John Maynard Keynes (Cambridge1883 – June 5, FirleEast Sussex21 april 1946) was a British Economist. He is best known for the book The General Theory of Employment, Interest and Money (the General theory of employmentinterest and money), in which he describes the Keynesian theory , with which he would become the founder of the Keynesian economics named after him (also referred to counter-cyclical budgetary policy called). The General Theory gold some thirty years, from shortly after the end of the 1960s to appear as the Foundation of modern macroeconomics. His work from the 1970s were threatened in popularity in. Under the influence of thecredit crunch in 2007 is the interest in his work, however, greatly increased in recent years.


[hide]*1 early life

Life Course[Edit]Edit

Descent, youth and college years[Edit]Edit

Keynes ' father, John Neville Keynes, was likewise economist and his mother was a supporter of women's rights. Keynes had already at an early age tend to impose his will on other people. In elementary school he already had someone in service to carry his books in Exchange for help with homework. He had a contract with someone to whom he hated had: this person had to remain fifteen feet away from him in Exchange for the delivery of a library book per week. After the exclusive boarding school Eton College Keynes to have visited, studied at the University of Cambridge. He initially studied mathematics and philosophy at King's College. Only later did he study economy . From his first year at Cambridge, he was a member of the Cambridge Apostles.

Bloomsbury Group[Edit]Edit

In addition to pioneering economist Keynes was also a prominent member of the Bloomsbury group, England's 'avant-garde' of intellectuals and artists. Other members of this club were Virginia Woolf and Bertrand Russell.


In 1921, it was Keynes "very much in love" on Lydia Lopokova, a well-known Russian ballerina, and one of the stars of the Sergei Diaghilev's Ballets Russes. During the first years of their courtship, with Lopokova Keynes maintained, in addition to those, also having an affair with a younger man, Sebastian Sprott. However, eventually he chose for an exclusive relationship with Lopokova. [1[2In 1925 Lopokova Keynes and entered into the marriage. It would be a happy commitment. Keynes ' biographer Peter Clarke wrote that his marriage Keynes "a new focus, a new stability and pure pleasure in life gave, that would no longer go beyond". [3[4Lydia got pregnant, but miscarried in 1927. [4Under Keynes ' Bloomsbury friends Lopokova was, at least initially, object of criticism because of her ways, her conversation and her modest origins-the latter was especially stressed in the letters of Vanessa- and Clive Bell and Virginia Woolf. [5[6In her novel Mrs. Dalloway (1925), based on the character of Rezia Warren Smith Woolf Lopokova. [7E.M. Forster would later write: "how we all underestimate her". [5]


Keynes has a large power in the 1920s thanks to smart investments in foreign currency. As a result of the stock market crash of 1929, which he had not foreseen, he de facto went bankrupt, but by support from his father and from friends, he managed to stay afloat financially. Keynes turned out to be a successful investor. Soon he had his losses recouped. At his death in 1946, Keynes an output of £ 500,000 after, which in money from 2009 approximately equivalent to more than 12 million euro. This sum he had amassed despite its abundant support of various charities and a personal ethics, which made him reluctant to sell in a declining market. After all, if tevelen would do this would deepen a recession after all. [8]

Art Collector[Edit]Edit

Keynes built a sizable art collection on. he had among other works by Paul CezanneEdgar DegasAmedeo ModiglianiGeorges BraquePablo Picasso and Georges Seurat in possession. These were also some important works, some of which are now in the Fitzwilliam Museum in Cambridge. He also enjoyed collecting books. For example, he collected and protected many of Isaac Newton' written legacy. Partly on the basis of these articles described Keynes Newton as "the last of the magicians." [9]

Last years[Edit]Edit

At the end of his life, he also played a role in the drafting of the Bretton Woods system for the post-war international monetary system. Before that, he traveled regularly to the United States. Keynes was Governor of Eton and member of the Board of Directors of the Bank of England. In 1942, Keynes in the Peerage as Baron Keynes exalted. He took a seat on the House of Lords and performed there also settled the word. He obtained honorary doctorates of the universities of EdinburghParis (Sorbonne) and Cambridge. He died at the age of 62. Both of his parents were present at the mourning ceremony. Keynes was cremated and his ashes scattered.

Jobs and careers[Edit]Edit

In 1907 he became official at the Ministry of colonies, though he was rather gone to the railways . He then worked on a book on probability theory. He was Chief Editor of the influential British economic The Economic Journal magazine in 1911. In 1913 he published the book Indian Currency and Finance. He returned to Cambridge as a lecturer.

First World War[Edit]Edit

The British Government did just before and during the first world war a job on the experience of Keynes. Although he is not formally in 1914 came again into government service traveled Keynes a few days before the hostilities would break out at the request of the Government to London. The London bankers insisted there strongly at the Government speciepayments – i.e. the convertibility of bank notes to suspend, in Gold -but with Keynes ' help one could Finance Minister (when Lloyd George) that this was a bad idea; It would harm the future reputation of the City as the payments were suspended before this was absolutely necessary.

After the outbreak of the first world war refused Keynes active service. Though he held a post at the Ministry of finance. At that post he has according to some contributed much to the war effort.

Treaty of Versailles[Edit]Edit

At the end of this war was Keynes present as top official at the Versailles peace conference. He resigned because he disagreed with what was discussed at that Conference. He wrote the book The Economic Consequences of the Peace. According to Keynes stood in Versailles does not restore Europe first, but a political act of revenge that would elicit a greater war. He also predicted that the reparations were imposed that would ruin the German economy Germany. Are equal was confirmed by the German hyperinflation and by the outbreak of the Second World War.

A Treatise on Probability[Edit]Edit

Keynes had his A Treatise on Probability even before the war finished, but this work published only in 1921. [10the work was a remarkable contribution to the philosophical and mathematical underpinnings ofprobability theory. Keynes advanced the view that opportunities any more, and no less than truth values truth and falsehood, half-way. Keynes developed in the chapters 15 and 17 of this book the first upper-lower limit-probabilistic interval approach of probability. In chapter 26 he developed the first decision weight approach with its conventional coefficient for risks and weights, c.

Journalism work[Edit]Edit

Besides his academic work in the 1920s Keynes was active as a journalist. He sold his work internationally and worked in London as a financial consultant.

Obituary of Marshall[Edit]Edit

Keynes wrote an obituary in 1924 for his earlier master Alfred Marshall, who by Schumpeter was praised as "the most brilliant levensbeschijving of a scientist, I've ever read." ' [11Marshalls widow had read the work as in "trance", while Lytton Strachey it judged as one of Keynes ' work best "[10]

Treatise on Money[Edit]Edit

Keynes attacked the post-war deflation to politics. In 1923 he published A Tract on Monetary Reformhis hand. [10in it he expressed his belief that countries had to focus on the stability of domestic prices, deflation had to be avoided if possible, even if this would mean devaluation of the currency. Great Britain had the largest share of the 1920s to suffer from high unemployment, which Keynes matter tempted to devaluation of the British pound to recommend in order to make the British export more affordable for foreigners, whereby the employment should be encouraged. From 1924 he also pleaded for a fiscal response; the Government would create jobs by increasing spending on public works. [10during the 1920s Keynes ' recommendations but had a limited effect on political decision-makers and the mainstream of academic opinion-according to Hyman Minsky was one of the reasons for this are that the theoretical substantiation of recommendations at that time some "opaque" was. [12]

Keynes also pleaded In the Tract for an end to the gold standard. Keynes advised that it is no longer a net benefit for countries such as Great Britain was to take part in the gold standard, because participation was at odds with the need for domestic political autonomy. The gold standard could force countries to enter a deflationary policy at exactly the time when expansive measures were required to address rising unemployment. The Ministry of Finance (Treasury) and the Bank of England were still behind the gold standard and in 1925 they were able to the then Minister of finance to convince Winston Churchill of their ideas, which had a depressive effect on British industry. Keynes responded by writing The Economic Consequences of Mr. Churchill. He continued to agitate against the gold standard to Great Britain this eventually left in 1931. [10]

In 1930 he published the book The Treatise on Money. In that work he discussed reviving the alternating and decreasing activity.

General Theory of Employment, Interest and Money[Edit]Edit

In 1936 appeared his book General Theory of Employment, Interest and Money. This book would be standard reading for economists in the decades from 1945 until in the 1980s. To writing it, he was brought by the great crisis in the 1930s. It made him one of the most influential economists of the twentieth century. Keynes laid the emphasis on the demand side of the economy. He suggested in addition that a Government must invest in the economy to recovery. For example, a large infrastructural project startup if the Government, this will lead to more jobs and higher consumption and thereby to a higher productivity. By the investment of the Government can stimulate the demand side of the economy, which has positive effects for the economy.

Second World War[Edit]Edit

[1][2]Keynes (right) and Harry Dexter White at the Bretton Woods Conference.

During World War II, Keynes argued in How to Pay for the War, published in 1940, that the war had to be largely funded by higher taxes and in particular by forced savings (employees are obligated to lend money to the Government), rather than by deficit financing in order to prevent inflation . Mandatory savings would dampen domestic demand and thus help in channelling additional resources towards the war production, it would also be fairer than imposing very high taxes. This would also have the advantage of preventing a post-war recession, when workers after the war about their forced savings could have.

In september 1941, Keynes nominated for a vacancy on the Board of Directors of the Bank of England. He was appointed and served a full term from april 1942. [13In June 1942, Keynes during the King's Birthday Honours for his services awarded a hereditary noble title. [14On 7 July was his title in the official journal of the British Government published as "BARON KEYNES of Tilton, in the County of Sussex." [15In the House of Lords he took on the banks of the Liberal Party place.

From the moment the Allied victory certainly seemed, was Keynes, as leader of the British delegation and Chairman of the World bank-Commission closely involved in negotiations in the summer of 1944 which ultimately led to the Bretton Woods system. The Keynes plan with regard to an international clearing Union pleaded for a radical system for managing the various connected currencies. He suggested the establishment of a common unit, the Bancor, no for and also those of new global institutions-a worldcentral bank and the International clearing Union. Keynes wanted these institutions the international trade and financial transactions with strong incentives for the countries would manage. In this way, considerable trade deficits or would trade surpluses should be precluded. The larger negotiation power of the United States, however, meant that the final results were better with the more conservative plan, the American negotiator Harry Dexter White. According to the American economist Brad DeLong has Keynes on almost every point, where he was overruled by the Americans, in retrospect by the course of events right. [16]

These two new institutions, which later are known as the World bank and the International Monetary Fund (IMF) were founded as a compromise that first responded to the American vision. There would be no incentives for States to prevent large trade surpluses , instead the burden to correct imbalances in the trade have to be borne only by the deficit countries. According to Keynes deficit countries were least able to solve the problems without causing economic deprivation for their population. Yet it was Keynes when he accepted the final agreement still satisfied. He said that if the new institutions would remain faithful to their basic principles, "the brotherhood of all people will be more than just a phrase." [17]



The followers of his ideas are called Keynesians .

The Keynesian ascendancy 1939-1979[Edit]Edit


See Keynesian revolution for the main article on this topic.

From the end of the great depression until the middle of the 1970s was the work of Keynes the main inspiration for economic policy makers in Europe, America and much of the rest of the world. [18While economists and policy makers from the middle and late 1930s became more and more convinced of Keynes ' way of thinking, it was only after the outbreak of the Second World War that the authorities on sufficiently large scale started borrowing money (to pay for military expenditures) to eliminate unemployment. According to the Economist John Kenneth Galbraith (then an American Government official charged with controlling inflation) was the strong rebound of the economy due to the war expenditure, "the best demonstration of the Keynesian ideas that one could wish for. [19]

The Keynesian revolution in the post-war period was associated with the emergence in the West of the modern liberalism. [20Keynesian ideas became so popular that some scientists on Keynes being as the representative of the ideals of modern liberalism, as Adam Smith represented the ideals of classical liberalism . [21after the war Winston Churchill tried to offer a counterweight to the rise of the Keynesian policy in the United Kingdom. In the election campaign of 1945 he used the rhetorical criticism of the mixed economy. Despite its popularity as the winner of the second world war Churchill suffered a crushing defeat byClement Attlee, whose LabourGovernment claimed that an economic policy was strongly influenced by the ideas of Keynes. [19]

Neo-Keynesian economics[Edit]Edit

[4][5]The IS-LM model is used to reduce the effects of demand shocks on an economy to analyze.


See Neo-Keynesian economics for the main article on this topic.

In the late 1930s and 1940 tried economists (notably John HicksFranco Modigliani and Paul Samuelson) to interpret the writings of Keynes and to formalize in terms of formal mathematical models. In a process that is referred to as "the Neoclassical Synthesis" they combined the Keynesian analysis with the neo-classical economics. As a result they produced the neo-Keynesian economics, which the subsequent forty years the mainstream of macroeconomic thinking would form.

At the beginning of the 1950s was Keynesian policy were applied in almost the entire developed world and similar measures used by many developing countries for a mixed economy. By then Keynes ' views on the economy become the norm at universities in the world. During the 1950s and 1960s enjoyed the developed and emerging free capitalist economies an exceptionally high economic growth and low unemployment.

Influence on the economy education[Edit]Edit

Keynes ' ideas are still taught and economic thinking have changed dramatically. His theory is still reflected in most HAVO and VWO school books.