Keynes wrote very little on Marx although at one point he dismisses the labour theory of value as ‘‘out of date controverialising‘‘ and at another refers to Marx as a lesser figure than Sylvio Gessell, the German revolutionary Minister of Finance in the short lived Bavarian Soviet Republic in 1919 and former merchant and  monetary theorist. But there is an intriguing short passage in his collected works that offers an insight  as to what he thought of the great Hegelian of the nineteenth century.

Keynes compares Marx‘s notion of M-C-M‘ where M‘ exceeds M to the widespread view that the chain should read C-M-C‘.  Keynes writes as follows in a note in volume xxix, p.81, (CW Macmillan, Cambridge University Press for The Royal Economic Society, 1979.)

The excess of M‘ over M is the source of Marx‘s surplus value. It is a curiosity in the history of economic theory that the heretics of the past hundred years who have in one shape or another, opposed the formula M-C-M‘ to the classical formula  C-M-C‘ have tended to believe either that M‘ must always and necessarily exceed M or that M must always and necessarily exceed M‘, according as they were living in a period in which one or the other predominated in actual experience. Marx and those who believe in the necessarily exploitatory character of the capitalist system, assert the inevitable excess of M‘ ; while Hobson, or Foster and Catchings or Major Douglas who believe in its inherent tendency towards deflation and underemployment, assert the inevitable excess of M. Marx ,however, was approaching the intermediate truth when he added that the continuous excess of M‘ , would be inevitably interrupted by a series of crises, gradually increasing in intensity, or entrepreneur bankruptcy and underemployment, during which presumably, M must be in excess. My own (Keynes‘s argument) should at least …serve to effect a reconciliation between the followers of Marx and those of Major Douglas, leaving the classical economists still high and dry in their belief that M and M‘ are always equal !

This passage aside from its somewhat limited  interpretation of surplus value shows that Keynes was always keen to appeal to progressives to recruit them to the cause of establishing a revolution in economic thought in the midst of the Great Depression and that Marx had a large following among the young during times of crisis.

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