Keynes, John Maynard, Baron Keynes of Tilton

Keynes, John Maynard, Baron Keynes of Tilton

Early Career and Critique of Versailles

Keynes served (1906–8) in the India Office of the civil service, where he was concerned with problems of Indian currency. He subsequently returned to Cambridge, where he taught economics until 1915. During World War I, he worked in the Treasury, advancing in 1919 to the position of principal British treasury representative. After accompanying British prime minister Lloyd George to the peace conference ending the war, however, he resigned in protest of what he considered the inequitable economic provisions of the Versailles Treaty. His Economic Consequences of the Peace (1919) vividly presented his views and won him world fame. Keynes criticized the Versailles Treaty for its vindictiveness, specifically the impossibly high reparations levied on the Germans, and for its abandonment of the relatively free pre-1914 economy based on gold and low tariffs. He foresaw that German economic weakness stemming from the Versailles provisions would involve the whole of Europe in ruin.

Departure from Classical Economics

Keynes's departure from classical concepts of laissez-faire dated from the mid-1920s, when he formulated the Liberal party's program to promote employment by a program of government spending on public works. Keynes came to believe that such a program would increase national purchasing power as well as foster employment in complementary industries. For the sake of full employment Keynes also modified his classical belief in international free trade. His ideas, based on large-scale government economic planning, are best expressed in his chief work, The General Theory of Employment, Interest, and Money (1936). Coming at a time when many nations had been racked by depressed economies, the book offered a sharp critique of laissez-faire economic policies and argued that central government needed to step in, particularly during periods of chronic unemployment. Other works by Keynes from this period are the Tract on Monetary Reform (1923) and the Treatise on Money (1930).

Later Career

In the years following 1936, Keynes spent most of his time in public service, producing several articles on the subject of war financing. During World War II he was a consultant to the chancellor of the exchequer and a director of the Bank of England. He was raised to the peerage in 1942. Keynes was influential at Bretton Woods (1944) in the proposals for the establishment of a world bank to stimulate growth in underdeveloped areas.

Influence

Keynesian economics stands as the most influential economic formulation of the 20th cent., though its ascendency was vigorously challenged by monetarismmonetarism,
economic theory that monetary policy, or control of the money supply, is the primary if not sole determinant of a nation's economy. Monetarists believe that management of the money supply to produce credit ease or restraint is the chief factor influencing inflation
..... Click the link for more information.  in the late 20th cent. His theories were widely revived during the economic crisis of 2008–9. Keynes's ideas have appealed to both practical politicians and theoretical economists with equal force, perhaps because he was a steadfast pragmatist, attacking the real problems of national employment and income while still remaining faithful to the requirements of rigorous economic thought. Although he favored controlled investment and an active public sector, he never wavered in his faith in the capitalist market economy. In Keynesian theory, government action is designed to stimulate the market, not to eliminate it.

Bibliography

See Keynes's Collected Writings (30 vol., 1971–80), biographies by R. Skidelsky (3 vol., 1986–2001) and P. Clarke (2009); G. Fletcher, The Keynesian Revolution and Its Critics (1987); P. Clarke, The Keynesian Revolution in the Making, 1924–1936 (1989); R. Skidelsky, Keynes: The Return of the Master (2009); N. Wapshott, Keynes Hayek (2011).