John Maynard Keynes

John Maynard Keynes, 1st Baron Keynes CB, FBA (/keɪnz/ KAYNZ; 5 June 1883 – 21 April 1946), was an English economist. His writings started the school of thought called Keynesian economics. Originally, he studied mathematics. He learned from and improved earlier work on why business cycles happen. His ideas, reshaped as New Keynesianism, are key parts of mainstream macroeconomics. Many call him the "father of macroeconomics." He is one of the most important economists of the 1900s.

Keynes studied at King's College at the University of Cambridge. He graduated in 1904 with a B.A. in mathematics. During the Great Depression in the 1930s, Keynes changed economic thinking. He did not agree with neoclassical economics, which said that free markets would always create full employment if workers could change their wages. Keynes said that aggregate demand (all the spending in the economy) decided how active the economy was. He believed that if there was not enough spending, there could be long periods of high unemployment. Because wages and work costs cannot go down easily, the economy would not fix itself quickly. Keynes said that governments should use fiscal and monetary policies to help during recessions and depressions.

After the 1929 crisis, Keynes stopped supporting free trade. He thought the idea of comparative advantage was not realistic and became a protectionist. He wrote about these ideas in his most important book, The General Theory of Employment, Interest and Money, published in 1936. By the late 1930s, many Western countries started using Keynes's ideas. By the time he died in 1946, almost all capitalist governments were using his suggestions. Keynes helped design international economic institutions after World War II but did not get his way on all points.

Early life and education

John Maynard Keynes was born in Cambridge, England, on 5 June 1883. He grew up in a loving family. His father, John Neville Keynes, was an economist, and his mother, Florence Ada Keynes, was a social reformer who later became the town’s second female mayor. Keynes had two siblings, Margaret Neville Keynes and Geoffrey Keynes, who both became successful in their fields.

Keynes started school at a young age and was very good at mathematics. He went to Eton College, where he did well in many subjects. He later studied mathematics at King's College, Cambridge. While at Cambridge, he joined many activities and societies. He became interested in philosophy and economics. His family and early experiences helped him believe that government could make life better for people.

Career

John Maynard Keynes began his career in 1906 as a clerk in the India Office. He later went back to Cambridge to study probability theory and became a fellow of King's College in 1909. He wrote his first economics article in 1911 and started the Political Economy Club.

During the First World War, Keynes helped the British government. He worked at the Treasury starting in 1915, dealing with money matters for allies and managing scarce currencies. In 1919, he went to the Versailles peace conference, where he tried to stop very high payments on Germany, but his ideas were not used.

In the 1920s, Keynes finished "A Treatise on Probability" and kept writing about economic issues. He spoke against high payments on Germany and criticized Britain’s return to the gold standard. During the Great Depression, he said governments should spend money to help the economy. In 1936, he published his big book, "The General Theory of Employment, Interest and Money." This book changed old economic ideas and started modern macroeconomics.

During the Second World War, Keynes gave advice on paying for the war using taxes and saving instead of deficit spending. After the war, he helped create the Bretton Woods system, which started the World Bank and the International Monetary Fund.

Economic viewpoint

John Maynard Keynes changed how we think about economics, especially during hard times like the Great Depression. He believed that countries should not always rely on trading freely with others. He thought that if a country buys more from other countries than it sells, it can hurt that country's economy. He suggested taxing goods from other countries to help balance trade and support local jobs.

Keynes started his career supporting free trade but later changed his mind. He argued that during economic downturns, it might be better to protect local industries and control trade to help the economy recover. He believed that governments should take active steps to manage trade and jobs, especially when times were hard. His ideas influenced many economic policies after his time.

Main article: The Economic Consequences of the Peace

Influence and legacy

Main article: Keynesian Revolution

From the end of the Great Depression until the mid-1970s, John Maynard Keynes's ideas helped guide economic policies around the world. After World War II began, governments borrowed money to spend on large projects. This helped reduce unemployment. Keynes's ideas became very popular and were linked to the rise of modern liberalism in Western countries.

Main article: Neo-Keynesian economics

In the 1930s and 1940s, economists tried to understand Keynes's ideas using math. They mixed his theories with other economic thoughts to create neo-Keynesian economics. This became a major part of economic studies for many years. By the 1950s and 1960s, many countries used Keynes's ideas, which led to strong economic growth and low unemployment.

Main article: Post-war displacement of Keynesianism

By the late 1970s, some economists began to question Keynes's ideas. They thought his theories didn’t match what was happening in the economy anymore. New ideas, like monetarism, started to become more popular. However, some people still believed in Keynes's ideas, and they kept using them in different ways.

Main article: 2008–09 Keynesian resurgence

When the 2008 financial crisis happened, many people thought Keynes's ideas might be useful again. Leaders around the world used Keynesian ideas to help their economies recover. They spent money on projects to create jobs and support businesses. This showed that Keynes's ideas were still important, even many years after he passed away.

Main article: New Keynesian economics

In the 1990s and 2000s, economists developed New Keynesian economics. This approach tried to combine Keynes's ideas with modern economic theory. It explained why prices and wages sometimes don’t change quickly and why government action can help the economy work better.

Reception

John Maynard Keynes was known for his charm and was liked by many. Even people who did not agree with him respected his work. After a speech at the Bretton Woods negotiations, he received a rare standing ovation. This showed how much people valued his ideas, even though he had health problems.

Keynes had some famous critics, including economist Friedrich Hayek, who later said he admired Keynes. Others, like Lionel Robbins, praised Keynes for his sharp mind and good speaking skills. Even with some criticism, many people saw Keynes as one of the most remarkable people ever known.

Personal life

Keynes had many close friends, including members of the Bloomsbury Group, a group of writers and artists who loved to talk and support the arts. In 1925, he married Lydia Lopokova, a famous Russian ballerina. They had a happy marriage but did not have children.

Keynes liked to use his money to help good causes. He gave money to theaters and music schools, such as the Cambridge Arts Theatre, the Royal Opera House, and the Ballet Company at Sadler’s Wells. He also collected art and books, including works by artists like Paul Cézanne and Edgar Degas, as well as papers from the scientist Isaac Newton.

Publications

John Maynard Keynes wrote many important books and articles about economics. Some of his most famous books are The Economic Consequences of the Peace, A Treatise on Probability, and The General Theory of Employment, Interest and Money. These books discuss topics like money, war, and how economies change.

He also wrote articles about issues like inflation and the Great Slump of the 1930s. His ideas still shape how we think about economics today.