Sussex to think about a successor to the international gold standard, Britain was in a desperate plight, in debt not just to the US but to the countries playing host to her armies, such as India and Egypt. Without currency controls, Britain was bankrupt.

Keynes envisaged a sort of supernational bank in which trading accounts would be settled not in gold, but in a sort of artificial or bank money that would be available to members as an overdraft facility according to their share of world trade. Behind it would stand the greatest creditor nation, the United States.

As Keynes's biographer, Professor Robert Skidelsky, writes: "Provided all countries were guaranteed sufficient quantities of reserves, it might be possible to dismantle the trade barriers which had grown up in the 1930s and during the war and restore the single world which had vanished in 1914."

In devising this plan, Keynes admitted to drawing on Schacht's ingenious use of bilateral clearing arrangements to permit the Third Reich to continue importing raw materials for its military build-up in the 1930s.

Keynes, desperate to get away and rest, took the meetings at breakneck speed. On

19 July, he collapsed on the hotel stairs

In Washington, Dexter White, director of monetary research at the US Treasury, was also thinking about "future currency arrangements" but from a different viewpoint. From President Roosevelt down, the US could not care less about preserving the British empire. The US wanted currency convertibility and open markets for its exports as soon as possible. The compromise between the Keynes and White plans, which were published in 1943, became known as the Bretton Woods System.

The process began in an atmosphere of mistrust. At his first meeting with Henry Morgenthau, the US treasury secretary, Keynes tactlessly suggested that Britain would use US military aid to build up its cash balances. Keynes and his staff objected to the number of lawyers on the US side and made snide remarks about "rabbinics", by which they meant the precision and subtlety of the Jewish officials at the Treasury such as White and Edward Bernstein.

Eventually, Keynes and White devised a system in which only the US dollar would exchange at a fixed rate into gold. The allies had to make their currencies convertible into these gold dollars within 1 per cent of a fixed rate, but could draw on short-term assistance from a stabilisation fund to which all members subscribed and the US, naturally, subscribed most. In addition to this fund, now christened the International Monetary Fund, White and his staff had devised a bank to finance the rebuilding of war-damaged economies. This International Bank for Reconstruction and Development still forms the core of what is now known as the World Bank.

Lord Keynes was by now ailing and could not bear the thought of working through the Washington summer. With great courtesy, the Americans agreed to hold the drafting meetings in Atlantic City on the New Jersey shore and the main conference in the cool of New Hampshire. Arriving with Keynes by train on 30 June, Lydia Lopokova, the Russian ballerina whom Keynes had married in 1925, found chaos: "The taps run all day, the windows do not close or open, the pipes mend and unmend and no one can get anywhere."

They were lodged in the room above Morgenthau, and for three weeks the US treasury secretary was disturbed by Lady Keynes's dancing exercises.

With much of the main work done, the conference itself consisted mostly of a British rearguard action to delay the convertibility of its debts and much detail of a mind-numbing complexity. Desperate to get away and rest, Keynes took the meetings on the bank at a breakneck pace. As Acheson reported: "Keynes . . . knows this thing inside out so that when anybody says Section 15-C he knows what that is, but before you have an opportunity to turn to Section 15-C and see what he is talking about, he says, 'I hear no objection to that', and it is passed."

On 19 July, Keynes collapsed on the hotel stairs, and word spread that he had had a heart attack. According to Skidelsky, the German newspapers ran adulatory obituaries. On 22 July, Keynes had recovered enough to propose acceptance of the conference's final act. As he left the room, many of the delegates stood and sang "For He's a Jolly Good Fellow". Within two years, Keynes was dead and White survived only two years longer, bedevilled in his last years by allegations of disloyalty in his dealings with the Soviet Union.

Some economists, such as Milton Friedman, have questioned whether Keynes and White were correct in their analysis and, even if they were, whether Bretton Woods was the solution. Others argue that such measures as the $3.75bn American loan to Britain in 1945, the $13bn Marshall Plan of 1948 and the 30 per cent devaluation of sterling in 1949 did more to revive Europe. The system of semi-fixed exchange rates just about survived the 1960s but the US, under pressure from financing the war in Vietnam, abandoned gold convertibility in 1971. The two Bretton Woods institutions, the IMF and the World Bank, have been criticised for imposing quasi-colonial conditions on third world borrowers. The IMF is also undercapitalised in the face of the current financial crisis.

When Gordon Brown calls for a new Bretton Woods, he is evidently not calling for a currency peg or an infrastructure bank but for a halcyon age of idealism and Anglo-American amity - above all for that ideal or hero of modern times embodied in John Maynard Keynes, the economist as saviour.

James Buchan's latest novel is "The Gate of Air", published by the MacLehose Press

Thirteen things you may not know about John Maynard Keynes

  • He was born the year Karl Marx died, 1883.
  • He was 6ft 6ins tall.
  • When he took civil service exams in 1906, his lowest scores were in economics and maths because, he used to say, he knew more than his examiners.
  • Duncan Grant, with whom Keynes had a long affair, painted him writing a letter asking the US for a loan to continue the 1914-18 war.
  • At the age of 42, he married the Russian ballerina Lydia Lopokova.
  • A regular investor, he lost, then recovered, a fortune in the 1929 crashing stock market.
  • A close friend of Kingsley Martin, he joined the board of the New Statesman in 1931.
  • He bred pigs at his Sussex home.
  • He amassed one of the largest private collections of 20th-century art, with works by Braque, Cezanne, Degas, Modigliani, Picasso, and Seurat.
  • A director of the British Eugenics Society, he described it in 1945 as the most important branch of sociology.
  • During the Bretton Woods conference in 1944. he suffered a heart attack and German newspapers published his obituary.
  • At the conclusion of Bretton Woods, delegates acknowledged Keynes's achievement by singing "For He's a Jolly Good Fellow".
  • In 1946, he suffered a second heart attack and died. It was attributed by some to the effort of securing a $3.75bn loan from the US, a negotiation that Keynes himself described as "absolute hell" .

This article first appeared in the 10 November 2008 issue of the New Statesman, Change has come

MATTHIAS SEIFARTH FOR NEW STATESMAN
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Moby: “The average American IQ is around 98”

Moby, the vegan king of chill-out pop, talks wealth, David Bowie’s hat and the average intelligence of his fellow Americans.

In January 2012, two women walking their nine dogs on the hill beneath the Hollywood sign found a man’s severed head wrapped in a plastic bag. His decomposing feet and hands were discovered nearby. First theories pointed to the work of a Mexican drug cartel, or the murderous Canadian porn actor Luka Magnotta. The story piqued the interest of the electronic dance music mogul Moby, who wrote about it in a New Statesman diary in May this year.

Today, the smell of cedar and pine hits you on the canyon path, which is hot, steep and sandy – an immediate wilderness in one of LA’s most exclusive areas. The Griffith Observatory shines like a strange white temple on the hill. Brad Pitt, a local resident, was doorstepped after the head was discovered: he lives near Moby on the streets of Los Feliz, near Griffith Park, where the only sounds are hedge strimmers and workmen’s radios. Moby’s 1920s mansion is all but obscured by Virginia creeper.

As we sit down at his kitchen table, Moby tells me that the body parts were found to belong to a 66-year-old Canadian flight attendant called Hervey Medellin. Shortly before Medellin’s disappearance, his boyfriend, Gabriel Campos-Martinez, had used a computer in the flat they shared to find an article titled, “Butchering of the human carcass for human consumption”. The head, feet and hands showed signs of having been frozen: the rest of the body was never found. He says it was one of those rare times in life where reality was more intriguing than the conspiracy theories.

Moby, of course, eats no meat. Fifteen minutes’ drive away in the hipster neighbourhood of Silver Lake, his vegan bistro, Little Pine, serves a variety of plant-based dishes, proceeds from which go to animal rights organisations including the Humane Society and Peta. His own music is never played there. We are meeting to talk about his new album – but, he says: “It’s 2016 and people neither buy nor listen to albums. And they certainly don’t listen to the 16th album made by a 51-year-old musician. I don’t care if anyone gives me money for this music or for live shows ever again. Once a record’s released, I couldn’t care less what happens with it. I liked making it, but I don’t care.”

He is currently working his way though the stages of grief outlined by the psychiatrist Elisabeth Kübler-Ross. To denial, anger, bargaining, depression and acceptance he has added a new phase: Schadenfreude. On the night of the US election, he left the house at 6pm west coast time to watch the coverage with some friends. He checked his usual round of sites on his phone: CNN, the New York Times, the Washington Post, Nate Silver’s FiveThirtyEight, the Guardian, the Huffington Post, the BBC, politico.com. He was concerned to see that no one was calling any of the early states; with Obama’s election, exit polls suggested the victory by noon. Days earlier, Moby had been predicting humanity’s “wake-up call” in the form of the destruction of Greenland or a zoonotic virus – but not this. He is softly spoken, with a quick laugh and the kind of intelligence that seems to warm him up from the inside when he talks, but today he is angry.

“It is disturbing on so many levels,” he says. “One, that we have elected an inept racist as president. Two, just seeing how dumb and delusional so many Americans are. Because really – in terms of the subsets of people who would vote for Trump – you have to be delusional, or racist, or stupid. I am so confused as to the fact that such a high percentage of Americans are either really stupid or incredibly bigoted.”

The stupidity of Americans is, he says, a matter of “anthropological curiosity” – or simply demographics. “The average American IQ is around 98,” he notes. “So that honestly means – in a vaguely non-pejorative way – that there are a lot of really, really dumb people. The nonsense that people were spouting before the election – that Trump was a good businessman, for example? This phenomenon has been particularly egregious of late: people have an almost adversarial relationship with evidence. Climate-change deniers are another example.”

As a self-described old-timey alcoholic, Richard Melville Hall (nicknamed Moby by his father in honour of his great-great-great-uncle Herman) has a pervasive interest in neurochemistry. He uses it to explain much of the past six months in Western politics. Our failing political systems – the subject, in fact, of the album he doesn’t want to talk about – are underpinned by “a kind of delusional motivation, which is basically to ignore the countless things that are actually going wrong in the world and focus all your attention on things that are arbitrary. In the United States, you have people who have perfectly good jobs in safe communities who are obsessed about Mexico, crime and unemployment. We have these quasi-Orwellian responses to stimuli, and they come from a place of fear and scarcity. Humans are still built to amass as much wealth as possible, and fight off the enemies as quickly as possible, but the only threats are the ones we generate ourselves.”

There’s a dishcloth on the table, a few magazines, a bit of a draught and Moby in a black hoodie pouring two glasses of water.

Fear and scarcity pervade American society, he says, because social policy is an extension of corporate process and “nothing is free from the cadres of professional lobbyists”. Meanwhile the ravenous news consumption that helped drive Trump reflects a human addiction to the “neurochemical jolt” of engaging with the media.

“People have a profound and almost feral attachment to that which makes them feel good in the moment,” he says. “Without thinking of long-term consequences, does their belief give them a shot of dopamine right at this second? If so, they hold on to it. Eating junk food, voting Brexit and voting for Trump.”

 

***

 

Moby is the model of an addictive personality well-practised at controlling itself. He was a fully fledged alcoholic by his early twenties: at ten, he’d been given champagne and made himself the promise, “I always want to feel this good.” Now, he cannot touch a drink, but his modern-day addiction, he says without a beat, is his phone. Every thought is pursued to extremes. He recently released an animated video for a new song, “Are You Lost In the World Like Me?”, showing a procession of grotesque, phone-addicted cartoon characters filming a girl as she throws herself off a skyscraper and hits the ground.

The house is vaguely baronial, airy and open-plan: all dark wood and furniture polish. An Annie Hall poster in the pool house; a coyote postcard on the kitchen wall.

This particular property is a result of serious downsizing: Moby has a habit of buying very big places, doing them up and then moving out. When he was still in New York, he bought a remote mountaintop retreat in Kent Cliffs, 50 miles north of Manhattan. He created a magnificent bedroom of 1,500 square feet with ten skylights – but quickly learned he could only get a decent night’s sleep when he pulled his mattress into the cupboard. He told the New York Times that, living all alone in the big house, he “felt like Orson Welles at the end of Citizen Kane”.

He moved to LA in 2010, swapped vodka for quinoa smoothies and took the keys for another large building – the Wolf’s Lair, the turreted, 1920s Gothic castle in Hollywood once inhabited by Marlon Brando, with the swimming pool historically used for porn movies and the hidden tiki bar. He bought it for $4m and sold it for $12.5m four years later – allegedly to Banksy. He rattled around in that house, too. Right on cue, he tells me: “I felt like Orson Welles at the end of Citizen Kane.”

On the one hand, these were sensible ­investments for the man who’s sold 20 million records; on the other, large impersonal spaces appealed to Moby long before he was in a position to buy them. Raised by his single mother on food stamps and welfare in Darien, Connecticut, he started his adult life squatting an abandoned lock factory, where he could ride his moped around his bedroom, piss into a bottle and read battered Star Trek paperbacks while working on early demo tapes, rather like a ragged, vegan version of the boy in the movie Big.

He was very happy in his penniless state, as he records in his memoir, Porcelain. He’d like to propose something he calls the End of Wealth – but we’ll come back to that.

In the past few years Moby has broken free from the “Beckettian purgatory of touring”. When his biggest-selling album, Play, was released in 1999, his music career was effectively “over”. Before Play, he had changed creative direction, going from progressive house to ambient to thrashy punk – to which he has just returned – and no one knew what to do with him. The only reason he hadn’t been dropped by his UK label, Mute Records, was that its owner, Daniel Miller, was “an old egalitarian socialist”.

Play sampled slave songs of the Deep South – recorded by the ethnomusicologist Alan Lomax in the 1940s – and wove them into a backdrop of cerebral chill-out. The songs of pain and emotion took on an eerie neutrality, and TV shows and ad companies came calling. He was approached by Will and Grace and Grey’s Anatomy. At that point, selling records and touring were still more lucrative than licensing a song to TV – and licensing a song to TV was still considered selling out. But Moby considers himself an ugly duckling: “If someone who was once unattractive suddenly gets asked out on loads of dates, of course they say yes a lot.” He licensed every song on Play and it became the soundtrack of the millennium.

His memoir was unusual because it concentrated on the ten-year period before he got famous. It captured his enthusiasm – and his strangeness – at its source and showed him to have a sense of humour that may have passed people by the first time round. “I’m in London! London!” he wrote. “Benny Hill, Joy Division, Peter O’Toole!” He visited the vegan café in Covent Garden.

The book is filled with money: or with the constant, practical concern of not having it. Navigating poverty is an everyday routine: he is an “alchemist” turning used beer bottles into nickels at the recycler, and thence into soya milk and oranges. In his early twenties he becomes a Christian, partly so that he can repeat the Sermon on the Mount at Bible classes in the households of Greenwich Village and “judge” the rich children.

Book two, which Faber & Faber is waiting for, is more difficult. The period of his fame and fortune in the 2000s is too much of a cliché. “Ten years ago I was entitled, narcissistic, bottoming out, alcoholic, selfish and feral. Robbie Williams has done that story, so has Ozzy and Mötley Crüe. Who wants to read that? It’s tautological.”

Instead, he has decided to write about the first ten years of his life. It will look into his relationship with his mother, who loved him but raised him in various drug dens. He was at her side when she died in 1997, but he missed her funeral, having woken late in the morning to discover that at some point in the night he must have got up and set his alarm clock three hours late. He took a taxi to the wake, worrying about the fare, and for reasons he can’t really explain, turned up cracking jokes.

He has a strange nostalgia for the kinds of friendships you have in early adulthood, when everyone is equal, “before that point when someone starts making money and they think they’ve won: they’re going to have access to a different kind of happiness”.

In 2003, when he turned 38, he was famous, wealthy and miserable. “I’ve been able to see and inhabit almost every stratum on the socioeconomic scale, from extreme poverty and obscurity to wealth and fame, and it gives me an insight into it,” he says. “Because a lot of people who experience wealth are born into it, and a lot of people who experience poverty never leave it. I can safely say that for me there has been no causal effect between increased fame and wealth and increased basic happiness and well-being.”

When Moby talks about himself, he applies many apologetic epithets: clichéd, meditating, yoga-loving, mealy-mouthed. In 2007 he developed mobygratis.com, a large online resource offering independent film-makers and film students a licence to use his music for free. If their films are commercially successful, the revenue from licence fees must go to the Humane Society. He says he wants to propose a more rational, evidence-based approach to wealth.

“We are still attached to the idea of the redistribution of wealth,” he says. “As progressive lefties, we’re all brought up to think that is a good idea. In the old days, it meant the difference between eating and not eating. Nowadays the person on $30,000 consumes twice the calories of the millionaire, and has a bigger TV and works fewer hours.

“There is an underlying assumption that if wealth were distributed more evenly then people would be happier, but there is unfortunately very little anthropological or sociological evidence to support that idea, unless there are institutions to support the basic needs of community, like food and shelter. Confusing materialism with happiness is the essence of our culture.”

While west LA is plastic surgery and gold-plated toilets, he says, his own neighbourhood is “David Lynch wearing an old T-shirt and mowing the lawn”. Among the millionaires of Los Feliz, conspicuous consumption is frowned upon. He knows several who live “incredibly austere lives. I was having tea with Jim Carrey the other day. He’s basically just giving everything away. He just realised that owning three planes was stressing him out . . .”

In his New Statesman diary, Moby said that life in LA offered him miles and miles of lavender-scented name-dropping.

“Coldplay played the Rose Bowl recent­ly,” he says. “And the Rose Bowl holds 75,000 people. It’s a struggle for me to sell 2,000. At first, I winced with a little jealousy. But then I thought, ‘If my career was at that Coldplay level, how would that actually affect my daily existence? Would it make my shoes fit better? Would it make the water pressure in my shower better?’ As long as you’ve satisfied the basic hierarchy of needs – enough to eat, clean air to breathe, bears not eating your legs – happiness is all where and how you put your attention.”

***

He goes to his kitchen cupboard and from among the colanders and measuring jugs he extracts a black velvet fedora – size seven, silk-lined, from a London company established in 1879. In green marker around the inside rim are the words “With love from David – Christmas 2005”. Bowie gave it to him over Christmas dinner that year. “It’s the hat that he wore in The Man Who Fell to Earth,” Moby says. “There’s this amazing picture of him wearing it with John Lennon and it’s clearly when he was doing a lot of cocaine.”

Moby lived on Mott Street in Little Italy and Bowie lived on Mulberry Street. “I had a little roof deck, and he had a beautiful roof terrace, and we could wave at each other.” They were neighbours and friends, worked on music together, went on tour together, had barbecues together. He says the title of Bowie’s last album, Black Star, is a reference to the 1960 Elvis Presley song of the same name “about the end of a life” (“And when a man sees his black star,/He knows his time, his time has come”).

“David had been sick for a long time,” he says. “Or ill, as you say in the UK. So, David had been ill for a long time. I was very pleased that . . . after he died, people were asking me, ‘How do you feel?’ and I’m like, ‘Actually, I’m just kind of happy that he lived as long as he did.’ Because I . . . had thought, yeah, I had thought that he was going to die a little before that. So.”

The Radiohead singer Thom Yorke lives just up the street from him in Los Angeles but Moby has never met him “as far as I know”. Apart from Bowie, he claims not to have musician friends.

“Musicians – and I’m sure you’ve encountered this many times – have a sense of self-importance that is off-putting,” he says. “It is very hard to be friends with someone who thinks that just by showing up, they’re doing something special. At the end of the day, you want to say to them, ‘You know what? You wrote a couple of good songs. Let’s put it in perspective.’”

He was born on 11 September 1965, and on his 36th birthday he watched the twin towers burning from his roof deck. He tells me that when the second plane hit and it became clear the first was no accident, he heard “the cumulative effect of ten thousand rooftops covered with people, and the weirdest scream. A scream of horror but also a scream of understanding.”

Fifteen years on, he talks about this year’s politics as a Manichaean thing. “Half the world are motivated by fear and desire to move backwards, and the other half are motivated by optimism and a desire to move forward rationally. It’s religious tolerance versus fundamentalism; it’s racism versus inclusion. I wonder if there’s a way we can make peace with that whole other half of humanity who are holding on to a non-evidence-based approach to the future. But I don’t know what it is.” He has known Hillary Clinton for two decades, was a vocal supporter of hers during the election run and released a pair of anti-Trump tracks for Dave Eggers’s music project 30 Days, 50 Songs.

He says that many celebrity Clinton backers were cautious to come out for her during the primaries “because Bernie supporters wanted to crucify you. Now Trump has united and inspired Democrats more than anything since the Vietnam War.”

The election result, he says, might just be “the equivalent of a crystal meth addict going on one last bender. Maybe this bender will finally convince Americans to stop voting for Republicans. Because they are terrible. There has always been an understanding that if everyone in America voted, there would be no Republican politicians. The reason Republicans win is that most Americans don’t vote.

“Those of us on the left who were brought up to be tolerant of people who had different opinions from us – well that’s great, ­unless the opinions are bigoted and wrong. If someone is a climate-change denier, they are wrong. If someone voted for Brexit, they are wrong. If someone voted for Trump, they are wrong. There is a lot of ambiguity in the world, but not about these things.”

The clock ticks towards 11.15am and Moby, ever punctual, is done.

“These Systems Are Failing” is out now on Little Idiot/Mute

Kate Mossman is the New Statesman's arts editor and pop critic.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump