Born: June 5, 1883, in Cambridge, England; Died: April 21, 1946, in Firle, Sussex, England; English; macroeconomic theory; Major Works: The Economic Consequences of the Peace (1919), Treatise on Probability (1921), Tract on Monetary Reform (1929), The General Theory of Employment, Interest and Money (1936).
John Maynard Keynes, Baron Keynes of Tilton in the County of Sussex, was an English economist who impacted both political theory and modern economics. Keynesian economics promote a mixed economy dominated by the private sector but with a large role for government and the public sector. Keynesian economics argues that at the macroeconomic level the private sector is at times inefficient in its allocation of resources. When this occurs, the public sector needs to be actively involved in the fiscal and monetary policies to create stability of the business cycle. Keynes followed a legacy of successful nonconformists within his family and is revered as the father of macroeconomics. Keynes died in 1946.
John Maynard Keyes was born in Cambridge, England, on June 5, 1883. His father was a lecturer and the university's chief administrative official. His mother was an accomplished author, Cambridge's first woman councilor, and also its mayor. After enjoying an elite education at Eton College, Keynes completed his postsecondary studies at King's College in Cambridge and earned his degree in mathematics in 1905. He spent additional time studying under Alfred Marshall and Arthur Pigou and received a master's of arts in economics.
Keynes's early career started as a civil servant in London when he placed second on an examination, which cost him his desired job in the Treasury Department. He was appointed to a position in foreign affairs to the Royal Commission on Indian Currency and Finance, a bureau that extended advice on the administration of India, one of England's dominions at the time. Keynes accepted this foreign affairs job and learned how a government department operates. He soon developed an interest in Indian affairs and their currency; Keynes gained the attention of numerous government officials because he was able to apply economic theory to practical problems. His experience helped him write his first book in economics, Indian Currency and Finance (1913), a description of the Indian monetary system.
In 1908, Keynes returned to Cambridge to teach economics. Tired of the slow-moving departments of the Indian Office, his attentions turned to writing. He composed an essay based on his experiences in government entitled “Recent Economic Events in India” (1919), which was his first major article in print. In addition to being a journalist and lecturer, Keynes was part of the acclaimed Bloomsbury Group of literary greats, including Virginia Woolf and Bertrand Russell. In 1911, Keynes was appointed the prestigious honor of editor of The Economic Journal. This was a significant accomplishment especially due to the fact that he had few publications at this time.
World War I put a hefty burden on the British economy, and in 1915 Keynes was offered a job at the British Treasury. He gladly accepted this offer to actively participate in the war effort. Keynes served as the Treasury's chief representative at the Paris Peace Conference of 1919 since his division had done much of the work on the preliminary reparations and war debts; however, its result was quite unfavorable to him. After returning to England, he resigned from this post and turned to writing a book. By the fall of 1919, Keynes had published The Economic Consequences of the Peace, which became an international best seller and a close foreshadowing of the immediate future. He predicted that the treaty's terms were too harsh and were aimed to cripple Germany instead of punishing them. Keynes's contention was that the provisions in the treaty would hamper Germany's postwar economy, Germany would eventually repudiate the treaty, and a rearming of Europe would ensue. Just as Keynes had suggested, the German economy experienced hyperinflation in 1923 and only a fraction of the reparations were ever received.
After 1929, the entire world was in a plummet and Keynes decided to take on the task of explaining and determining new ways to control trade cycles. This resulted in two books, Tract on Monetary Reform (1929) and The General Theory of Employment, Interest and Money (1936). Through these books, Keynes proclaimed that there needed to be both national and international programs that would lead to a cohesive monetary policy. He believed that a national budget should be used as a primary instrument in planning the national economy. Keynes asserted that policies were needed to regulate the ups and downs of the trade cycle. He firmly believed that it was the responsibility of government to regulate the levels of employment and investment. Keynes response to a depression or recession is government actions designed to encourage spending and discourage saving, and a key component is that the government's central bank should lower interest rates when prices are too high and raise interest rates when prices fall.
Keynes made other important contributions to economics, one focused on the disorganization caused by World War I and the other on the deterioration in the balance of trade between Europe and the United States. He continued to help the British government and became an unofficial adviser to Germany. Keynes worked with Roosevelt and other writers of the New Deal, contributing directly to its implementation. By the time World War II began, Keynes was a famous and accredited expert on economics. He assumed a primary role in establishing the Bretton Woods system, which would eventually lay foundations for the International Monetary Fund and the World Bank. He strongly supported William Beveridge's proposal for an expansion of Britain's social services, which led to the United Kingdom's National Health Service. Keynes occupied a seat in the House of Lords as a member of the Liberal Party and supported equal opportunities for women in business.
John Maynard Keynes suffered from several heart attacks before losing his life on April 21, 1946, in Firle, Sussex, England, due to heart failure. He was cremated and his ashes were scattered on the Downs above Tilton.
See also: Beveridge, William; Marshall, Alfred; Pigou, A. C.
Related Credo Articles
One of the leading economists of the twentieth century, Keynes held academic positions at the University of Cambridge and also worked from time...
Economist Harrod R F. , The Life of John Maynard Keynes , London : Macmillan , and New York : Harcourt Brace , 1951 ...
British, b: 1883, Cambridge, England, d: 1946, Tilton, Sussex. Cat: Cambridge political economist. Ints: Economics; probability; moral...