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Home > Macroeconomic Issues Thinkers > John Maynard Keynes

Macroeconomic Issues Thinkers

John Maynard Keynes

Key economic thinker of the 20th century

Timeline

1883
Born in Cambridge, UK.
1897
Received scholarship to Eton.
1902
Attended Cambridge University.
1906
Joined the Civil Service.
1909
Elected fellow of King’s College, Cambridge University.
1911
Appointed editor of the Economic Journal.
1919
Appointed chief Treasury representative at the Paris Peace Conference.
1919
Publication of Economic Consequences of the Peace.
1921
Appointed chairman of the National Mutual Life Insurance Company.
1921
Publication of Treatise on Probability.
1923
Publication of Tract on Monetary Reform.
1923
Began contributing monthly columns to The Nation.
1929
Appointed fellow of the British Academy.
1929
Appointed to the UK government’s Macmillan Committee of Enquiry into Finance and Industry.
1930
Publication of Treatise on Money.
1936
Publication of The General Theory of Employment, Interest and Money.
1940
Appointed a government economic adviser.
1941
Elected to the Court of the Bank of England.
1942
Awarded a peerage.
1944
Represented Britain at the Bretton Woods conference.
1946
Died in Tilton, East Sussex, UK.

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Life and Career

J. M. Keynes was an internationally renowned economist, who had a major impact on 20th century economic practice and fiscal policy. He was educated at Eton and Cambridge University, before entering the India Office of the Civil Service. He later returned to Cambridge to teach economics, while he developed his economic theories, and wrote some of the major economic texts of his time. He was also involved in the war effort for the Treasury Office, and advised various chancellors between 1940 and 1946. He was central to the creation of the International Monetary Fund and the World Bank, in the aftermath of World War II.

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Key Thinking

  • The effect of Keynesian economics and theory still reverberates; his work on economic policy, and social progress was hugely influential in forming modern economic thinking.

  • He strongly advocated interventionist policies, and governmental use of fiscal and monetary measures to mitigate the adverse effects of recessions and booms.

  • He believed that government borrowing was necessary for undertaking large-scale public works that would stimulate the economy during a recession.

  • The promotion of deficit spending to help employment became the basis of government economic policy.

  • During World War II, Keynes was actively involved in discussions on the post-war economic landscape, particularly the creation of the International Monetary Fund, the World Bank, and the Bretton Woods system for international currency management.

  • At that time, he also met with Roosevelt’s economic advisors to counter prevalent laissez-faire policies, and supported the President’s New Deal, and the promotion of high employment, production, and purchasing power.

  • He was a pivotal figure in the request for American assistance for the UK economy after the war.

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In Perspective

  • His Treatise on Probability explored the foundations of knowledge regarding the meaning and measurement of probability, depicting probability as a logical relation, and therefore objective.

  • In Economic Consequences of the Peace, he criticized the allies for the harshness of the reparations they imposed on Germany at the end of the World War I. The later rise of Hitler was thought by many to justify this condemnation.

  • In A Tract on Monetary Reform he called for an end to the Gold Standard, on the basis that devaluation was preferable to deflation, and that sterling was overvalued. The British government later abandoned the Standard, and was forced to devalue sterling by 20%.

  • He distinguished between investments and saving, proposing that if investments exceeded saving, it led to inflation, but if saving exceeded investment, there would be recession.

  • In The General Theory of Employment, Interest and Money, he argued, that unemployment occurs if people don’t spend enough money.

  • In How to Pay for the War, he supported low interest rates, and compulsory saving to prevent the type of inflation that happened after World War I.

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Quotation

“In the long run, we’re all dead.”

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Further reading on John Maynard Keynes

Books:

  • Davidson, John. John Maynard Keynes. Basingstoke, UK: Palgrave Macmillan, 2007.
  • Keynes, John Maynard. The General Theory of Employment, Interest and Money. Basingstoke, UK: Palgrave Macmillan, 2007.
  • Minsky, Hyman. John Maynard Keynes. New York: McGraw-Hill, 2008.

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