John Maynard Keynes Essay ⋆ Political Science Essay Examples ⋆ EssayEmpire

The father of the school of liberal economics, Britain’s John Maynard Keynes (1883–1946) is considered by many scholars to be the most influential economist of the twentieth century. After graduating from King’s College of Cambridge University in 1905, Keynes accepted a position at Britain’s India Office. In 1913, he was appointed to the parliamentary Royal Commission on Indian Finance and Currency. World War I (1914–1918) interrupted Keynes’s career, and he developed a life-long hatred of war.

Keynes’s economic expertise earned him a seat on the British delegation to the Versailles Peace Conference, where he argued that the Allies were defeating themselves in demanding that Germany pay reparations beyond their capabilities. In The Economics of the Peace (1919), Keynes made a strong case for establishing economic stability in Germany through increased industrialization. His supporters believe that if the Allies had followed Keynes’s recommendations at Versailles, World War II (1939–1945) could have been averted.

Keynes’s unpopular views on postwar economic policies caused his reputation to decline briefly, but he redeemed himself in 1921 with the publication of Treatise of Probability, followed by A Treatise on Money in 1930. Keynes also published a large body of articles that appeared in newspapers and journals such as the London Times, the New York Times, Atlantic Monthly, Yale Review, and Political Quarterly.

Keynes’s most influential work, General Theory of Employment, Interest and Money, was published in 1936. In it Keynes rebuts the economic theories of French economist JeanBaptiste Say, who argued that supply creates its own demand. General Theory also offered alternatives to Scottish philosopher Adam Smith’s laissez-faire theory based on the belief that the best thing a government could do for the market was to leave it alone. Keynes suggests that economics are cyclical, responding to fluctuating wages, employment, prices, and production output. Whenever the economy enters a downward spiral, in Keynes’s view, the government is obligated to institute measures designed to stimulate the economy.

Keynes’s ideas won wide acceptance during the Great Depression of 1929 and influenced President Franklin Roosevelt’s New Deal policies in the United States. At the end of World War II, Keynes was one of the British delegates at the Bretton Woods Conference in New Hampshire at which forty-four nations examined ways to rebuild countries debilitated by the war. The result was the creation of World Bank, the International Monetary Fund, and the International Bank for Reconstruction and Development. In the early twenty-first century, these international organizations continue to be involved in the economic development and rehabilitation of developing countries.

In the post–World War II years, Keynesian economics led to the establishment of social welfare states in Western democracies and has continued to influence government policies throughout the world. However, Keynesianism has not been without its critics. Those detractors have faulted Keynes for a number of failings, charging him with neglecting to develop comprehensive theories on significant concepts such as those dealing with inflation and bureaucracy.

The theories of post-Keynesians have continued to come into conflict with the views of classical economists, particularly those of Milton Friedman and others at the Chicago School of Economics. A major clash between the two groups occurred in the 1980s, when such views provided the basis for Reaganism in the United States and Thatcherism in Great Britain. Neo-Keynesians returned to favor with the election of Tony Blair in Great Britain and Bill Clinton in the United States. In the latter instance, however, neo-Keynesians soon lost ground with the election of George W. Bush in 2000.

Bibliography:

Ahiakpor, James C.W. Keynes and the Classics Reconsidered. Boston: Kluwer Academic, 1998.
Hoover, Kenneth R. Economics as Ideology: Keynes, Laski, Hayek, and the Creation of Contemporary Politics. Lanham, Md.: Rowman and Littlefield, 2003.
Keynes, John Maynard. The End of Laissez-Faire:The Economic Consequences of Peace. New York: Prometheus, 2004.
Pasinetti, Luigi L., and Bertram Schefold. The Impact of Keynes on Economics in the Twentieth Century. Northampton, Mass.: Edward Elgar, 1999.
Skildesky, Robert. Keynes. New York: Oxford, 1996.

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