John Maynard Keynes is considered to be one of the most influential economists and authors of all time. He was very successful during his lifetime and is known as the Father of Keynesian. Some may have believed him to be the academic scribbler who feasted on mindless followers while others consider him to be the greatest economist who lived, and a man who could even fix our current woes today.
Keynes was born on June 5, 1883 to a prestigious family. His father, John Neville was an economist and lecturer who taught at Cambridge University while his mother Florence was the city’s first female mayor. He was a sickly child and endured many illnesses as a young boy. He was diagnosed with rheumatic fever, but overcame that after a short time and was entered for a scholarship evaluation at Eton College.
In 1902, he was granted the scholarship to King’s College for Mathematics. Keynes thrived and became a member of the exclusive debating group known as the Apostles Cambridge which included some of the brightest students. He did post-graduate work under economists Alfred Marshall and Arthur Pigou, but chose to take a position with Britain’s Civil Service in 1905. This was where he began to gather information for his first book about India’s monetary system. By 1909, he began to follow in his father’s footsteps and returned to Cambridge to lecture. During his time there he became the editor of the Economist’s Journal.
After that, in 1913, Keynes was appointed to the Royal Commission on Indian Currency and Finance after publishing his book of the same name that was primarily based on lectures he had taught two years prior at Cambridge. Though by 1919, he was employed by the British Treasury and was promoted quickly to serve as chief principal representative at the Peace Conference in Versailles. He was a pacifist, but wanted to contribute to Britain’s war efforts. He did not agree with the harsh terms that were negotiated at the conference and resigned. Once he returned to England, he wrote The Economic Consequences of the Peace. This is what shot him to stardom and outlined what he truly stood for. It was extremely controversial and though many disagreed with his conclusions it brought him much attention. He argued that the war reparations imposed could not be paid for by a poor Germany which would in turn cause conflict all over Europe. It was proved to be right in history!
John Maynard Keynes returned to teaching at Cambridge but continued to inscribe articles for various newspapers and magazines. He became the chairman of a Liberal journal known as, The Nation. He used this to attack the economic policies of the Conservative government. By 1925, he married Lydia Lopokova and became interested in “the management of the economy.” According to Alec Cairncross, “two forms of economic instability inspired him. First, was the instability of prices, inflation, and deflation and all that went with them. Second and most importantly, were unemployment and the fluctuation of economic activity giving rise to it.” This was what led to the birth of Keynesian.
The Great Depression is what provoked him to begin writing about unemployment. Keynes argued that full employment could not be reached by making wages sufficiently low. He stated that economies are made of aggregate quantities of output resulting from aggregate streams of expenditure or unemployment is caused due to people not spending enough of their money. With that in mind, he thought that if savings exceeds investment that would lead to recession or another depression but, if investment exceeds savings then there will be inflation. Keynes essentially wanted people spending money and not saving which he thought was the answer to remove people from the sorrows of the Depression. He believed that the government should “spend its way out of the Depression to gain stability yet again.” Basically, he proposed that when national economies suffer a massive downturn then they should borrow and spend money to boost economic activity. Then, once the economy is prosperous again they can begin to repay their debt with the proceeds.
He made many contributions to pull the British government out of financial ruin through his many writings and thoughts, but the most important book he ever wrote was A General Theory of Employment, Interest, and Money. In this book, he argued yet again that government expenditure could stimulate the economy and it confirmed his theory that unemployment could occur involuntarily. This caught the attention of President Franklin D. Roosevelt and was a factor in the introduction of the New Deal and many of the economic policies of Britain’s Labor Government.
In 1944, he played a considerable role in the Bretton Woods negotiations. He wanted the establishment of a world central bank and an international currency regulation to be addressed. He was an important component in the development of the World Bank and International Monetary Fund. Also, he proposed the world currency reserve known as a bancor. The bancor was to be fixed to thirty commodities and with this it could quite possibly stabilize commodity prices and allow us to achieve trade balance through taxation. However, the idea was not adopted but is still mentioned in discussions to this present day.
He became very wealthy at a time when the economy was diminishing and made a personal fortune by becoming a board member and consultant for many companies throughout the years. He passed away on April 24, 1946 due to heart complications.
The development of Keynesian was the greatest triumph in his life. He proved how to make money when no one else could after the reign of wars and the Depression and contributed many ways of thinking that are still used today. His thoughts and views have gone down in history and will continue to be thought of forever. I believe his words of wisdom may help to pull us out of the financial ruin that we are in today!