Key Personality: J.M. Keynes

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John Maynard Keynes
Keynes is a Key Personality for:
Britain during the Inter-War Years

  • J.M. Keynes was an economist who worked as a civil servant in the British government. He had also lectured on economic in Cambridge University.
  • After World War I, he was Prime Minister Lloyd George's economic advisor at the Paris Peace Conference. He disagreed with the Treaty of Versailles and warned that the reparations Germany had to pay were too severe and would have negative economic effects on Europe. His views turned out to be correct.
  • At this time, the dominant view on economics was laissez-faire, i.e. that governments should not interfere and economic depressions would sort themselves out. Keynes opposed the British return to the gold standard in the 1920s and argued that the government should help depressed areas where industries such as ship-building and cotton were in decline.
  • The Great Depression undermined laissez-faire thinking. Governments and economists could not think of a way to end the Depression. In 1936, Keynes wrote The General Theory of Employment, Interest and Money to explain the new economic reality. He said that governments should lower interest rates and borrow money for public works. These ideas kicked off the Keynesian Revolution, which spread after the Second World War.
  • Keynes' ideas in the Beveridge Report in 1942 laid the foundations of the Welfare State which was set up in Britain after the war. In 1945, he led the British delegation to the Bretton Woods Conference in the US which was working out the details of the post-war currency system. His ideas were rejected in favour of the American "White Plan". Keynes died in 1946.

In short...

  • Background:
    • Economist, lecturer, civil servant.
  • Keynes After World War I:
    • Lloyd George's economic advisor
    • Opposed the harsh reparations Germany had to pay, warned of negative economic effects.
    • Opposed British return to the gold standard.
    • Believed the government should help the depressed areas.
  • 1930s and 40s:
    • Great Depression upsets laissez-faire thinking.
    • The General Theory of Employment, Interest and Money
    • Govts should lower interst rates and borrow money for public works (Keynesian Revolution)
    • Beveridge Report: foundations of the Welfare State.
    • Bretton-Woods Conference: ideas rejected in favour of "White Plan".

J.M Keynes on a 1965 issue of Time Magazine. His influence has extended for decades.© Time