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John Maynard Keynes

John Maynard Keynes John Maynard Keynes[2†]

John Maynard Keynes (1883-1946) was an influential English economist known for his revolutionary theories on unemployment and economic recessions, particularly articulated in "The General Theory of Employment, Interest and Money" (1935-36). His ideas, advocating government intervention to ensure full employment, reshaped macroeconomic theory and policy. His work laid the foundation for Keynesian economics and its modern adaptations, profoundly impacting 20th-century economic practices and policies[1†][2†].

Early Years and Education

John Maynard Keynes was born on June 5, 1883, in Cambridge, Cambridgeshire, England[1†][3†]. He was born into a moderately prosperous family. His father, John Neville Keynes, was an economist and later an academic administrator at King’s College, Cambridge[1†]. His mother was one of the first female graduates of the same university[1†].

Keynes started his education at the age of five and a half. However, frail health led him to be tutored at home[1†][3†]. He entered St Faith’s Preparatory School in 1892[1†][3†]. Academically bright, he gained a scholarship that earned him a place at Eton College in 1897[1†][3†]. It was at Eton that he developed his love for mathematics, classics, and history[1†][3†].

He entered King’s College, Cambridge, in 1902[1†]. At Cambridge, he was influenced by economist Alfred Marshall, who prompted Keynes to shift his academic interests from mathematics and the classics to politics and economics[1†]. Cambridge also introduced Keynes to an important group of writers and artists. The early history of the Bloomsbury group —an exclusive circle of the cultural elect, which counted among its members Leonard and Virginia Woolf, the painter Duncan Grant, and the art critic Clive Bell —centred upon Cambridge and the remarkable figure of Lytton Strachey[1†]. Strachey, who had entered Cambridge two years before Keynes, inducted the younger man into the exclusive private club known simply as “the Society.” Its members and associates (some of them homosexual, like Keynes himself) were the leading spirits of Bloomsbury[1†].

After earning a B.A. in 1905 and an M.A. in 1909, Keynes became a civil servant, taking a job with the India Office in Whitehall[1†].

Career Development and Achievements

After graduating from Cambridge, Keynes started working as a civil servant at the India Office in Whitehall[4†]. His role as an economic analyst in the India Office marked the beginning of his illustrious career[4†][5†]. After leaving the position, he returned to the University of Cambridge to become a lecturer from 1908 until 1915[4†].

Keynes’s career took a significant turn during World War I, where he served as the de facto financial manager of Britain’s war effort[4†][5†]. His responsibilities during this period included managing the country’s economic and financial affairs, which further honed his expertise in economics and finance[4†][5†].

Keynes’s most significant contribution to economics came after the war, with the publication of his most important work, “The General Theory of Employment, Interest and Money” (1935–36)[4†][1†]. In this book, Keynes challenged the ideas of neoclassical economics that held that free markets would, in the short to medium term, automatically provide full employment, as long as workers were flexible in their wage demands[4†][6†]. He argued that aggregate demand (total spending in the economy) determined the overall level of economic activity, and that inadequate aggregate demand could lead to prolonged periods of high unemployment[4†][6†]. Keynes advocated the use of fiscal and monetary policies to mitigate the adverse effects of economic recessions and depressions[4†][6†].

During and immediately after World War II, Keynes served in an unpaid capacity as the country’s chief economic representative to the United States and international fora[4†][5†]. His ideas, reformulated as New Keynesianism, are fundamental to mainstream macroeconomics[4†][6†]. He is known as the "father of macroeconomics"[4†][6†].

First Publication of His Main Works

John Maynard Keynes was a prolific writer and published several works that had a profound impact on economic theory[1†][2†][7†][8†][9†]. Here are some of his main works:

These works not only established Keynes as a leading economist of his time but also continue to influence economic thought and policy today[1†][2†][7†][8†][9†].

Analysis and Evaluation

John Maynard Keynes’s contributions to economics have been monumental. His ideas shook up the dominant framework of classical economics and continue to influence both economic and fiscal policy for Western governments many decades later[10†]. The crux of Keynes’ views was that government interventionist policy was necessary in order to combat excessive boom and bust cycles in a nation’s economy[10†].

Keynesian economics, named after Keynes, argues that demand drives supply and that healthy economies spend or invest more than they save[10†][11†]. To create jobs and boost consumer buying power during a recession, Keynes held that governments should increase spending, even if it means going into debt[10†][11†]. Critics attack Keynesian economics for promoting deficit spending, stifling private investment, and causing inflation[10†][11†].

Keynes’s long-run influence has not been as significant as his short-run impact. The Keynesian model was a core part of economics textbooks from the late 1940s until the late 1980s[10†][1†]. But as economists have become more concerned about economic growth, and more informed about inflation and unemployment, the Keynesian model has lost prominence[10†][1†].

However, many of his ideas were revolutionary; almost all were controversial[10†][12†]. Keynesian economics serves as a sort of yardstick that can define virtually all economists who came after him[10†][12†]. His theories had a major impact on modern economic and political theory as well as on many governments’ fiscal policies[10†][13†].

Personal Life

John Maynard Keynes had a vibrant personal life that was intertwined with his professional accomplishments. He was a prominent figure in the arts and was a board member of several companies[14†]. He was also part of an exclusive circle of the cultural elect known as the Bloomsbury group, which included notable figures such as Leonard and Virginia Woolf, the painter Duncan Grant, and the art critic Clive Bell[14†][1†]. Some members of this group, including Keynes himself, were homosexual[14†][1†].

Keynes’s personal relationships had a significant influence on his life. His friendship with Lytton Strachey, who he met at Cambridge, was lifelong[14†][15†]. He also had an amorous relationship with the artist Duncan Grant[14†][15†].

In 1926, Keynes married Lydia Lopokova, a Russian ballerina[14†]. This marriage marked a significant chapter in his personal life.

Keynes’s personal life, like his professional one, was marked by a broad range of interests and relationships. His personal experiences and relationships undoubtedly influenced his work and thinking, contributing to the richness and depth of his economic theories.

Conclusion and Legacy

John Maynard Keynes’s influence on the field of economics is undeniable. He is credited with founding modern macroeconomics and his name is associated with a school of economic thinking known as Keynesian economics[16†][4†]. His theory of “underemployment” equilibrium challenged the central idea of the orthodox economics of his day: that markets for all commodities, including labor, are simultaneously cleared by prices[16†][17†].

Keynes’s legacy is twofold. Firstly, he invented macroeconomics – the theory of output as a whole[16†][17†]. His aggregate equations that underpin his “general theory” still populate economics textbooks and shape macroeconomic policy[16†][17†]. Even those who insist that market economies gravitate toward full employment are forced to argue their case within the framework that Keynes created[16†][17†].

Secondly, Keynes left behind the notion that governments can and should prevent depressions[16†][17†]. This view is widely accepted and can be seen in the difference between the strong policy response to the collapse of 2008-2009 and the passive reaction to the Great Depression of 1929-1932[16†][17†]. As the Nobel laureate Robert Lucas, an opponent of Keynes, admitted in 2008: "I guess everyone is a Keynesian in a foxhole."[16†][17†]

However, it’s important to note that Keynes’s theory of “underemployment” equilibrium is no longer accepted by most economists and policymakers[16†][17†]. The global financial crisis of 2008 bears this out. The collapse discredited the more extreme version of the optimally self-adjusting economy; but it did not restore the prestige of the Keynesian approach[16†][17†].

Despite the controversies and debates surrounding his theories, Keynes’s impact on economics and economic policymaking is profound and enduring. His work continues to influence economic thought and policy, making him one of the most influential economists of the 20th century[16†][1†][16†][4†].

Key Information

References and Citations:

  1. Britannica - John Maynard Keynes: British economist [website] - link
  2. Wikipedia (English) - John Maynard Keynes [website] - link
  3. The Famous People - John Maynard Keynes Biography [website] - link
  4. Corporate Finance Institute - John Maynard Keynes - Background and Career, Notable Works, Legacy [website] - link
  5. Britannica - What were John Maynard Keynes’s jobs? [website] - link
  6. John Maynard Keynes - Career Timeline [website] - link
  7. Cambridge University Press - The History of Economics - Chapter: John Maynard Keynes (Lecture 17) [website] - link
  8. Journal of Liberal History - John Maynard Keynes (Lord Keynes), 1883-1946 [website] - link
  9. Contemporary Thinkers - A Guide to the Work of John Maynard Keynes [website] - link
  10. InvestingAnswers - John Maynard Keynes: The Man Who Transformed the Economic World [website] - link
  11. Investopedia - Who Was John Maynard Keynes & What Is Keynesian Economics? [website] - link
  12. Library of Economics and Liberty - John Maynard Keynes - Econlib [website] - link
  13. New World Encyclopedia - John Maynard Keynes [website] - link
  14. BBC History - Historic Figures - John Maynard Keynes (1883 - 1946) [website] - link
  15. Google Books - John Maynard Keynes: A Personal Biography of the Man who Revolutionized ... - Charles Henry Hession [website] - link
  16. Adam Smith Institute - [website] - link
  17. The Guardian - Examining Keynes's legacy, 80 years on [website] - link
  18. Britannica - John Maynard Keynes, Baron Keynes of Tilton summary [website] - link
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