John Maynard Keynes

Life and Writings1

John Maynard Keynes was born in Cambridge, England, in 1883. His father, John Neville Keynes (1852-1949), was a pupil of Marshall, a scholar of logic and economics and author of The Scope and Method of Political Economy (1891) but had preferred an administrative career to prospects of a professorship, reaching the top of Cambridge University administration; his mother, Florence Brown, was one of the first female graduates of that university and the first woman to be elected mayor of Cambridge.

Maynard’s curriculum was in keeping with the highest standards of the bourgeoisie: secondary school at Eton, university at King’s College, Cambridge. There he studied mathematics and classical humanities; he was also elected into the elitist secret society of the Apostles, devoted to ‘the pursuit of truth’. By a few years older than Keynes, another Apostle, the philosopher George Edward Moore (1873-1958), had rejected the utilitarian identification between ‘to be good’ and ‘to do good’, proposing an ethics of inner self-searching for truth and personal coherence. In the climate of cultural renewal characterising the Edwardian period, to Keynes and his friends this meant a radical reappraisal of Victorian culture and ethics, manifested also in their personal conduct, marked by extreme intellectualism and the pursuit of aesthetic pleasures, while, departing from Moore, they rejected the idea of general rules of conduct, substituted by confidence in the ability of the ‘elect’ to evaluate case by case what the right behaviour would be.

This society enlisted among others Lytton Strachey, Bertrand Russell and Alfred Whitehead. In the following decades, some of the Apostles, in

  • 1 The main biographies are those by Skidelsky (1983,1992, 2000; 2010 for a synthesis) and Moggridge (1992); now outdated is the biography by Harrod (1951). The Collected Writings of John Maynard Keynes, in thirty volumes, were published on the initiative of the Royal Economic Society between 1971 and 1989 (Macmillan, London).
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particular Strachey, with other leading protagonists of English literature such as Virginia Woolf and Vanessa Bell, formed the Bloomsbury circle (from the name of the residential area of London where the protagonists of the circle lived). Keynes maintained close relations with this group, at least up to his marriage.

After graduating in mathematics, in 1906 Keynes took the civil service entrance examinations but, coming in second, had to content himself with a job at the India Office (while the top of the list traditionally went to the Treasury). There was little work to be done, and Keynes had the time to write a treatise on the Indian monetary system (1913) and a long essay on the theory of probability. Thanks to this essay, after a first unsuccessful attempt, in 1909 he obtained a fellowship at King’s College, Cambridge, of which he was an active member up to the end of his life. In 1908 he resigned from the India office to became lecturer in economics at Cambridge; his modest salary was paid by Pigou out of his own pocket, thus continuing a tradition started by Marshall, whom Pigou had succeeded in the economics chair. As from 1911, with Marshall’s support, Keynes took over editorship of the Economic Journal; two years later he also became secretary of the Royal Economic Society. He was to hold these two appointments for more than three decades, a period in which the Economic Journal rose to become the most prestigious economic journal of the time.

During the First World War, Keynes declared himself a conscientious objector, although working at the Treasury on issues connected with financing the war effort. In 1919 he was a member of the British delegation at the peace conference in Versailles but opposed the reparations imposed on Germany, considering them an unsustainable burden on the German economy and society: thus he resigned and, once back in Cambridge, addressed the subject in his highly successful The Economic Consequences of the Peace (1919).

By now a widely recognised writer, Keynes contributed on the main issues of economic policy with a series of articles; he also published some books, among which the Treatise on Probability in 1921 (a revised version of his 1909 fellowship dissertation, to which Keynes dedicated more years [1]

of work and more care than to any other of his publications) and the Tract on Monetary Reform in 1923.[2] To his various academic responsibilities he then added that of chairman of an insurance company and, in partnership, launched into speculation on the exchange markets on his own account and on behalf of relatives and friends (although the results were not always happy). In 1925, having spent a great part of his life cultivating male friendships, Maynard married a famous Russian dancer, Lydia Lopokova.

In 1930 and 1936, respectively, he published the two works - the Treatise on Money and the General Theory on Employment, Interest and Money - to which he principally owes his fame as a theoretical economist. Other important contributions were the lively and provocative essays collected in the Essays in Persuasion (1931) and the well-documented and incisive biographies collected in the Essays in Biography (1933). In the same year that saw the General Theory published, in Cambridge Keynes inaugurated the Arts Theatre, built almost entirely on his own private funds; his wife Lydia was prima ballerina in the inaugural performance. In the following year he had a heart attack and was obliged to scale down his workload.

In 1940 he was appointed advisor to the Treasury and plunged once again into problems of war finance, negotiating loans from the United States. In July 1944 he played a leading role in the Bretton Woods conference. Suffering a further heart attack, he died on 21 April 1946.

There is an immense literature on Keynes’s thought. Many concur that the conditions of high and persistent unemployment in the 1930s favoured the spread of Keynesian ideas. Some commentators stress the distinctly British viewpoint taken by Keynes, who saw his country losing positions to the United States. As for the international monetary system, Keynes outlined schemes that took into account the interests of the less strong currencies, as the British pound was likely to be in a world dominated by the US dollar. Keynes intended to contribute to a reformed system of capitalism, able to guarantee increasing fairness together with freedom and efficiency, in opposition to totalitarian systems, fascism and Nazism in Italy and Germany and Stalinism in the Soviet Union. He recognized the end of the ideology of laissez-faire in its most extreme form: hence his critique of the then dominant theory, showing how insufficient were the equilibrating mechanisms of the free market and his theorisation of an activist economic policy.

  • [1] Keynes’s criticisms were not based on the internal sustainability of reparations, i.e. on thefiscal burden they implied, but on their external sustainability, i.e. the chances of realisinga surplus in other items of the balance of payments sufficiently large to offset unilateraltransfers for reparations. Keynes’s attention focused on the impossibility of generatinga sufficient surplus in the balance of trade and thus sparked off wide-ranging debatecentred on export and import elasticities to the exchange rate and to income. As a matterof fact, Germany actually showed a substantial capital inflow, thanks also to loans from theUnited States.
  • [2] In this work Keynes distinguished between internal and external stabilisation of the valueof money and declared a preference for stabilisation of internal prices rather than of theexternal value of the national currency; he was therefore critical of the idea of the poundreturning to the gold standard - decided, however, a few months later, on 28 April 1925.Moreover, by the decision of the then Chancellor of the Exchequer Winston Churchill,return to the gold standard took place at the pre-war parity; this implied an overvaluationof the pound and a loss of competitiveness for English manufacturers. Keynes criticisedthe decision scathingly in a brilliant pamphlet, The Economic Consequences of Mr. Churchill(1925).
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