The son of John Neville Keynes, a Cambridge economist, philosopher and administrator, and Florence Ada (Brown), Cambridge’s first woman town councillor and later its mayor, Maynard Keynes made contributions that extended well beyond academic economics. After an education at Eton and King’s College, Cambridge (BA in Mathematics 1905), his first career was that of a civil servant in the India Office (1906–8). Although he soon returned to Cambridge to lecture in economics (1908–20) and be a Fellow of King’s (1909–46), he never lost his connection with the world of affairs. He served as a member of the Royal Commission on Indian Finance and Currency (1913–14), was a wartime Treasury official eventually in charge of Britain’s external financial relations (1915–19), a member of the Macmillan Committee on Finance and Industry (1929–31), a member of the Economic Advisory Council (1930–9), an adviser to the Chancellor of the Exchequer (1940–6) and a director of the Bank of England (1941–6). After 1919, he also had an active career in the world of finance as a company director, insurance company chairman and bursar of King’s College, Cambridge. Moreover, under the influence of his Bloomsbury friends Vanessa Bell and Duncan Grant, as well as Lydia Lopokova of the Diaghilev Ballet whom he married in 1925, he played an active and important role in the cultural life of his time as a patron of the arts, founder of the Arts Theatre, Cambridge (which he gave to the city and university in 1938), trustee of the National Gallery, chairman of the Council for the Encouragement of Music and the Arts, and initiator and first chairman of the Arts Council of Great Britain.
Keynes’s reputation as an academic economist arises from work that he started after his fortieth year and published after he was 47. Prior to that, he was much better known as a publicist and commentator on economic affairs, a career he began in 1919 after his resignation as the senior Treasury official at the Paris Peace Conference with his bestselling and influential indictment of the negotiation and terms of the Peace Treaty in The Economic Consequences of the Peace (1919). He continued in this popular vein with A Revision of the Treaty (1922), A Tract on Monetary Reform (1923), The Economic Consequences of Mr Churchill (1925), The End of Laissez-Faire (1926) and prolific journalism, notably for the liberal Nation and Athenaeum (1923–31) and the more socialist New Statesman and Nation, for both of which he was chairman of the board. This does not mean that he was unknown as an academic: he was editor of the Royal Economic Society’s The Economic Journal (1911–45) and the author of A Treatise on Probability (1921), a philosophical examination of the principles of reasoning and rational action in conditions of incomplete and uncertain knowledge, the earliest ideas of which date after 1904 when Keynes was strongly influenced by G.E.Moore. Nevertheless, it would be fair to echo Sir Austin Robinson’s comment (1947): ‘If Maynard Keynes had died in 1925 it would have been difficult for those who knew intimately the power and originality of his mind to have convinced those who had not known him of the full measure of Keynes’ ability.’
The bases for Keynes’s academic reputation as an economist were his Treatise on Money (1930) and The General Theory of Employment, Interest and Money (1936). Both were stages in the development in theoretical terms of the principles which should underlie attempts by governments to achieve economic stability. In the Treatise, as in the more popular Tract, the main concern was with monetary and price stability and the role that monetary policy alone could play in achieving them. As was common in contemporary monetary economics, Keynes dichotomized the economy into its monetary and real sectors and, on the assumption that money was neutral in the long run, looked for the principles of monetary practice which would ensure price stability, in the Treatise case a monetary policy which made the long-term market rate of interest equivalent to the ‘natural rate’ at which savings equalled investment. This initial approach to the problem was found to be inadequate by Keynes’s critics, who included R.G.Hawtrey, F.A.Hayek and D.H.Robertson, as well as a group of younger economists in Cambridge (R.F.Kahn, James Meade, Joan and Austin Robinson, and Piero Sraffa). When convinced of the inadequacies of the Treatise, Keynes began reformulating his ideas. The major breakthrough came in 1933 when, contrary to traditional theory, Keynes hit on the crucial role of changes in output and employment in equilibration savings and investment, thus providing the basis for a more general theory than his own or his predecessors’ previous work. The new theory seemed to offer the possibility of equilibrium at less than full employment, something missing in previous work. From his 1933 breakthrough, which hinged on the consumption-income relationship implicit in the multiplier, after considerable further work, everything fell into place.
During the last ten years of his life, although his activities were inhibited by a severe heart condition after 1937, Keynes devoted less time to defending and somewhat refining his theoretical views than to seeing them implemented.
Even before the outbreak of war in 1939, he had started to influence Treasury thinking in Britain, while his students and his writings were becoming influential in such places as Washington and Ottawa. However, the problems of war finance and post-war planning appear to have been crucial in the spread of his ideas into day-to-day policy making, for as he demonstrated in How to Pay for the War (1940) the new ideas when married to another contemporary development—national income and expenditure accounting—provided a powerful new way of thinking about the economy and its management. The resulting ‘new economies’ put less emphasis than Keynes would have done on the roles of monetary policy and the control of public investment in the achievement of full employment, yet, along with a political determination to avoid the wastes of the interwar years, it led to widespread official commitments to post-war policies of high or full employment. By then, however, Keynes was less involved in such matters: the last years of his life saw him devoting much more of his efforts to shaping other aspects of the post-war world, most notably the international monetary order of the International Monetary Fund and the World Bank, and to securing Britain’s post-war international economic position. Gaining these, or at least a semblance of them, finally exhausted him.
Harrod, R.F. (1951) The Life of John Maynard Keynes, London.
Keynes, J.M. (1971–89) The Collected Writings of John Maynard Keynes, ed. E.Johnson and D.Moggridge, 30 vols, London and New York. (Those approaching Keynes’s ideas for the first time are advised to look at vol. 9, Essays in Persuasion.)
Moggridge, D.E. (1993), Keynes, 3rd edn, Toronto.
Skideisky, R. (1983) John Maynard Keynes, vol. 1, London.
