Keynes's Application of Virtue Ethics in the General Theory in Chapter 9

24 Pages Posted: 31 Jan 2018 Last revised: 1 Feb 2018

See all articles by Michael Emmett Brady

Michael Emmett Brady

California State University, Dominguez Hills

Date Written: January 23, 2018


Keynes carefully and methodically devoted chapter nine of the General Theory to a detailed discussion of Virtue Ethics which is related to Adam Smith’s discussion in The Theory of Moral Sentiments. Both Virtues and Vices were considered by Keynes. The four main virtues in the Greek version of virtue ethics, as enunciated by Plato(Socrates) and Aristotle, were Prudence, Temperance, Justice and Courage or Fortitude. Temperance and Courage can be combined, as done by Adam Smith in The Theory of Moral Sentiments into the virtue of self command. Adam Smith’s and Keynes’s explicit use of an Aristotelian, Virtue ethics approach contrasts with the economic profession’s explicit reliance on utilitarian ethics only. It is not possible to create a synthesis between the two different approaches to ethics.

Keynes and Smith agree with Aristotle that the primary, major problem at the macro level for an economy is the existence of a major sub group of upper income class individuals that Smith appropriately identified as projectors, imprudent risk takers and prodigals. These individuals violate the primary virtue of prudence by activities that can cause negative effects that impact the entire society. Smith proposes that this behavior be neutralized or mitigated by imposing restrictions on their ability to obtain bank credit and loans. Smith also believed that at the macro level the number of sober people (frugal, parsimonious, circumspect, careful) will significantly outnumber the projectors, imprudent risk takers and prodigals, so that their impact on the macro economy would be limited. This, of course, is similar to Keynes’s point that “Speculators may do no harm as bubbles on a steady stream of enterprise.” However, this all changes if enterprise and speculation switch places, so that “…the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.” This is precisely the problem that has arisen in the American and world economies since the late 1970’s. Thus, speculation can be regarded as a vice and enterprise can be regarded as virtue.

The point can be made even more directly. A world dominated by George Romney type investors leads to growth and prosperity, while a world dominated by Mitt Romney types, Bain Capital private equity firms, hedge funds, financial speculators and stock market manipulators leads to economic downturn and stagnation.

Keywords: Smith, Virtue ethics, Benthamite Utilitarianism, Aristotle, money, banking, prodigals, Imprudent risk taker, projectors

JEL Classification: B10, B12, B14, B16, B20, B22

Suggested Citation

Brady, Michael Emmett, Keynes's Application of Virtue Ethics in the General Theory in Chapter 9 (January 23, 2018). Available at SSRN: or

Michael Emmett Brady (Contact Author)

California State University, Dominguez Hills ( email )

1000 E. Victoria Street, Carson, CA
Carson, CA 90747
United States

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