Keynes, John Maynard

Definition:
(1883-1946). British economist. Fellow and lecturer at King's College, Cambridge, from 1909 and during the First World War he worked at the Treasury, of which he was the principal representative at the negotiations preparatory to the Treaty of Versailles. Having shown, by his resignation, disapproval of the financial proposals, especially those relating to reparations, he predicted trenchantly in The Economic Consequences of the Peace (1919), the results of imposing obligations which a defeated Germany would be unable to meet. The book made Keynes the centre of immediate controversy and ensured his fame when his worst fears were realized. He was equally critical of Britain's return to the gold standard (1925) and predicted the rapid increase in unemployment that would arise from its deflationary effects. The direction in which his mind was working was shown by the proposals he made for dealing with unemployment in the 1929 election manifesto of the Liberal party (to which he belonged), a large programme of public works being among the chief recommendations. His matured ideas for regulating the economy as well as his new conclusions on monetary theory were elaborated with great skill and persuasive power in The General Theory of Employment, Interest, and Money (1936). The general acceptance of its main tenets in many countries after the Second World War constituted what is known as the Keynesian revolution. It marked the end of the classical economists' belief in the self-regulating economy: aggregate demand was to be adjusted to available supply, consciously using such financial techniques as enlarging or reducing the credit base or varying the rates of interest; government expenditure, too, should be adjusted as necessary so as either to stimulate or to discourage public demand. Keynes himself modified some of his prescriptions in later years: it is clear from the 'stop-go' tactics enforced upon governments in Britain and elsewhere that the full answers have not been found; but the great overall post-war rise in prosperity in the developed countries and the absence of catastrophic unemployment is largely due to Keynes. He was one of the few theoretical economists who had the opportunity or skill to bring his ideas into practice. In the Second World War he was adviser to the Chancellor of the Exchequer having become (1940) a peer and a member of the Court of the Bank of England. The years from 1943 on were mainly spent on financial missions to America. He was the chief British delegate at the Bretton Woods Conference (1944) and it was his plan, welded with similar American proposals, that became the basis of discussion and agreement there on the foundation of the International Monetary Fund and the World Bank. Keynes was a lover and patron of several arts and built and endowed the Cambridge Arts Theatre; he married (1925) the Russian ballerina, Lydia Lopokova.

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