John Maynard Keynes, 1st Baron Keynes, was a British economist whose ideas fundamentally changed the theory and practice of economics.
Born on June 5, 1883, in Cambridge, England, Keynes came from an academic background. His father, John Neville Keynes, was a noted economist and philosopher himself, having penned the influential work "The Scope and Method of Political Economy" (1891).
Educated at Eton and King’s College, Cambridge, Keynes displayed exceptional academic prowess. By 1905, he had completed his undergraduate studies, majoring in mathematics. During his time at Cambridge, he became acquainted with the Bloomsbury Group, a collective of influential writers, intellectuals, and artists.
Keynes's early professional years were spent working in the India Office and lecturing at Cambridge. However, his work on the economic consequences of the peace after World War I, specifically "The Economic Consequences of the Peace" (1919), propelled him into the public eye. In this work, he criticized the Treaty of Versailles for its potentially destructive reparations imposed on Germany, predicting economic hardship and subsequent unrest.
His magnum opus, "The General Theory of Employment, Interest and Money" (1936), introduced revolutionary ideas which challenged the classical economics perspective, which believed in the self-adjusting nature of markets. Keynes posited that during recessions, active government intervention was necessary to ensure full employment. He emphasized the importance of aggregate demand for goods and services as the driving factor of economic activity and unemployment. His ideas greatly influenced the New Deal in the U.S. and similar policies in other nations. Post-World War II, many Western countries adopted Keynesian policies, establishing a mixed economy that sought to balance the public and private sectors.
Throughout his life, Keynes played a pivotal role in the creation and development of financial institutions, most notably the International Monetary Fund (IMF) and the World Bank.
He was deeply involved in British economic policy, serving as an adviser to various governments and holding prominent positions in institutions like the British Arts Council and the Bank of England.
Keynes considered economics ‘method’, rather than a ‘doctrine’ (CW 12, p. 856), to be applied to the analysis of an economic material made up of ‘motives, expectations, psychological uncertainties’ (CW 14, p. 300). For Keynes, economics is also ‘a branch of logic’ (CW 14, p. 296), an ‘organised and orderly’ (CW 7, p. 297) way of thinking about the economic material. This epistemological and epistemic vision started with his “Treatise on Probability” and continued to his “General Theory”.
These methodological deliberations, though less renowned, are of greatest interest.
Keynes's influence was not just limited to economics; he was a patron of the arts, a successful investor, and a key figure in the Bloomsbury Group.
A curious fact of his attitude towards culture and science is reflected in his personal collection of Newton’s alchemy manuscripts bought in an auction. Keynes sought papers on any topic at first, but eventually concentrated on this specific niche: Newton’s alchemy. Few people knew the father of modern science had dabbled in alchemy; but the more Keynes collected and the more he “brood[ed] over these queer collections,” the clearer it became that alchemy wasn’t a niche to Newton at all. It was, in many ways, Newton’s life work—more vital to him than physics or mathematics ever was. This Newton “was not the first of the age of reason,” Keynes concluded: “He was the last of the magicians.”
He passed away on April 21, 1946, and his economic theories continue to shape economic debates.
(1 Oct 1931) Famous economic expert predicts great future for Britain as result of gold standard suspension.
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