John Maynard Keynes

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John Maynard Keynes
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{{redirect |Keynes}}{{for |his father|John Neville Keynes}}{{short description|English economist}}{{Use British English |date= August 2011}}{{Use dmy dates |date= October 2012}}

| image = Keynes_1933.jpg| caption = 18836|df=yes}}| birth_place = Cambridge, Cambridgeshire, England1946216df=yes}}| death_place = Tilton, near Firle, Sussex, England| spouse = Lydia Lopokova| nationality = British| alma_mater = Eton College, University of CambridgeLiberal Party (UK)>Liberal| module =

| institution = King's College, CambridgePolitical economy |Probability}}Jeremy Bentham, Thomas Malthus, Alfred Marshall, Nicholas Johannsen, Knut Wicksell, Piero Sraffa, John Neville Keynes, Bertrand RussellTHE RETURN TO KEYNESPUBLISHER=HARVARD UNIVERSITY PRESSPAGE=146EDITOR2=TOSHIAKI HIRAI URL=HTTPS://BOOKS.GOOGLE.COM/BOOKS?ID=8GGUJJQIDA4C&PG=PA146, | influenced = John Kenneth Galbraith, Paul Samuelson, John Hicks, Nicholas Kaldor, Joan Robinson, Hyman Minsky, Amartya Sen, Abba Lerner, Franco Modigliani, James Tobin Robert Solow, Ha Joon Chang, Joseph Stiglitz, Steve Keen, Paul Krugman, Robert Shiller, George Akerlof, Brad DeLong, Thomas Piketty, Yanis Varoufakis, Robert Reich, Zhou Xiaochuan, Wolfgang Stützel, Mariana Mazzucato, Robin Hahnel, Axel Leijonhufvud, Manmohan Singh, New Keynesian economics, Post-Keynesian economicsMacroeconomics Keynesian economics >Liquidity preference Spending multiplier >AD–AS model|Demand-side economics}}| awards = | signature = }}}}{{Macroeconomics sidebar}}John Maynard Keynes, 1st Baron KeynesODNB, Cairncross, Alec, Keynes, John Maynard, Baron Keynes (1883–1946), 34310, {{post-nominals |country= GBR|CB|FBA}} ({{IPAc-en |k|eɪ|n|z}} {{respell |KAYNZ}}; 5 June 1883 – 21 April 1946), was a British economist, whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in mathematics, he built on and greatly refined earlier work on the causes of business cycles, and was one of the most influential economists of the 20th century.{{sfn |Yergin|Stanislaw|2002 |pp= 39–42}}NEWS, John, Sloman,weblink How to kick-start a faltering economy the Keynes way, BBC, 22 October 2008, BOOK, Cohn, Steven Mark, Reintroducing Macroeconomics: A Critical Approach,weblink 2015, Taylor & Francis, 978-1-317-46120-3, 111, JOURNAL, Davis, William L., Bob, Figgins, David, Hedengren, Daniel B., Klein, Economic Professors' Favorite Economic Thinkers, Journals, and Blogs, Econ Journal Watch, 8, 2, 126–46, May 2011,weblink Widely considered the founder of modern macroeconomics, his ideas are the basis for the school of thought known as Keynesian economics, and its various offshoots.BOOK, Skidelsky, Robert, Keynes: The Return of the Master, 26 October 2010, Public affairs, Cambridge, 978-1-58648-897-0, During the Great Depression of the 1930s, Keynes spearheaded a revolution in economic thinking, challenging the ideas of neoclassical economics that held that free markets would, in the short to medium term, automatically provide full employment, as long as workers were flexible in their wage demands. He argued that aggregate demand (total spending in the economy) determined the overall level of economic activity, and that inadequate aggregate demand could lead to prolonged periods of high unemployment. Keynes advocated the use of fiscal and monetary policies to mitigate the adverse effects of economic recessions and depressions. He detailed these ideas in his magnum opus, The General Theory of Employment, Interest and Money, published in 1936. In the mid to late-1930s, leading Western economies adopted Keynes's policy recommendations. Almost all capitalist governments had done so by the end of the two decades following Keynes's death in 1946. As a leader of the British delegation, Keynes participated in the design of the international economic institutions established after the end of World War II but was overruled by the American delegation on several aspects. Keynes's influence started to wane in the 1970s, partly as a result of the stagflation that plagued the Anglo-American economies during that decade, and partly because of criticism of Keynesian policies by Milton Friedman and other monetarists,BOOK, Krugman, Paul, Paul Krugman, Peddling Prosperity: Economic Sense and Nonsense in the Age of Diminished Expectations,weblink 1995, W.W. Norton, 978-0-393-31292-8, 43, In 1968 in one of the decisive intellectual achievements of postwar economics, Friedman not only showed why the apparent tradeoff embodied in the idea of the Phillips curve was wrong; he also predicted the emergence of combined inflation and high unemployment ... dubbed ‘stagflation., who disputed the ability of government to favorably regulate the business cycle with fiscal policy.NEWS, To Set the Economy Right, 27 August 1979, 13 November 2008,weblink Time (magazine), Time, However, the advent of the global financial crisis of 2007–2008 sparked a resurgence in Keynesian thought. Keynesian economics provided the theoretical underpinning for economic policies undertaken in response to the crisis by President Barack Obama of the United States, Prime Minister Gordon Brown of the United Kingdom, and other heads of governments.NEWS,weblink The undeniable shift to Keynes, Chris Giles in London, Ralph Atkins in Frankfurt and Krishna Guha in Washington, Financial Times, 23 January 2009, When Time magazine included Keynes among its (Time 100: The Most Important People of the Century|Most Important People of the Century) in 1999, it stated that "his radical idea that governments should spend money they don't have may have saved capitalism."NEWS,weblink The Time 100: John Maynard Keynes, Time (magazine), Time, Robert, Reich, 29 March 1999, 18 June 2009, Robert Reich, The Economist has described Keynes as "Britain's most famous 20th-century economist."NEWS,weblink The IMF in Britain: Toothless truth tellers, The Economist, 11 May 2013, 2 October 2013, In addition to being an economist, Keynes was also a civil servant, a director of the Bank of England, and a part of the Bloomsbury Group of intellectuals.WEB,weblink Maynard Keynes, The Bloomsbury Group, 22 August 2007, 26 May 2012,

Early life and education

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King's College, Cambridge. Keynes's grandmother wrote to him saying that, since he was born in Cambridge, people will expect him to be clever.
John Maynard Keynes was born in Cambridge, Cambridgeshire, England, to an upper-middle-class family. His father, John Neville Keynes, was an economist and a lecturer in moral sciences at the University of Cambridge and his mother Florence Ada Keynes a local social reformer. Keynes was the first born, and was followed by two more children – Margaret Neville Keynes in 1885 and Geoffrey Keynes in 1887. Geoffrey became a surgeon and Margaret married the Nobel Prize-winning physiologist Archibald Hill.According to the economic historian and biographer Robert Skidelsky, Keynes's parents were loving and attentive. They remained in the same house throughout their lives, where the children were always welcome to return. Keynes would receive considerable support from his father, including expert coaching to help him pass his scholarship exams and financial help both as a young man and when his assets were nearly wiped out at the onset of Great Depression in 1929. Keynes's mother made her children's interests her own, and according to Skidelsky, "because she could grow up with her children, they never outgrew home".BOOK, Skidelsky, Robert, John Maynard Keynes: 1883–1946: Economist, Philosopher, Statesman, 2003, 0330488678, 14, 43–46, 456, 263, 834, Pan MacMillan Ltd, In January 1889 at the age of five and a half, Keynes started at the kindergarten of the Perse School for Girls for five mornings a week. He quickly showed a talent for arithmetic, but his health was poor leading to several long absences. He was tutored at home by a governess, Beatrice Mackintosh, and his mother. In January 1892, at eight and a half, he started as a day pupil at St Faith's preparatory school. By 1894, Keynes was top of his class and excelling at mathematics. In 1896, St Faith's headmaster, Ralph Goodchild, wrote that Keynes was "head and shoulders above all the other boys in the school" and was confident that Keynes could get a scholarship to Eton.Sources:
  • WEB,weblink John Maynard Keynes – St Faith's School Website, St Faith's School Website, 2016-04-28, dead,weblink" title="">weblink 30 May 2016, dmy-all,
  • BOOK, Deane, Phyllis, The Life and Times of J. Neville Keynes: A Beacon in the Tempest,weblink 2001, Edward Elgar Publishing, 978-1-84064-534-7, 168–,
  • BOOK, Skidelsky, Robert, John Maynard Keynes: Hopes Betrayed, 1883–1920 Vol 1, 1983, 69–73, 978-0333115992, Picador,
  • BOOK, Felix, David, Keynes: A Critical Life,weblink 1999, Greenwood Press, 978-0-313-28827-2, 22,
  • BOOK, Harrod, Roy, Roy Harrod, The life of John Maynard Keynes,weblink 1951, Harcourt, Brace, 1-125-39598-2, 10,
  • BOOK, Moggridge, Donald, Maynard Keynes: An Economist's Biography,weblink 1992, Routledge, 978-1-134-79866-7, 47, Sources:
  • BOOK, Hession, Charles Henry, John Maynard Keynes: A Personal Biography of the Man Who Revolutionized Capitalism,weblink 1984, 12–, 0025513109, MacMillan Ltd,
  • BOOK, Dostaler, Gilles, Keynes and His Battles,weblink 2007, Edward Elgar Publishing, 978-1-78100-837-9, 262–,
  • WEB,weblink John Maynard Keynes, J J O'Connor and E F Robertson, October 2003, MacTutor History of Mathematics, School of Mathematics and Statistics, University of St Andrews, Scotland, 25 January 2014,
  • WEB,weblink John Maynard Keynes – Timeline, 26 May 2012,
  • {{citation|last=Gümüş|first=Erdal|title=J. M. Keynes; Liberalism and Keynes; Keynes's Personal Life; Keynes's School Years|journal=Dumlupinar University Journal of Social Sciences|volume=5|issue=9|year=2003|pages=81–100|place=Eskisehir Osmangazi University|id=MPRA Paper No. 42373|url=|accessdate= 25 January 2014}} (cites Skidelsky)
  • {{citation|title=130 years of Perse Girls – Stephen Perse Foundation|url=|year=2011|page=8|accessdate=25 January 2014|url-status=dead|archiveurl=|archivedate=22 August 2015|df=dmy-all}} includes a photograph that is said to show Keynes as a child at the Perse School Kindergarten
In 1897, Keynes won a scholarship to Eton College, where he displayed talent in a wide range of subjects, particularly mathematics, classics and history. At Eton, Keynes experienced the first "love of his life" in Dan Macmillan, older brother of the future Prime Minister Harold Macmillan.BOOK, Supermac: The Life of Harold Macmillan, Thorpe, D.R., 27, Chatto & Windus, 2010, Despite his middle-class background, Keynes mixed easily with upper-class pupils.In 1902 Keynes left Eton for King's College, Cambridge, after receiving a scholarship for this also to read mathematics. Alfred Marshall begged Keynes to become an economist,BOOK, McGee, Matt, Economics – In terms of The Good, The Bad and The Economist, 2005
, 354
publisher=IBID Press, S.l., 163584293, although Keynes's own inclinations drew him towards philosophy – especially the ethical system of G. E. Moore. Keynes joined the Pitt ClubBOOK, Moggridge, Donald Edward, Maynard Keynes: An Economist's Biography, 1992, Routledge, Oxford, 9781134798667, 52–81, and was an active member of the semi-secretive Cambridge Apostles society, a debating club largely reserved for the brightest students. Like many members, Keynes retained a bond to the club after graduating and continued to attend occasional meetings throughout his life. Before leaving Cambridge, Keynes became the President of the Cambridge Union Society and Cambridge University Liberal Club. He was said to be an atheist.BOOK,weblink Essays on John Maynard Keynes, Keynes, Milo, 1979-11-29, Cambridge University Press, 9780521296960, en, BOOK,weblink Humanism: A Beginner's Guide, Cave, Peter, 2009-03-01, Oneworld Publications, 9781780740294, en, In May 1904, he received a first-class BA in mathematics. Aside from a few months spent on holidays with family and friends, Keynes continued to involve himself with the university over the next two years. He took part in debates, further studied philosophy and attended economics lectures informally as a graduate student for one term, which constituted his only formal education in the subject. He took civil service exams in 1906.The economist Harry Johnson wrote that the optimism imparted by Keynes's early life is a key to understanding his later thinking.WEB
, Biography of Baron John Maynard Keynes
, David Gowland
, 29 May 2009
, dead
,weblink" title="">weblink
, 16 June 2011
, dmy-all
, Keynes was always confident he could find a solution to whatever problem he turned his attention to and retained a lasting faith in the ability of government officials to do good.ASCHHEIM > FIRST1 = J. FIRST2 = G. S. FIRST3 = G. FIRST4= O. FIRST5 = JOHN CUNNINGHAM,weblink John Maynard Keynes: Critical Assessments, pp. 101–120, 135, Second, The Monetary Thought-Ideology Nexus: Simons verses Keynes; Marx and Keynes – Private Property and Money, 978-0-415-11415-8, 1994, Keynes's optimism was also cultural, in two senses: he was of the last generation raised by an empire still at the height of its power and was also of the last generation who felt entitled to govern by culture, rather than by expertise. According to Skidelsky, the sense of cultural unity current in Britain from the 19th century to the end of World War I provided a framework with which the well-educated could set various spheres of knowledge in relation to each other and life, enabling them to confidently draw from different fields when addressing practical problems.


In October 1908, Keynes's Civil Service career began as a clerk in the India Office.{{London Gazette|issue=11879|date=6 November 1906 |page=1124}} He enjoyed his work at first, but by 1908 had become bored and resigned his position to return to Cambridge and work on probability theory, at first privately funded only by two dons at the university – his father and the economist Arthur Pigou.By 1909 Keynes had published his first professional economics article in The Economic Journal, about the effect of a recent global economic downturn on India.{{r|"Minksky"}} He founded the Political Economy Club, a weekly discussion group. Also in 1909, Keynes accepted a lectureship in economics funded personally by Alfred Marshall. Keynes's earnings rose further as he began to take on pupils for private tuition.In 1911 Keynes was made the editor of The Economic Journal. By 1913 he had published his first book, Indian Currency and Finance.See JOURNAL, Keynes, John Maynard, 1913, Indian Currency and Finance, Macmillan & Co., London,weblink He was then appointed to the Royal Commission on Indian Currency and Finance{{London Gazette|issue=28711|page=2809|date=18 April 1913}} – the same topic as his book – where Keynes showed considerable talent at applying economic theory to practical problems. His written work was published under the name "J M Keynes", though to his family and friends he was known as Maynard. (His father, John Neville Keynes, was also always known by his middle name).

First World War

The British Government called on Keynes's expertise during the First World War. While he did not formally re-join the civil service in 1914, Keynes traveled to London at the government's request a few days before hostilities started. Bankers had been pushing for the suspension of specie payments – the convertibility of banknotes into gold – but with Keynes's help the Chancellor of the Exchequer (then Lloyd George) was persuaded that this would be a bad idea, as it would hurt the future reputation of the city if payments were suspended before it was necessary.In January 1915, Keynes took up an official government position at the Treasury. Among his responsibilities were the design of terms of credit between Britain and its continental allies during the war and the acquisition of scarce currencies. According to economist Robert Lekachman, Keynes's "nerve and mastery became legendary" because of his performance of these duties, as in the case where he managed to assemble – with difficulty – a small supply of Spanish pesetas.The secretary of the Treasury was delighted to hear Keynes had amassed enough to provide a temporary solution for the British Government. But Keynes did not hand the pesetas over, choosing instead to sell them all to break the market: his boldness paid off, as pesetas then became much less scarce and expensive.BOOK, Spiegel, Henry William, The Growth of Economic Thought, 1991, 602, 0-8223-0973-4, Duke University Press, Durham, UK, On the introduction of military conscription in 1916, he applied for exemption as a conscientious objector, which was effectively granted conditional upon continuing his government work.In the 1917 King's Birthday Honours, Keynes was appointed Companion of the Order of the Bath for his wartime work,{{London Gazette|issue=30111 |supp=y|page=5456|date=1 June 1917}} and his success led to the appointment that would have a huge effect on Keynes's life and career; Keynes was appointed financial representative for the Treasury to the 1919 Versailles peace conference. He was also appointed Officer of the Belgian Order of Leopold.{{London Gazette|issue=31928 |supp=y|page=6175|date=1 June 1920}}

Versailles peace conference

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Keynes's colleague, David Lloyd George. Keynes was initially wary of the "Welsh Wizard," preferring his rival H. H. Asquith|Asquith
, but was impressed with Lloyd George at Versailles; this did not prevent Keynes from painting a scathing picture of the then-prime minister in his Economic Consequences of the Peace.]]Keynes's experience at Versailles was influential in shaping his future outlook, yet it was not a successful one. Keynes's main interest had been in trying to prevent Germany's compensation payments being set so high it would traumatize innocent German people, damage the nation's ability to pay and sharply limit her ability to buy exports from other countries – thus hurting not just Germany's economy but that of the wider world.Unfortunately for Keynes, conservative powers in the coalition that emerged from the 1918 coupon election were able to ensure that both Keynes himself and the Treasury were largely excluded from formal high-level talks concerning reparations. Their place was taken by the Heavenly Twins – the judge Lord Sumner and the banker Lord Cunliffe whose nickname derived from the "astronomically" high war compensation they wanted to demand from Germany. Keynes was forced to try to exert influence mostly from behind the scenes.The three principal players at Versailles were Britain's Lloyd George, France's Clemenceau and America's President Wilson.BOOK, Frank, McDonough, 43–46, The Origins of the First and Second World Wars, 1997, Cambridge University Press, 1-4051-0664-6, It was only Lloyd George to whom Keynes had much direct access; until the 1918 election he had some sympathy with Keynes's view but while campaigning had found his speeches were only well received by the public if he promised to harshly punish Germany, and had therefore committed his delegation to extracting high payments.Lloyd George did, however, win some loyalty from Keynes with his actions at the Paris conference by intervening against the French to ensure the dispatch of much-needed food supplies to German civilians. Clemenceau also pushed for substantial reparations, though not as high as those proposed by the British, while on security grounds, France argued for an even more severe settlement than Britain.Wilson initially favored relatively lenient treatment of Germany – he feared too harsh conditions could foment the rise of extremism and wanted Germany to be left sufficient capital to pay for imports. To Keynes's dismay, Lloyd George and Clemenceau were able to pressure Wilson to agree to include pensions in the reparations bill.Towards the end of the conference, Keynes came up with a plan that he argued would not only help Germany and other impoverished central European powers but also be good for the world economy as a whole. It involved the radical writing down of war debts, which would have had the possible effect of increasing international trade all round, but at the same time thrown the entire cost of European reconstruction on the United States.Lloyd George agreed it might be acceptable to the British electorate. However, America was against the plan; the US was then the largest creditor, and by this time Wilson had started to believe in the merits of a harsh peace and thought that his country had already made excessive sacrifices. Hence despite his best efforts, the result of the conference was a treaty which disgusted Keynes both on moral and economic grounds and led to his resignation from the Treasury.BOOK, Skidelsky, Robert, John Maynard Keynes: 1883–1946: Economist, Philosopher, Statesman, 2003, 0-330-48867-8, 217–220, 245, 260–265, 283, 342–355, Pan MacMillan Ltd, In June 1919 he turned down an offer to become chairman of the British Bank of Northern Commerce, a job that promised a salary of £2000 in return for a morning per week of work.Keynes's analysis on the predicted damaging effects of the treaty appeared in the highly influential book, The Economic Consequences of the Peace, published in 1919.WEB,weblink John Maynard Keynes, Policonomics, 26 May 2012, This work has been described as Keynes's best book, where he was able to bring all his gifts to bear – his passion as well as his skill as an economist. In addition to economic analysis, the book contained pleas to the reader's sense of compassion:Also present was striking imagery such as "year by year Germany must be kept impoverished and her children starved and crippled" along with bold predictions which were later justified by events:Keynes's followers assert that his predictions of disaster were borne out when the German economy suffered the hyperinflation of 1923, and again by the collapse of the Weimar Republic and the outbreak of the Second World War. However the historian Ruth Henig claims that "most historians of the Paris peace conference now take the view that, in economic terms, the treaty was not unduly harsh on Germany and that, while obligations and damages were inevitably much stressed in the debates at Paris to satisfy electors reading the daily newspapers, the intention was quietly to give Germany substantial help towards paying her bills, and to meet many of the German objections by amendments to the way the reparations schedule was in practice carried out".BOOK, Henig, Ruth, Versailles and After, 1919-1933,weblink second, 1995, Routledge, 978-1-134-79873-5, 65, JOURNAL, Sally, Marks, Mistakes and Myths: The Allies, Germany, and the Versailles Treaty, 1918–1921, The Journal of Modern History, September 2013, 85, 3, 632–659, 10.1086/670825, 10.1086/670825, For nearly forty years, historians of twentieth-century diplomacy have argued that the Versailles treaty was more reasonable than its reputation suggests and that it did not of itself cause the Depression, the rise of Hitler, or World War II" (p. 632). Marks also claims that the book is a "brilliant but warped polemic" (p. 636) that is "long-discredited by scholars" and which Keynes regretted writing (p. 656)., Only a small fraction of reparations was ever paid. In fact, the historian Stephen Schuker demonstrates in American 'Reparations' to Germany, 1919–33, that the capital inflow from American loans substantially exceeded German out payments so that, on a net basis, Germany received support equal to four times the amount of the post-Second World War Marshall Plan.Schuker also shows that, in the years after Versailles, Keynes became an informal reparations adviser to the German government, wrote one of the major German reparation notes, and supported the hyperinflation on political grounds. Nevertheless, The Economic Consequences of the Peace gained Keynes international fame, even though it also caused him to be regarded as anti-establishment – it was not until after the outbreak of the Second World War that Keynes was offered a directorship of a major British Bank, or an acceptable offer to return to government with a formal job. However, Keynes was still able to influence government policy making through his network of contacts, his published works and by serving on government committees; this included attending high-level policy meetings as a consultant.

In the 1920s

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Keynes argued against a return to the gold standard at parity with pre-war sterling valuation after World War I
Keynes had completed his A Treatise on Probability before the war but published it in 1921. The work was a notable contribution to the philosophical and mathematical underpinnings of probability theory, championing the important view that probabilities were no more or less than truth values intermediate between simple truth and falsity. Keynes developed the first upper-lower probabilistic interval approach to probability in chapters 15 and 17 of this book, as well as having developed the first decision weight approach with his conventional coefficient of risk and weight, c, in chapter 26. In addition to his academic work, the 1920s saw Keynes active as a journalist selling his work internationally and working in London as a financial consultant. In 1924 Keynes wrote an obituary for his former tutorAlfred Marshall which Joseph Schumpeter called "the most brilliant life of a man of science I have ever read."BOOK, Schumpeter, Joseph, Ten Great Economists, 2003, 271, 1-932512-09-8, Simon Publications, Marshall's widow was "entranced" by the memorial, while Lytton Strachey rated it as one of Keynes's "best works".In 1922 Keynes continued to advocate reduction of German reparations with A Revision of the Treaty. He attacked the post-World War I deflation policies with A Tract on Monetary Reform in 1923 – a trenchant argument that countries should target stability of domestic prices, avoiding deflation even at the cost of allowing their currency to depreciate. Britain suffered from high unemployment through most of the 1920s, leading Keynes to recommend the depreciation of sterling to boost jobs by making British exports more affordable. From 1924 he was also advocating a fiscal response, where the government could create jobs by spending on public works. During the 1920s Keynes's pro stimulus views had only limited effect on policy makers and mainstream academic opinion – according to Hyman Minsky one reason was that at this time his theoretical justification was "muddled". The Tract had also called for an end to the gold standard. Keynes advised it was no longer a net benefit for countries such as Britain to participate in the gold standard, as it ran counter to the need for domestic policy autonomy. It could force countries to pursue deflationary policies at exactly the time when expansionary measures were called for to address rising unemployment. The Treasury and Bank of England were still in favor of the gold standard and in 1925 they were able to convince the then Chancellor Winston Churchill to re-establish it, which had a depressing effect on British industry. Keynes responded by writing The Economic Consequences of Mr. Churchill and continued to argue against the gold standard until Britain finally abandoned it in 1931.

During the Great Depression

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The Great Depression with its periods of worldwide economic hardship formed the backdrop against which the Keynesian Revolution took place. The image is Florence Owens Thompson by photographer Dorothea Lange taken in March 1936.
Keynes had begun a theoretical work to examine the relationship between unemployment, money, and prices back in the 1920s. The work, Treatise on Money, was published in 1930 in two volumes. A central idea of the work was that if the amount of money being saved exceeds the amount being invested – which can happen if interest rates are too high – then unemployment will rise. This is in part a result of people not wanting to spend too high a proportion of what employers payout, making it difficult, in aggregate, for employers to make a profit. Another key theme of the book is the unreliability of financial indices for representing an accurate – or indeed meaningful – an indication of general shifts in purchasing power of currencies over time. In particular, he criticized the justification of Britain's return to the gold standard in 1925 at pre-war valuation by reference to the wholesale price index. He argued that the index understated the effects of changes in the costs of services and labor. Keynes was deeply critical of the British government's austerity measures during the Great Depression. He believed that budget deficits during recessions were a good thing and a natural product of an economic slump. He wrote, "For Government borrowing of one kind or another is nature's remedy, so to speak, for preventing business losses from being, in so severe a slump as the present one, so great as to bring production altogether to a standstill."NEWS, Cassidy, John, John Cassidy (journalist), The Demand Doctor, The New Yorker, 10 October 2011,weblink At the height of the Great Depression, in 1933, Keynes published The Means to Prosperity, which contained specific policy recommendations for tackling unemployment in a global recession, chiefly counter-cyclical public spending. The Means to Prosperity contains one of the first mentions of the multiplier effect. While it was addressed chiefly to the British Government, it also contained advice for other nations affected by the global recession. A copy was sent to the newly elected President Franklin D. Roosevelt and other world leaders. The work was taken seriously by both the American and British governments, and according to Robert Skidelsky, helped pave the way for the later acceptance of Keynesian ideas, though it had little immediate practical influence. In the 1933 London Economic Conference opinions remained too diverse for a unified course of action to be agreed upon.BOOK, Skidelsky, Robert, John Maynard Keynes: 1883–1946: Economist, Philosopher, Statesman, 2003pages= 494–500, 504, 509–510, Pan MacMillan Ltd, {{external media | width = 210px | float = right | headerimage= | video1 = Booknotes interview with Robert Skidelsky on John Maynard Keynes: Fighting for Freedom, 1937–1946, 28 April 2002, C-SPAN}}Keynesian-like policies were adopted by Sweden and Germany, but Sweden was seen as too small to command much attention, and Keynes was deliberately silent about the (Economy of Nazi Germany#Pre-war economy: 1933–1939|successful efforts of Germany) as he was dismayed by their imperialist ambitions and their treatment of Jews. Apart from Great Britain, Keynes's attention was primarily focused on the United States. In 1931, he received considerable support for his views on counter-cyclical public spending in Chicago, then America's foremost center for economic views alternative to the mainstream. However, orthodox economic opinion remained generally hostile regarding fiscal intervention to mitigate the depression, until just before the outbreak of war. In late 1933 Keynes was persuaded by Felix Frankfurter to address President Roosevelt directly, which he did by letters and face to face in 1934, after which the two men spoke highly of each other. However, according to Skidelsky, the consensus is that Keynes's efforts only began to have a more than marginal influence on US economic policy after 1939.Keynes's magnum opus, The General Theory of Employment, Interest and Money was published in 1936. It was researched and indexed by one of Keynes's favorite students, later the economist David Bensusan-Butt.BOOK, Keith, Tribe, Economic Careers: Economics and Economists in Britain, 1930–1970, London, Routledge, 1997, 61, 0-415-14708-5, The work served as a theoretical justification for the interventionist policies Keynes favoured for tackling a recession. The General Theory challenged the earlier neoclassical economic paradigm, which had held that provided it was unfettered by government interference, the market would naturally establish full employment equilibrium. In doing so Keynes was partly setting himself against his former teachers Marshall and Pigou. Keynes believed the classical theory was a "special case" that applied only to the particular conditions present in the 19th century, his theory being the general one. Classical economists had believed in Say's law, which, simply put, states that "supply creates its demand", and that in a free market workers would always be willing to lower their wages to a level where employers could profitably offer them jobs. An innovation from Keynes was the concept of price stickiness – the recognition that in reality workers often refuse to lower their wage demands even in cases where a classical economist might argue it is rational for them to do so. Due in part to price stickiness, it was established that the interaction of "aggregate demand" and "aggregate supply" may lead to stable unemployment equilibria – and in those cases, it is the state, not the market, that economies must depend on for their salvation.File:Keynes caricature Low 1934.jpg|left|thumb|Caricature by David Low, 1934]]The General Theory argues that demand, not supply, is the key variable governing the overall level of economic activity. Aggregate demand, which equals total un-hoarded income in a society, is defined by the sum of consumption and investment. In a state of unemployment and unused production capacity, one can only enhance employment and total income by first increasing expenditures for either consumption or investment. Without government intervention to increase expenditure, an economy can remain trapped in a low employment equilibrium – the demonstration of this possibility has been described as the revolutionary formal achievement of the work.BOOK, Skidelsky, Robert, John Maynard Keynes: 1883–1946: Economist, Philosopher, Statesman, 2003, 0-330-488678publisher=Pan MacMillan Ltd, The book advocated activist economic policy by government to stimulate demand in times of high unemployment, for example by spending on public works. "Let us be up and doing, using our idle resources to increase our wealth," he wrote in 1928. "With men and plants unemployed, it is ridiculous to say that we cannot afford these new developments. It is precise with these plants and these men that we shall afford them."The General Theory is often viewed as the foundation of modern macroeconomics. Few senior American economists agreed with Keynes through most of the 1930s.BOOK, Hazlitt, Henry, The critics of Keynesian Economics, 1995, 1960, 978-1-57246-013-3, Foundation for Economic Education, Irvington-on-Hudson, N.Y., Yet his ideas were soon to achieve widespread acceptance, with eminent American professors such as Alvin Hansen agreeing with the General Theory before the outbreak of World War II.BOOK, Seymour E., Harris, The New Economics: Keynes's Influence on Theory and Public Policy, 2005, xxii, 46, 1-4191-4534-7, Kessinger Publishing, JOURNAL, Martin, Kingsley, 16 March 1940, Mr Keynes Has A Plan, Picture Post, Keynes himself had only limited participation in the theoretical debates that followed the publication of the General Theory as he suffered a heart attack in 1937, requiring him to take long periods of rest. Among others, Hyman Minsky and Post-Keynesian economists have argued that as result, Keynes's ideas were diluted by those keen to compromise with classical economists or to render his concepts with mathematical models like the IS–LM model (which, they argue, distort Keynes's ideas). Keynes began to recover in 1939, but for the rest of his life his professional energies were largely directed towards the practical side of economics – the problems of ensuring optimum allocation of resources for the war efforts, post-war negotiations with America, and the new international financial order that was presented at the Bretton Woods Conference.In the General Theory and later, Keynes responded to the socialists who argued, especially during the Great Depression of the 1930s, that capitalism caused war. He argued that if capitalism were managed domestically and internationally (with coordinated international Keynesian policies, an international monetary system that didn't put the interests of countries against each other, and a high degree of freedom of trade), then this system of managed capitalism could promote peace rather than conflict between countries. His plans during World War II for post-war international economic institutions and policies (which contributed to the creation at Bretton Woods of the International Monetary Fund and the World Bank, and later to the creation of the General Agreement on Tariffs and Trade and eventually the World Trade Organization) were aimed to give effect to this vision.See Donald Markwell, John Maynard Keynes and International Relations: Economic Paths to War and Peace, Oxford University Press, 2006.Although Keynes has been widely criticized – especially by members of the Chicago school of economics – for advocating irresponsible government spending financed by borrowing, in fact he was a firm believer in balanced budgets and regarded the proposals for programs of public works during the Great Depression as an exceptional measure to meet the needs of exceptional circumstances.Universal Man Richard Davenport-Hines Collins 2015

Second World War

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Keynes (right) and the US representative Harry Dexter White at the inaugural meeting of the International Monetary Fund's Board of Governors in Savannah, Georgia in 1946
During the Second World War, Keynes argued in How to Pay for the War, published in 1940, that the war effort should be largely financed by higher taxation and especially by compulsory saving (essentially workers lending money to the government), rather than deficit spending, in order to avoid inflation. Compulsory saving would act to dampen domestic demand, assist in channeling additional output towards the war efforts, would be fairer than punitive taxation and would have the advantage of helping to avoid a post-war slump by boosting demand once workers were allowed to withdraw their savings. In September 1941 he was proposed to fill a vacancy in the Court of Directors of the Bank of England, and subsequently carried out a full term from the following April.{{London Gazette|issue=35279|page=5489|date=19 September 1941}}{{London Gazette|issue=35511|page=1540|date=3 April 1942}} In June 1942, Keynes was rewarded for his service with a hereditary peerage in the King's Birthday Honours.{{London Gazette|issue=35586|page=2475|date=5 June 1942}} On 7 July his title was gazetted as "Baron Keynes, of Tilton, in the County of Sussex" and he took his seat in the House of Lords on the Liberal Party benches.{{London Gazette|issue=35623|page=2987|date=7 July 1942}}As the Allied victory began to look certain, Keynes was heavily involved, as leader of the British delegation and chairman of the World Bank commission, in the mid-1944 negotiations that established the Bretton Woods system. The Keynes plan, concerning an international clearing-union, argued for a radical system for the management of currencies. He proposed the creation of a common world unit of currency, the bancor, and new global institutions – a world central bank and the International Clearing Union. Keynes envisaged these institutions managing an international trade and payments system with strong incentives for countries to avoid substantial trade deficits or surpluses.Marie Christine Duggan (2013) "Taking Back Globalization: A China-United States Counterfactual Using Keynes's 1941 International Clearing Union." RRPE, Vol. 45, No. 4weblink The USA's greater negotiating strength, however, meant that the outcomes accorded more closely to the more conservative plans of Harry Dexter White. According to US economist J. Bradford DeLong, on almost every point where he was overruled by the Americans, Keynes was later proved correct by events.WEB,weblink Review of Robert Skidelsky, John Maynard Keynes: Fighting for Britain 1937–1946, Brad Delong, Berkeley university, 14 June 2009, The two new institutions, later known as the World Bank and the International Monetary Fund (IMF), were founded as a compromise that primarily reflected the American vision. There would be no incentives for states to avoid a large trade surplus; instead, the burden for correcting a trade imbalance would continue to fall only on the deficit countries, which Keynes had argued were least able to address the problem without inflicting economic hardship on their populations. Yet, Keynes was still pleased when accepting the final agreement, saying that if the institutions stayed true to their founding principles, "the brotherhood of man will have become more than a phrase."BOOK, Keynes, J.M, Donald Moggridge, The Collected Writings of John Maynard Keynes, 1980, 26, Speech by Lord Keynes in Moving to Accept the Final Act at the Closing Plenary Session, Bretton Woods, 22 July 1944,, 103, London: Macmillan, 0-333-10736-5, BOOK, G. Edward, Griffin, The Creature from Jekyll Island: A Second Look at the Federal Reserve, 2004, 85–106, American Media, 0-912986-40-9,


After the war, Keynes continued to represent the United Kingdom in international negotiations despite his deteriorating health. He succeeded in obtaining preferential terms from the United States for new and outstanding debts to facilitate the rebuilding of the British economy.WEB,weblink John Maynard Keynes: Career Timeline,, 2 October 2013, Just before his death in 1946, Keynes told Henry Clay, a professor of social economics and advisor to the Bank of England,BOOK, Richard, Sayers, The Bank of England, 1891–1944, Volume 1,weblink 978-0-521-21067-6, 1976,
of his hopes that Adam Smith's "invisible hand" could help Britain out of the economic hole it was in: "I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject from economic thinking twenty years ago."


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Prime Minister Clement Attlee with King George VI after Attlee won the 1945 election

Keynesian ascendancy 1939–79

From the end of the Great Depression to the mid-1970s, Keynes provided the main inspiration for economic policymakers in Europe, America and much of the rest of the world.BOOK, Fletcher, Gordon A., Keynesian Revolution and Its Critics: Issues of Theory and Policy for the Monetary Production Economy,weblink second, 1989, Palgrave Macmillan UK, 978-1-349-20108-2, xix–xxi, 88, 189–191, 234–238, 256–261, While economists and policymakers had become increasingly won over to Keynes's way of thinking in the mid and late 1930s, it was only after the outbreak of World War II that governments started to borrow money for spending on a scale sufficient to eliminate unemployment. According to the economist John Kenneth Galbraith (then a US government official charged with controlling inflation), in the rebound of the economy from wartime spending, "one could not have had a better demonstration of the Keynesian ideas."VIDEO, Daniel Yergin , William Cran (writers / producer),, Commanding Heights, see chapter 6 video or transcript,weblink TV documentaryPublic Broadcasting Service>PBS, US, 2002, The Keynesian Revolution was associated with the rise of modern liberalism in the West during the post-war period.BOOK, Clark, Barry Stewart, Political Economy: A Comparative Approach,weblink 1998, Greenwood Publishing Group, 978-0-275-95869-5, 101, Modern liberalism was the dominant ideology in Western nations from the end of World War II until the early 1970s. Its appeal stemmed from not only the success of Keynesian economics in maintaining prosperity during that period, but also from the postwar revulsion towards any pure form of ideology., Keynesian ideas became so popular that some scholars point to Keynes as representing the ideals of modern liberalism, as Adam Smith represented the ideals of classical liberalism.BOOK, Wolfe, Alan, Alan Wolfe, The Future of Liberalism,weblink 2009, Alfred A. Knopf, 978-0-307-26677-4, If Adam Smith is the quintessential classical liberal, the twentieth-century British economist John Maynard Keynes, whose ideas paved the way for massive public works projects and countercyclical economic policies meant to soften the ups and downs of the business cycle, best represents the modern version., After the war, Winston Churchill attempted to check the rise of Keynesian policy-making in the United Kingdom and used rhetoric critical of the mixed economy in his 1945 election campaign. Despite his popularity as a war hero, Churchill suffered a landslide defeat to Clement Attlee whose government's economic policy continued to be influenced by Keynes's ideas.

Neo-Keynesian economics

Image:Islm.svg|thumb|right|Neo-Keynesian IS–LM model is used to analyse the effect of demand shockdemand shockIn the late 1930s and 1940s, economists (notably John Hicks, Franco Modigliani, and Paul Samuelson) attempted to interpret and formalise Keynes's writings in terms of formal mathematical models. In what had become known as the neoclassical synthesis, they combined Keynesian analysis with neoclassical economics to produce neo-Keynesian economics, which came to dominate mainstream macroeconomic thought for the next 40 years.By the 1950s, Keynesian policies were adopted by almost the entire developed world and similar measures for a mixed economy were used by many developing nations. By then, Keynes's views on the economy had become mainstream in the world's universities. Throughout the 1950s and 1960s, the developed and emerging free capitalist economies enjoyed exceptionally high growth and low unemployment.WEB,weblink Crash: Reforming the world's international money, 5 April 2010, Paul Davidson, The New School, Paul Davidson (economist), BOOK, Davidson, Paul, Paul Davidson (economist), The Keynes Solution: The Path to Global Economic Prosperity,weblink 2009, St. Martin's Press, 978-0-230-10101-2, Professor Gordon Fletcher has written that the 1950s and 1960s, when Keynes's influence was at its peak, appear in retrospect as a golden age of capitalism.In late 1965 Time magazine ran a cover article with a title comment from Milton Friedman (later echoed by U.S. President Richard Nixon), "We are all Keynesians now". The article described the exceptionally favourable economic conditions then prevailing, and reported that "Washington's economic managers scaled these heights by their adherence to Keynes's central theme: the modern capitalist economy does not automatically work at top efficiency, but can be raised to that level by the intervention and influence of the government." The article also states that Keynes was one of the three most important economists who ever lived, and that his General Theory was more influential than the magna opera of other famous economists, like Adam Smith's The Wealth of Nations.NEWS, We Are All Keynesians Now, 13 November 2008,weblink Time magazine, 31 December 1965, subscription,

Keynesian economics out of favour 1979–2007

Keynesian economics were officially discarded by the British Government in 1979, but forces had begun to gather against Keynes's ideas over 30 years earlier. Friedrich Hayek had formed the Mont Pelerin Society in 1947, with the explicit intention of nurturing intellectual currents to one day displace Keynesianism and other similar influences. Its members included the Austrian School economist Ludwig von Mises along with the then young Milton Friedman. Initially the society had little impact on the wider world – according to Hayek it was as if Keynes had been raised to sainthood after his death and that people refused to allow his work to be questioned.WEB,weblink transcript of Commanding Heights documentary, episode 1Public Broadcasting Service>PBS, Daniel Yergin and Joseph Stanislaw, 3 July 2009, WEB,weblink 3 July 2009, interview: Friedrich Hayek on John Maynard Keynes – Part II, hayekcenter, Friedrich Hayek, Friedrich Hayek, Friedman however began to emerge as a formidable critic of Keynesian economics from the mid-1950s, and especially after his 1963 publication of A Monetary History of the United States.On the practical side of economic life, "big government" had appeared to be firmly entrenched in the 1950s, but the balance began to shift towards the power of private interests in the 1960s. Keynes had written against the folly of allowing "decadent and selfish" speculators and financiers the kind of influence they had enjoyed after World War I. For two decades after World War II the public opinion was strongly against private speculators, the disparaging label "Gnomes of Zürich" being typical of how they were described during this period. International speculation was severely restricted by the capital controls in place after Bretton Woods. According to the journalists Larry Elliott and Dan Atkinson, 1968 was the pivotal year when power shifted in favour of private agents such as currency speculators. As the key 1968 event Elliott and Atkinson picked out America's suspension of the conversion of the dollar into gold except on request of foreign governments, which they identified as the beginning of the breakdown of the Bretton Woods system.LARRY ELLIOTT > AUTHOR2 = DAN ATKINSON, The Gods That Failed: How Blind Faith in Markets Has Cost Us Our Future, 2008, 978-1-84792-030-0, 78, The Bodley Head Ltd, Criticisms of Keynes's ideas had begun to gain significant acceptance by the early 1970s, as they were then able to make a credible case that Keynesian models no longer reflected economic reality. Keynes himself included few formulas and no explicit mathematical models in his General Theory. For economists such as Hyman Minsky, Keynes's limited use of mathematics was partly the result of his scepticism about whether phenomena as inherently uncertain as economic activity could ever be adequately captured by mathematical models. Nevertheless, many models were developed by Keynesian economists, with a famous example being the Phillips curve which predicted an inverse relationship between unemployment and inflation. It implied that unemployment could be reduced by government stimulus with a calculable cost to inflation. In 1968, Milton Friedman published a paper arguing that the fixed relationship implied by the Philips curve did not exist.JOURNAL, Friedman, Milton, March 1968, The Role of Monetary Policy, American Economic Review, Friedman suggested that sustained Keynesian policies could lead to both unemployment and inflation rising at once – a phenomenon that soon became known as stagflation. In the early 1970s stagflation appeared in both the US and Britain just as Friedman had predicted, with economic conditions deteriorating further after the 1973 oil crisis. Aided by the prestige gained from his successful forecast, Friedman led increasingly successful criticisms against the Keynesian consensus, convincing not only academics and politicians but also much of the general public with his radio and television broadcasts. The academic credibility of Keynesian economics was further undermined by additional criticism from other monetarists trained in the Chicago school of economics, by the Lucas critique and by criticisms from Hayek's Austrian School. So successful were these criticisms that by 1980 Robert Lucas claimed economists would often take offence if described as Keynesians.WEB,weblink Keeping the Keynesian Faith, Princeton University, Alan Blinder, June 2001, 27 June 2009, Alan Blinder, Keynesian principles fared increasingly poorly on the practical side of economics – by 1979 they had been displaced by monetarism as the primary influence on Anglo-American economic policy. However, many officials on both sides of the Atlantic retained a preference for Keynes, and in 1984 the Federal Reserve officially discarded monetarism, after which Keynesian principles made a partial comeback as an influence on policy making.NEWS, The End of the Age of Milton Friedman, 13 November 2008,weblink The Huffington Post, Jeff, Madrick, 8 April 2008, Not all academics accepted the criticism against Keynes – Minsky has argued that Keynesian economics had been debased by excessive mixing with neoclassical ideas from the 1950s, and that it was unfortunate that this branch of economics had even continued to be called "Keynesian". Writing in The American Prospect, Robert Kuttner argued it was not so much excessive Keynesian activism that caused the economic problems of the 1970s but the breakdown of the Bretton Woods system of capital controls, which allowed capital flight from regulated economies into unregulated economies in a fashion similar to Gresham's law phenomenon (where weak currencies undermine strong currencies).JOURNAL,weblink Capital Rues, The American Prospect, Robert Kuttner, Robert Kuttner, 23 October 2008, 23 November 2011, Reviewing Capital Rules: The Construction of Global Finance, by Rawi Abdelal, Harvard University Press, and The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing From Crisis to Sustainability, by James Gustave Speth, Yale University PressHistorian Peter Pugh has stated that a key cause of the economic problems afflicting America in the 1970s was the refusal to raise taxes to finance the Vietnam War, which was against Keynesian advice.PETER PUGH >AUTHOR2=CHRIS GARRATT
, yes, Keynes for Beginners, 1993, 155, 1-874166-13-7, Icon
, A more typical response was to accept some elements of the criticisms while refining Keynesian economic theories to defend them against arguments that would invalidate the whole Keynesian framework – the resulting body of work largely composing New Keynesian economics. In 1992 Alan Blinder wrote about a "Keynesian Restoration", as work based on Keynes's ideas had to some extent become fashionable once again in academia, though in the mainstream it was highly synthesised with monetarism and other neoclassical thinking. In the world of policy making, free market influences broadly sympathetic to monetarism have remained very strong at government level – in powerful normative institutions like the World Bank, the IMF and US Treasury, and in prominent opinion-forming media such as the Financial Times and The Economist.BOOK, Hunter-Wade, Robert, John Ravenhill, Global Political Economy, 2005, 11publisher=Oxford University Press,

Keynesian resurgence 2008–09

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upThe economist Manmohan Singh, the then prime minister of India, spoke strongly in favour of Keynesian fiscal stimulus at the 2008 G-20 Washington summit.NEWS, Ram, N, Keynesian warning is one of seven 'big messages': Manmohan,weblink 8 October 2015, The Hindu, 17 November 2008,
The global financial crisis of 2007–08 led to public skepticism about the free market consensus even from some on the economic right. In March 2008, Martin Wolf, chief economics commentator at the Financial Times, announced the death of the dream of global free-market capitalism.WEB, The Rescue of Bear Stearns Marks Liberalization's Limit, 13 November 2008work=Financial Times, {{registration required}}
In the same month macroeconomist James K. Galbraith used the 25th Annual Milton Friedman Distinguished Lecture to launch a sweeping attack against the consensus for monetarist economics and argued that Keynesian economics were far more relevant for tackling the emerging crises.
WEB,weblink The Collapse of Monetarism and the Irrelevance of the New Monetary Consensus, The University of Texas, James K. Galbraith, 28 February 2009, Economist Robert J. Shiller had begun advocating robust government intervention to tackle the financial crises, specifically citing Keynes.VIDEO, Robert Shiller: The sub prime solution, 13 November 2008,weblink Google Video, WEB, The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do about It, 13 November 2008,weblink Princeton University Press, dead,weblink" title="">weblink 13 October 2008, dmy-all, WEB,weblink Reviving 'animal spirits' to raise confidence, Robert, Shiller,, 19 May 2012, 26 May 2012, Nobel laureate Paul Krugman also actively argued the case for vigorous Keynesian intervention in the economy in his columns for The New York Times.NEWS,weblink Fighting Off Depression, The New York Times, 15 August 2009, Krugman, Paul, 5 January 2009, NEWS,weblink Stuck in the Muddle, The New York Times, 15 August 2009, Krugman, Paul, 23 January 2009, NEWS,weblink Stay the Course, The New York Times, 15 August 2009, Krugman, Paul, 15 June 2009, Other prominent economic commentators who have argued for Keynesian government intervention to mitigate the financial crisis include George Akerlof,NEWS, harv, 22 March 2009,weblink Kill or cure? US stimulus kicks up a storm, The Independent, UK, 8 June 2010, Coy, Peter, J. Bradford DeLong,NEWS,weblink Is Obama's stimulus working?, Los Angeles Times, 19 August 2009, Robert Reich,WEB,weblink EconoMonitor " The Mini Depression and the Maximum-Strength Remedy,, 9 November 2008, 26 May 2012, dead,weblink" title="">weblink 4 October 2009, dmy-all, and Joseph Stiglitz.NEWS,weblink Chasing Stiglitz: Obama's economic team is missing the one guy who's been right all along,, 3 December 2008, 5 December 2013, Newspapers and other media have also cited work relating to Keynes by Hyman Minsky, Robert Skidelsky, Donald MarkwellWEB,weblink 3 July 2009, Keynes and International Economic and Political Relations, Trinity College, University of Melbourne, Donald Markwell, Donald Markwell, and Axel Leijonhufvud.BOOK, Leijonhufvud, Axel, On Keynesian Economics and the Economics of Keynes, 1969, 0-19-500948-7, Oxford University Press, A series of major bailouts were pursued during the financial crisis, starting on 7 September with the announcement that the U.S. Government was to nationalise the two government-sponsored enterprises which oversaw most of the U.S. subprime mortgage market – Fannie Mae and Freddie Mac. In October, Alistair Darling, the British Chancellor of the Exchequer, referred to Keynes as he announced plans for substantial fiscal stimulus to head off the worst effects of recession, in accordance with Keynesian economic thought.NEWS, Darling invokes Keynes as he eases spending rules to fight recession, 13 November 2008,weblink The Guardian, London, Allegra, Stratton, 20 October 2008, NEWS,weblink Spend, spend, spend: Alistair Darling adopts John Maynard Keynes doctrine, The Times, Sam Coates, 14 June 2009, London, 20 October 2008, {{subscription required}}
Similar policies have been adopted by other governments worldwide.
NEWS,weblink China Announces Massive Stimulus Package, Forbes, Paul Maidment, 11 November 2008, 9 November 2008weblink>archivedate=12 November 2008, WEB,weblink A global survey of stimulus plans, Vox EU, 14 June 2009, This is in stark contrast to the action imposed on Indonesia during the Asian financial crisis of 1997, when it was forced by the IMF to close 16 banks at the same time, prompting a bank run.NEWS,weblink The economics of hypocrisy, 27 November 2008, The Guardian, London, 20 October 2008, Ha-Joon, Chang, Much of the post-crisis discussion reflected Keynes's advocacy of international coordination of fiscal or monetary stimulus, and of international economic institutions such as the IMF and the World Bank, which many had argued should be reformed as a "new Bretton Woods", and should have been even before the crises broke out.BOOK, Markwell, Donald, John Maynard Keynes and International Relations: Economic Paths to War and Peace, 2006, 0-19-829236-8, Oxford University Press, The IMF and United Nations economists advocated a coordinated international approach to fiscal stimulus.WEB, 3 July 2009,weblink Fiscal Policy for the Crisis, International Monetary Fund author2 = Steve Symansky author4 = Carlo Cottarelli, Donald Markwell argued that in the absence of such an international approach, there would be a risk of worsening international relations and possibly even world war arising from economic factors similar to those present during the depression of the 1930s.By the end of December 2008, the Financial Times reported that "the sudden resurgence of Keynesian policy is a stunning reversal of the orthodoxy of the past several decades."WEB,weblink The undeniable shift to Keynes, Financial Times, Chris Giles in London, Ralph Atkins in Frankfurt and Krishna Guha in Washington, 23 January 2009, {{registration required}}In December 2008, Paul Krugman released his book The Return of Depression Economics and the Crisis of 2008, arguing that economic conditions similar to those that existed during the earlier part of the 20th century had returned, making Keynesian policy prescriptions more relevant than ever. In February 2009 Robert J. Shiller and George Akerlof published (Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism|Animal Spirits), a book where they argue the current US stimulus package is too small as it does not take into account Keynes's insight on the importance of confidence and expectations in determining the future behaviour of businesspeople and other economic agents.In the March 2009 speech entitled Reform the International Monetary System, Zhou Xiaochuan, the governor of the People's Bank of China, came out in favour of Keynes's idea of a centrally managed global reserve currency. Zhou argued that it was unfortunate that part of the reason for the Bretton Woods system breaking down was the failure to adopt Keynes's bancor. Zhou proposed a gradual move towards increased use of IMF special drawing rights (SDRs).NEWS,weblink China calls for new reserve currency
, Jamil Anderlini in Beijing, Financial Times, 23 March 2009, 13 April 2009
, {{registration required}}WEB
, Reform the International Monetary System
, Zhou Xiaochuan
, People's Bank of China
, 23 March 2009
, 13 April 2009
, Zhou Xiaochuan
,weblink" title="">weblink
, 24 September 2015
, dead
, Although Zhou's ideas had not been broadly accepted, leaders meeting in April at the 2009 G-20 London summit agreed to allow $250 billion of special drawing rights to be created by the IMF, to be distributed globally. Stimulus plans were credited for contributing to a better than expected economic outlook by both the OECDWEB,weblink OECD foresees end to global slide, Financial Times, Norma Cohen, 24 June 2009, 26 June 2009, {{registration required}}and the IMF,WEB,weblink IMF says world is pulling out of recession, Financial Times, Krishna Guha and Sarah O'Connor in Washington and Michael Mackenzie in New York, 8 July 2009, 9 July 2009, {{registration required}}WEB,weblink Recession Loosens Grip But Weak Recovery Ahead, International Monetary Fund, 8 July 2009, 9 July 2009,
in reports published in June and July 2009. Both organisations warned global leaders that recovery was likely to be slow, so counter recessionary measures ought not be rolled back too early.
While the need for stimulus measures was broadly accepted among policy makers, there had been much debate over how to fund the spending. Some leaders and institutions, such as Angela MerkelNEWS,weblink Merkel warns on stimulus, Financial Timesauthor2=Chris Bryant
, yes, 28 March 2009, 20 July 2009
, {{registration required}}and the European Central Bank,NEWS,weblink Keynes Arouses Fed as ECB Looks for Monetary Exit, Mark Gilbert, 22 July 2009, 17 July 2009, Bloomberg, expressed concern over the potential impact on inflation, national debt and the risk that a too large stimulus will create an unsustainable recovery.Among professional economists the revival of Keynesian economics has been even more divisive. Although many economists, such as George Akerlof, Paul Krugman, Robert Shiller, and Joseph Stiglitz, supported Keynesian stimulus, others did not believe higher government spending would help the United States economy recover from the Great Recession. Some economists, such as Robert Lucas, questioned the theoretical basis for stimulus packages.NEWS,weblink The other-worldly philosophers, 20 July 2009, 16 July 2009, The Economist, Others, like Robert Barro and Gary Becker, say that empirical evidence for beneficial effects from Keynesian stimulus does not exist.Robert J. Barro, Gary Becker, Wall Street Journal editorials, 24 August 2011, and 2 September 2011 However, there is a growing academic literature that shows that fiscal expansion helps an economy grow in the near term, and that certain types of fiscal stimulus are particularly effective.WEB, Romer, Christina D., What do we know about the effects of fiscal policy? Separating evidence from ideology, Lecture at Hamilton College, 7 November 2011,weblink JOURNAL,weblink Expansionary Austerity: New International Evidence, Guajardo, Jaime, Leigh, Daniel, Pescatori, Andrea, July 2011, IMF Working Paper, WP/11/158, International Monetary Fund, 18 January 2012, 1886910, Using this new dataset, our estimates suggest fiscal consolidation has contractionary effects on private domestic demand and GDP.,

Reception and views


Keynes's economic thinking only began to achieve close to universal acceptance in the last few years of his life. On a personal level, Keynes's charm was such that he was generally well received wherever he went – even those who found themselves on the wrong side of his occasionally sharp tongue rarely bore a grudge.BOOK, McCann, Charles Robert, John Maynard Keynes – critical responses, 1998, 4, 21, Taylor & Francis, 0-415-15193-7, Keynes's speech at the closing of the Bretton Woods negotiations was received with a lasting standing ovation, rare in international relations, as the delegates acknowledged the scale of his achievements made despite poor health.Austrian School economist Friedrich Hayek was Keynes's most prominent contemporary critic, with sharply opposing views on the economy. Yet after Keynes's death, he wrote: "He was the one really great man I ever knew, and for whom I had unbounded admiration. The world will be a very much poorer place without him."BOOK, Wapshott, Nicholas, Nicholas Wapshott, Keynes Hayek: The Clash that Defined Modern Economics,weblink 2011, W. W. Norton, 978-0-393-08311-8, 206, Lionel Robbins, former head of the economics department at the London School of Economics, who engaged in many heated debates with Keynes in the 1930s, had this to say after observing Keynes in early negotiations with the Americans while drawing up plans for Bretton Woods:Douglas LePan, an official from the Canadian High Commission, wrote:Bertrand RussellNEWS, Hoggard, Liz, Ten things you didn't know about Mr Keynes,weblink 8 September 2019, Evening Standard, 21 October 2008,weblink" title="">weblink 22 January 2010, named Keynes one of the most intelligent people he had ever known, commenting:BOOK, Russell, Bertrand, The Autobiography of Bertrand Russell: 1872–1914, 97, Unwin Paperbacks, 1967, Keynes's obituary in The Times included the comment: "There is the man himself – radiant, brilliant, effervescent, gay, full of impish jokes ... He was a humane man genuinely devoted to the cause of the common good."


As a man of the centre described by some as having the greatest impact of any 20th-century economist, Keynes attracted considerable criticism from both sides of the political spectrum. In the 1920s, Keynes was seen as anti-establishment and was mainly attacked from the right. In the "red 1930s", many young economists favoured Marxist views, even in Cambridge, and while Keynes was engaging principally with the right to try to persuade them of the merits of more progressive policy, the most vociferous criticism against him came from the left, who saw him as a supporter of capitalism. From the 1950s and onwards, most of the attacks against Keynes have again been from the right.File:Friedrich Hayek portrait.jpg|thumb|upright|Friedrich HayekFriedrich HayekIn 1931 Friedrich Hayek extensively critiqued Keynes's 1930 Treatise on Money.JOURNAL,weblink 20 May 2008, Reflections on the Pure Theory of Money of Mr. J.M. Keynes, Economica, Hayek, Friedrick August von, 11, August 1931, After reading Hayek's The Road to Serfdom, Keynes wrote to HayekBOOK, Hoover, Kenneth R., Economics as Ideology, Rowman & Littlefield, 2008, Lanham, Maryland, 152, 978-0-7425-3113-0, "Morally and philosophically I find myself in agreement with virtually the whole of it", but concluded the letter with the recommendation: On the pressing issue of the time, whether deficit spending could lift a country from depression, Keynes replied to Hayek's criticismBOOK, Heilbroner, Robert, The Worldly Philosophers, 2000, 278–8, 0-671-63482-8, Robert Heilbroner, The Worldly Philosophers, in the following way:Asked why Keynes expressed "moral and philosophical" agreement with Hayek's Road to Serfdom, Hayek stated:WEB, 20 May 2008,weblink The Road from Serfdom, Reason (magazine), Reason, July 1992, Hazlett, Thomas W.,weblink" title="">weblink 13 October 2008, According to some observers,{{who|date=November 2016}} Hayek felt that the post-World War II "Keynesian orthodoxy" gave too much power to the state, and that such policies would lead toward socialism.BOOK, Dransfield, Robert, Dransfield, Don, Key Ideas in Economics, Nelson Thornes, 2003, 0-7487-7081-X, 81, While Milton Friedman described The General Theory as "a great book", he argues that its implicit separation of nominal from real magnitudes is neither possible nor desirable. Macroeconomic policy, Friedman argues, can reliably influence only the nominal.JOURNAL,weblink John Maynard Keynes, Federal Reserve Bank of Richmond, Spring 1997, Friedman, Milton, Economic Quarterly, 83/2, He and other monetarists have consequently argued that Keynesian economics can result in stagflation, the combination of low growth and high inflation that developed economies suffered in the early 1970s. More to Friedman's taste was the Tract on Monetary Reform (1923), which he regarded as Keynes's best work because of its focus on maintaining domestic price stability.Joseph Schumpeter was an economist of the same age as Keynes and one of his main rivals. He was among the first reviewers to argue that Keynes's General Theory was not a general theory, but a special case.WEB,weblink Dividends from Schumpeter's Noble Failure, Harvard Business School, Thomas K. McCraw, 7 February 2009, 21 June 2009, He said the work expressed "the attitude of a decaying civilisation". After Keynes's death Schumpeter wrote a brief biographical piece Keynes the Economist – on a personal level he was very positive about Keynes as a man, praising his pleasant nature, courtesy and kindness. He assessed some of Keynes's biographical and editorial work as among the best he'd ever seen. Yet Schumpeter remained critical about Keynes's economics, linking Keynes's childlessness to what Schumpeter saw as an essentially short term view. He considered Keynes to have a kind of unconscious patriotism that caused him to fail to understand the problems of other nations. For Schumpeter "Practical Keynesianism is a seedling which cannot be transplanted into foreign soil: it dies there and becomes poisonous as it dies."BOOK,weblink'+Influence+on+Theory+and+Public+Policy&printsec=frontcover, The New Economics: Keynes's Influence on Theory and Public Policy, and Kessinger Publishing, Symour E Harris, Joseph Schumpter, Keynes the Economist by Schumpter, 73–101, 978-1-4191-4534-6, 1 March 2005, President Harry S. Truman was skeptical of Keynesian theorizing: "Nobody can ever convince me that government can spend a dollar that it's not got," he told Leon Keyserling, a Keynesian economist who chaired Truman's Council of Economic Advisers.

Views on race

Keynes sometimes explained the mass murder that took place during the first years of communist Russia on a racial basis, as part of the "Russian and Jewish nature", rather than as a result of the communist rule. After a trip to Russia, he wrote in his Short View of Russia that there is "beastliness on the Russian and Jewish natures when, as now, they are allied together". He also wrote that "out of the cruelty and stupidity of the Old Russia nothing could ever emerge, but (...) beneath the cruelty and stupidity of the New Russia a speck of the ideal may lie hid", which together with other comments may be construed as anti-Russian and antisemitic.A Short View of Russia, Essays in Persuasion, (London 1932) John Maynard Keynes, 297–312Some critics, including Murray Rothbard, have sought to show that Keynes had sympathy with Nazism, and a number of writers described him as antisemitic. Keynes's private letters contain portraits and descriptions, some of which can be characterized as antisemitic, others as philosemitic.JOURNAL, Reder, Melvin W., The Anti-Semitism of Some Eminent Economists, History of Political Economy, 32, 4, 2000, 833–856, 10.1215/00182702-32-4-833, JOURNAL, Was Keynes Anti-Semitic?, Economic and Political Weekly, 35, 6 May 2000, 4409262, 1619–1624, Chandavarkar, A., 2000, Scholars have suggested that these reflect clichés current at the time that he accepted uncritically, rather than any racism.WEB,weblink The Immoral Moral Scientist. John Maynard Keynes, University of Alberta, Nina Paulovicova, 14 June 2009, On several occasions Keynes used his influence to help his Jewish friends, most notably when he successfully lobbied for Ludwig Wittgenstein to be allowed residency in the United Kingdom, explicitly in order to rescue him from being deported to Nazi-occupied Austria. Keynes was a supporter of Zionism, serving on committees supporting the cause.Allegations that he was racist or had totalitarian beliefs have been rejected by Robert Skidelsky and other biographers. Professor Gordon Fletcher wrote that "the suggestion of a link between Keynes and any support of totalitarianism cannot be sustained". Once the aggressive tendencies of the Nazis towards Jews and other minorities had become apparent, Keynes made clear his loathing of Nazism. As a lifelong pacifist he had initially favoured peaceful containment of Nazi Germany, yet he began to advocate a forceful resolution while many conservatives were still arguing for appeasement. After the war started he roundly criticised the Left for losing their nerve to confront Hitler:

Views on inflation

Keynes has been characterised as being indifferent or even positive about mild inflation.WEB,weblink Keynes on Inflation, Public Broadcasting Service, PBS, Daniel Yergin, Joseph Stanislaw, 30 June 2009, Daniel Yergin, Joseph Stanislaw, He had indeed expressed a preference for inflation over deflation, saying that if one has to choose between the two evils, it is "better to disappoint the rentier" than to inflict pain on working class families.BOOK, Tabb, William K., Reconstructing Political Economy: The Great Divide in Economic Thought, 2002, Routledge, 151,weblink 9780203049310, He also supported the German hyperinflation as a way to get free from reparations obligations. However, Keynes was also aware of the dangers of inflation. In The Economic Consequences of the Peace, he wrote:

Views on trade imbalances

Keynes was the principal author of a proposal – the so-called Keynes Plan – for an International Clearing Union. The two governing principles of the plan were that the problem of settling outstanding balances should be solved by "creating" additional "international money", and that debtor and creditor should be treated almost alike as disturbers of equilibrium. In the event, though, the plans were rejected, in part because "American opinion was naturally reluctant to accept the principle of equality of treatment so novel in debtor-creditor relationships".BOOK, Crowther, Geoffrey, An Outline of Money, Second Edition, Thomas Nelson and Sons, 1948, 326–29,
The new system is not founded on free-trade (liberalisationWEB, What Is Deregulation?, Investopedia, 25 June 2019, 5 September 2019,weblink Deregulation is the reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry., of foreign tradeWEB, What Is Trade Liberalization, Investopedia, 18 April 2019, 5 September 2019,weblink Trade liberalization is the removal or reduction of restrictions or barriers on the free exchange of goods between nations., ) but rather on the regulation of international trade, in order to eliminate trade imbalances: the nations with a surplus would have an incentive to reduce it, and in doing so they would automatically clear other nations deficits.WEB, Current Global Imbalances and the Keynes Plan (PDF), Costabile, Lilia, Political Economy Research Institute, December 2007, 5 September 2019,weblink He proposed a global bank that would issue its currency – the bancor – which was exchangeable with national currencies at fixed rates of exchange and would become the unit of account between nations, which means it would be used to measure a country's trade deficit or trade surplus. Every country would have an overdraft facility in its bancor account at the International Clearing Union. He pointed out that surpluses lead to weak global aggregate demand – countries running surpluses exert a "negative externality" on trading partners, and posed, far more than those in deficit, a threat to global prosperity.NEWS,weblink Reform the euro or bin it | Joseph Stiglitz, The Guardian, 5 May 2010, Stiglitz, Joseph, In his 1933 Yale Review article "National Self-Sufficiency,"WEB,weblink National Self-Sufficiency, Keynes, John Maynard, June 1933, Mount Holyoke College, The Yale Review Vol. 22, no. 4, 2019-09-05, WEB,weblink What Keynes warned about globalization, Grewal, David Singh, September 2009, Seminar Magazine, New Delhi, India, 0971-6742, 2019-09-05, he already highlighted the problems created by free trade. His view, supported by many economists and commentators at the time, was that creditor nations may be just as responsible as debtor nations for disequilibrium in exchanges and that both should be under an obligation to bring trade back into a state of balance. Failure for them to do so could have serious consequences. In the words of Geoffrey Crowther, then editor of The Economist, "If the economic relationships between nations are not, by one means or another, brought fairly close to balance, then there is no set of financial arrangements that can rescue the world from the impoverishing results of chaos."BOOK, Crowther, Geoffrey, An Outline of Money, Second Edition, Thomas Nelson and Sons, 1948, 336,
These ideas were informed by events prior to the Great Depression when – in the opinion of Keynes and others – international lending, primarily by the U.S., exceeded the capacity of sound investment and so got diverted into non-productive and speculative uses, which in turn invited default and a sudden stop to the process of lending.BOOK, Crowther, Geoffrey, An Outline of Money, Second Edition, Thomas Nelson and Sons, 1948, 368–72, Influenced by Keynes, economics texts in the immediate post-war period put a significant emphasis on balance in trade. For example, the second edition of the popular introductory textbook, An Outline of Money,BOOK, Crowther, Geoffrey, An Outline of Money, Second Edition, Thomas Nelson and Sons, 1948, devoted the last three of its ten chapters to questions of foreign exchange management and in particular the "problem of balance". However, in more recent years, since the end of the Bretton Woods system in 1971, with the increasing influence of Monetarist schools of thought in the 1980s, and particularly in the face of large sustained trade imbalances, these concerns – and particularly concerns about the destabilising effects of large trade surpluses – have largely disappeared from mainstream economics discourseBOOK, Krugman, P, Wells, R, 2006, Economics, Worth Publishers, and Keynes' insights have slipped from view.BOOK, Duncan, R, The Dollar Crisis: Causes, Consequences, Cures, 2005, Wiley, They are receiving some attention again in the wake of the financial crisis of 2007–08.WEB, Clearing Up This Mess, Monbiot, George, George Monbiot Website, 2008-11-18, 2019-09-05,weblink live,weblink" title="">weblink 23 January 2009,

Personal life

File:Duncan Grant with John Maynard Keynes.jpg|thumb|Painter Duncan GrantDuncan Grant


Keynes's early romantic and sexual relationships were exclusively with men.NEWS, 20 May 2008,weblink The man who made us all Keynesians, The New York Times, 11 May 1986, Robert L. Heilbroner,
Keynes had been in relationships while at Eton and Cambridge; significant among these early partners were Dilly Knox and Daniel Macmillan.{{sfn|Strachey|1994|pp=123, 127, 715}} Keynes was open about his affairs, and from 1901 to 1915 kept separate diaries in which he tabulated his many sexual encounters.The Sex Diaries of John Maynard Keynes The Economist, 28 January 2008, Evan Zimroth (Clare Hall, Cambridge) {{webarchive |url= |date=24 November 2009 }}O'Grady, Sean. "John Maynard Keynes: New biography reveals shocking details about the economist's sex life", The Independent. 12 March 2015; accessed 19 November 2015. Keynes's relationship and later close friendship with Macmillan was to be fortunate, as Macmillan's company first published his tract Economic Consequences of the Peace.Thorpe, p.18
Attitudes in the Bloomsbury Group, in which Keynes was avidly involved, were relaxed about homosexuality. Keynes, together with writer Lytton Strachey, had reshaped the Victorian attitudes of the Cambridge Apostles: "since [their] time, homosexual relations among the members were for a time common", wrote Bertrand Russell.{{sfn|Strachey|1994|p=103}} The artist Duncan Grant, whom he met in 1908, was one of Keynes's great loves. Keynes was also involved with Lytton Strachey, though they were for the most part love rivals, not lovers. Keynes had won the affections of Arthur Hobhouse,{{sfn|Strachey|1994|pp=108-110}} and as with Grant, fell out with a jealous Strachey for it.{{sfn|Strachey|1994|pp=181–183}} Strachey had previously found himself put off by Keynes, not least because of his manner of "treat[ing] his love affairs statistically".{{sfn|Strachey|1994|p=128}}Political opponents have used Keynes's sexuality to attack his academic work.NEWS, Bartlett, Bruce, Keynes's Biggest Mistake,weblink The New York Times, 7 May 2013, One line of attack held that he was uninterested in the long term ramifications of his theories because he had no children.Keynes's friends in the Bloomsbury Group were initially surprised when, in his later years, he began pursuing affairs with women,Adam Trimingham, "A man of numbers", The Argus, 12 November 2012. demonstrating himself to be bisexual.Sources describing Keynes as bisexual include:
  • John Maynard Keynes, The Economic Consequences of the Peace, Indo-European Publishing, 2011, see back book cover notes, {{ISBN|160444116X}}, 9781604441161
  • Paul Levy, "The Bloomsbury Group", Essays on John Maynard Keynes, ed. Milo Keynes, Cambridge University Press, 1979, p. 65, {{ISBN|052129696X}}, 9780521296960
  • David Warsh, Economic Principles: The Masters and Mavericks of Modern Economics, Simon & Schuster, 2010, p. 3, {{ISBN|9781451602562}} Ray Costelloe (who would later marry Oliver Strachey) was an early heterosexual interest of Keynes.{{sfn|Strachey|1994|p=129}} In 1906, Keynes had written of this infatuation that, "I seem to have fallen in love with Ray a little bit, but as she isn't male I haven't [been] able to think of any suitable steps to take."BOOK, Moggridge, Donald Edward, Maynard Keynes: an economist's biography, 104, Routledge, 1995,


File:Lopokova and Keynes 1920s.jpg|thumb|Lydia LopokovaLydia LopokovaIn 1921, Keynes wrote that he had fallen "very much in love" with Lydia Lopokova, a well-known Russian ballerina and one of the stars of Sergei Diaghilev's Ballets Russes.BOOK, Maynard Keynes: an economist's biography, 1992, Routledge, 395, D. E. Moggridge, I again fell very much in love with her. She seemed to me perfect in every way., In the early years of his courtship, he maintained an affair with a younger man, Sebastian Sprott, in tandem with Lopokova, but eventually chose Lopokova exclusively.The unlikely Lydia LopokovaThe Telegraph, 25 April 2008, Rupert Christiansen"The firebird of Gordon Square" Kathryn Hughes, The Guardian, 19 April 2008 They were married in 1925, with Keynes's former lover Duncan Grant as best man. "What a marriage of beauty and brains, the fair Lopokova and John Maynard Keynes" was said at the time. Keynes later commented to Strachey that beauty and intelligence were rarely found in the same person, and that only in Duncan Grant had he found the combination.BOOK, Justin Wintle, Makers of Modern Culture,weblink 1, 2002, Psychology Press, 978-0-415-26583-6, 270, Keynes, John Maynard, The union was happy, with biographer Peter Clarke writing that the marriage gave Keynes "a new focus, a new emotional stability and a sheer delight of which he never wearied".BOOK, Clarke, Peter, 2009, Keynes: The Twentieth Century's Most Influential Economist, Bloomsbury, 1, 56–59 , 80, 978-1-4088-0385-1, WEB
, 21 November 2008
, Keynes, John Maynard (1883–1946)
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, Lydia became pregnant in 1927 but miscarried.Among Keynes's Bloomsbury friends, Lopokova was, at least initially, subjected to criticism for her manners, mode of conversation, and supposedly humble social origins – the last of the ostensible causes being particularly noted in the letters of Vanessa and Clive Bell, and Virginia Woolf.Lady Talky, Alison Light, London Review of Books, Vol. 30 No. 24, 18 December 2008"Review: Keynes and the Celestial Dancer", by Anand Chandavarkar, Reviewed work(s): Lydia and Maynard: Letters between Lydia Lopokova and Maynard Keynes by Polly Hill; Richard Keynes, Economic and Political Weekly, Vol. 25, No. 34 (25 August 1990), p. 1896 In her novel Mrs Dalloway (1925), Woolf bases the character of Rezia Warren Smith on Lopokova.BOOK, Lydia and Maynard: letters between Lydia Lopokova and John Maynard Keynes, 97, André Deutsch, Polly Hill, Richard Keynes, 1989, E. M. Forster would later write in contrition about "Lydia Keynes, every whose word should be recorded":BOOK, Commonplace Book, Lydia Keynes, every whose word should be recorded, said to me as I was leaving her flat the other night: "You know I once tumbled from the stairs and believe me I paid the price." I took the sentence down before I forgot it., 195, E.M. Forster, 1987, "How we all used to underestimate her".File:46 Gordon Square London.jpg|thumb|46 Gordon Square, where Keynes would often stay while in London. Following his marriage, Keynes took out an extended lease on Tilton House, a farm in the countryside near BrightonBrighton(File:John Maynard Keynes 46 Gordon Square blue plaque.jpg|thumb|Blue plaque, 46 Gordon Square)

Support for the arts

Keynes thought that the pursuit of money for its own sake was a pathological condition, and that the proper aim of work is to provide leisure. He wanted shorter working hours and longer holidays for all.Keynes was interested in literature in general and drama in particular and supported the Cambridge Arts Theatre financially, which allowed the institution to become one of the major British stages outside London.Keynes's interest in classical opera and dance led him to support the Royal Opera House at Covent Garden and the Ballet Company at Sadler's Wells. During the war, as a member of CEMA (Council for the Encouragement of Music and the Arts), Keynes helped secure government funds to maintain both companies while their venues were shut. Following the war, Keynes was instrumental in establishing the Arts Council of Great Britain and was its founding chairman in 1946. From the start, the two organisations that received the largest grants from the new body were the Royal Opera House and Sadler's Wells.Like several other notable British authors of his time, Keynes was a member of the Bloomsbury Group. Virginia Woolf's biographer tells an anecdote of how Virginia Woolf, Keynes, and T. S. Eliot discussed religion at a dinner party, in the context of their struggle against Victorian era morality.BOOK, Quentin Bell, Virginia Wolf, A Biography., 2, The Hogarth Press. 1972, revised Edition 1996, 177, Quentin Bell, Keynes may have been confirmed,BOOK, John Maynard Keynes: Volume 1: Hopes Betrayed 1883–1920, Skidelsky, Robert, Robert Skidelsky, 86, 1 January 1994, Penguin Books, 014023554X, but according to Cambridge University he was clearly an agnostic, which he remained until his death.BOOK, Lubenow, William C, W. C. Lubenow, The Cambridge Apostles, 1820–1914, 1998, 0-521-57213-4, Cambridge University Press,
According to one biographer, "he was never able to take religion seriously, regarding it as a strange aberration of the human mind."


Keynes was ultimately a successful investor, building up a private fortune. His assets were nearly wiped out following the Wall Street Crash of 1929, which he did not foresee, but he soon recouped. At Keynes's death, in 1946, his net worth stood just short of £500,000 – equivalent to about £11 million ($16.5 million) in 2009. The sum had been amassed despite lavish support for various good causes and his ethic which made him reluctant to sell on a falling market, in cases where he saw such behaviour as likely to deepen a slump.See John Maynard Keynes by Skidelsky (2003), pp. 520–21, p. 563 and especially p. 565 where Keynes is quoted as "It is the duty of a serious investor to accept the depreciation of his holding with equanimity ... any other policy is anti-social, destructive of confidence and incompatible with the working of the economic system."Keynes built up a substantial collection of fine art, including works by Paul Cézanne, Edgar Degas, Amedeo Modigliani, Georges Braque, Pablo Picasso, and Georges Seurat (some of which can now be seen at the Fitzwilliam Museum). He enjoyed collecting books; he collected and protected many of Isaac Newton's papers. In part on the basis of these papers, Keynes wrote of Newton as "the last of the magicians."BOOK, Keynes, John Maynard, The World of Mathematics, 1956, Dover, 0-486-41153-2, 2000, James R. Newman, 277, Keynes successfully managed the endowment of King's College, Cambridge, with the active component of his portfolio outperforming a British equity index by an average of 8% a year over a quarter century, earning him favourable mention by later investors such as Warren Buffett and George Soros.JOURNAL, Chambers, David, Dimson, Elroy, Summer 2013, Retrospectives: John Maynard Keynes, Investment Innovator, Journal of Economic Perspectives, American Economic Association, 27, 3, 213–228, 10.1257/jep.27.3.213,

Political causes

Keynes was a lifelong member of the Liberal Party, which until the 1920s had been one of the two main political parties in the United Kingdom, and as late as 1916 had often been the dominant power in government. Keynes had helped campaign for the Liberals at elections from about 1906, yet he always refused to run for office himself, despite being asked to do so on three separate occasions in 1920. From 1926, when Lloyd George became leader of the Liberals, Keynes took a major role in defining the party's economic policy, but by then the Liberals had been displaced into third party status by the Labour Party.In 1939 Keynes had the option to enter Parliament as an independent MP with the University of Cambridge seat. A by-election for the seat was to be held due to the illness of an elderly Tory, and the master of Magdalene College had obtained agreement that none of the major parties would field a candidate if Keynes chose to stand. Keynes declined the invitation as he felt he would wield greater influence on events if he remained a free agent.Keynes was a proponent of eugenics. He served as director of the British Eugenics Society from 1937 to 1944. As late as 1946, shortly before his death, Keynes declared eugenics to be "the most important, significant and, I would add, genuine branch of sociology which exists."JOURNAL, Keynes, John Maynard, 1946, The Galton lecture, 1946: Presentation of the society's gold medal, Eugenics Review, 38, 1, 39–40, 2986310, 21260495, On February I4th, I946, before a large gathering of Fellows, Members and guests at Manson house, London, Lord Keynes, On behalf of the Eugenics Society, presented the first Galton Medal...Opening the proceedings, Lord Keynes said:It is a satisfaction to take part in the presentation of the first Galton Gold Medal, both in piety to the memory of the great Galton and in recognition of a worthy and appropriate recipient of a medal established in his name., Keynes once remarked that "the youth had no religion save communism and this was worse than nothing." Marxism "was founded upon nothing better than a misunderstanding of Ricardo", and, given time, he (Keynes) "would deal thoroughly with the Marxists" and other economists to solve the economic problems their theories "threaten to cause".In 1931 Keynes had the following to say on Marxism:BOOK, Keynes, John Maynard, Essays in Persuasion, 1931, 0-393-00190-3,weblink New York, W.W. Norton & Co., Keynes was a firm supporter of women's rights and in 1932 became vice-chairman of the Marie Stopes Society which provided birth control education. He also campaigned against job discrimination against women and unequal pay. He was an outspoken campaigner for reform of the laws against homosexuality.


(File:Tilton House, 2017.jpg|thumb|Tilton House, 2017)Throughout his life, Keynes worked energetically for the benefit both of the public and his friends; even when his health was poor, he laboured to sort out the finances of his old college.NEWS,weblink John Maynard Keynes: Can the great economist save the world?, 20 November 2008, The Independent, United Kingdom, Nick, Fraser, 8 November 2008,
Helping to set up the Bretton Woods system, he worked to institute an international monetary system that would be beneficial for the world economy. In 1946, Keynes suffered a series of heart attacks, which ultimately proved fatal. They began during negotiations for the Anglo-American loan in Savannah, Georgia, where he was trying to secure favourable terms for the United Kingdom from the United States, a process he described as "absolute hell".
BOOK, Pressman, Steven, Steven Pressman (economist), Fifty Major Economists,weblink 1999, Routledge, 978-1-134-78082-2, 99–104, BOOK, Marr, Andrew, Andrew Marr, A history of modern Britain,weblink 2007, Macmillan, London, 978-1-4050-0538-8, 12,
A few weeks after returning from the United States, Keynes died of a heart attack at Tilton, his farmhouse home near Firle, East Sussex, England, on 21 April 1946, at the age of 62.NEWS, Lord Keynes Dies of Heart Attack. Noted Economist Exhausted by Strain of Recent Savannah Monetary Conference,weblink John Maynard Lord Keynes, distinguished economist, whose work for restoring the economic structure of a world twice shattered by war brought him world-wide influence, died of a heart attack today at his home in Firle, Sussex. His age was 63., The New York Times, 22 April 1946, 10 February 2010, Against his wishes (he wanted for his ashes to be deposited in the crypt at King's), his ashes were scattered on the Downs above Tilton.Wilson, Scott. Resting Places: The Burial Sites of More Than 14,000 Famous Persons, 3d ed.: 2 (Kindle Location 25430). McFarland & Company, Inc., Publishers. Kindle Edition.
Both of Keynes's parents outlived him: his father John Neville Keynes (1852–1949) by three years, and his mother Florence Ada Keynes (1861–1958) by twelve. Keynes's brother Sir Geoffrey Keynes (1887–1982) was a distinguished surgeon, scholar, and bibliophile. His nephews include Richard Keynes (1919–2010), a physiologist, and Quentin Keynes (1921–2003), an adventurer and bibliophile. Keynes had no children; his widow, Lydia Lopokova, died in 1981.


{{Infobox COA widecentrecentre|200px)|motto = Me Tutore Tutus Eris|notes = Granted 16th May 1944

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