John Maynard Keynes was a British economist, investor and patron of the arts, who revolutionized economic theory. His ideas were so influential that an entire school of economic thought is named for him. He was also instrumental in creating new international monetary institutions at the end of World War II.
He was born on June 5, 1883 in Cambridge, son of an eminent economist. He attended King’s College in Cambridge, where he graduated with a degree in mathematics. After a stint in the British Civil Service in India, he returned to teach at Cambridge. After the outbreak of World War I, he took a leave of absence to serve in the British Treasury, where he managed intergovernmental finance. He resigned in protest at the provisions of the Treaty of Versailles, believing them to be too harsh on Germany. His predictions of the dire consequences that would follow proved in the end to be correct.
Keynes wrote several books on economic topics in the 1920s and 30s, but his The General Theory of Employment, Interest and Money (1936), made his reputation, influencing an entire generation of younger economists. Up until that time, economists believed that the economy tends, when left to itself, to reach equilibrium at the full employment level, that is, all goods produced would be sold and the amount of investment would equal the amount of savings.
Keynes, on the other hand, believed that there was no guarantee that the economy would remain at such a state without government intervention. More goods might be produced at the full employment level than could be sold. Price cuts meant to increase demand for the unsold goods might be offset by losses in income caused by wage cuts and decreases in production. Similarly, regardless of interest rates, savings might not necessarily equal investment, since the level of savings is partly dependent on the future expectations of savers, which can be very uncertain. He reasoned that since aggregate demand is the sum of consumption, investment and government spending, boosting government spending during economic downturns when consumption and investment are falling, would help raise employment back toward the full level by lifting demand. These increased government expenditures would be financed by borrowing, to be paid back from budget surpluses generated when the economy recovered.
During World War II, Keynes again played a key role in British finance. He was instrumental in creating the postwar international financial system, including two international lending institutions: the International Monetary Fund and the World Bank.
Web Sites
Catalog
Search the library's catalog for John Maynard Keynes.
Databases
Enter the name John Maynard Keynes in these databases:
**Survey: Provide Feedback About the Web Site, Including This Page**