Who was John Maynard Keynes?
John Maynard Keynes was born in Cambridge in 1883. He taught at King's College there and also worked for the British Treasury. In 1919 he went to the Paris peace conference as a Treasury representative, then quit in protest at the reparations being placed on Germany. His book on the peace made his name. Later, in 1936, The General Theory of Employment, Interest and Money claimed that a market economy can get stuck with high unemployment, and that public policy should lift spending to fix it. In 1944 he helped plan the Bretton Woods monetary system. He died two years later.
Political views
- Said the two great failings of the economy of his day were mass unemployment and the unfair spread of wealth and income.Source: marxists.org
- Backed deficit spending when the economy was weak, and rejected across-the-board wage cuts as a cure for unemployment between the wars.Source: econlib.org
- Proposed a broad socialisation of investment, with public bodies and private firms working together, as the path to full employment.Source: marxists.org
- Wrote that the state did not have to own the means of production, and he held that his plan fitted with individualism.Source: marxists.org
- Favoured redistributive taxes such as death duties, since they could raise consumption and so help capital grow.Source: marxists.org
- Warned that heavy reparations would leave Germany poor and politically unstable after the First World War.Source: gutenberg.org
- Had a hand in the 1944 Bretton Woods deal that set up fixed exchange rates and the International Monetary Fund.Source: econlib.org
Legacy
From the 1940s to the 1970s, Keynesian ideas steered government budgets and central banks across the West. They came back after later downturns, including the 2008 crisis. Admirers say he explained why deep slumps last and gave governments tools to fight joblessness. Critics such as Friedrich Hayek, and later monetarists like Milton Friedman, said his ideas fed inflation and debt and put too much trust in official management. Others point out that Keynes himself thought markets could do their job once full employment had been reached.
In their own words
“The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.”