John Maynard Keynes

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David Lloyd George 1902

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Keynes caricature Low 1934

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John Maynard Keynes, 1st Baron Keynes (5 June 1883 – 21 April 1946) was a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. He built on and greatly refined earlier work on the causes of business cycles, and is best known for his advocacy of government intervention in the economy to mitigate the adverse effects of economic recessions and depressions. Keynes is the founder of Keynesian economics, a theory of total spending in the economy (called aggregate demand) and its effects on output and inflation.

Early Life and Education

Keynes was born in Cambridge, Cambridgeshire, England, to an upper-middle-class family. He was the son of John Neville Keynes, an economist and lecturer at the University of Cambridge, and Florence Ada Keynes, a local social reformer. Keynes was educated at Eton College and King's College, Cambridge, where he earned a degree in mathematics in 1905. Despite his mathematical background, Keynes was interested in the social sciences, and after completing his degree, he studied economics under Alfred Marshall and Arthur Pigou, who were influential in developing his interest in economic theory.

Career

After completing his studies, Keynes worked for the British government in various capacities, including the India Office and the Treasury. His work during World War I on international financial arrangements is particularly notable. After the war, Keynes attended the Versailles Peace Conference as a delegate of the British Treasury. He famously resigned from his position in protest against the harsh terms imposed on Germany, predicting that the reparations demanded would lead to economic hardship and resentment that could lead to another war. His views were published in the influential book The Economic Consequences of the Peace (1919), which gained him international fame.

Keynes's most significant contribution to economics came with the publication of The General Theory of Employment, Interest, and Money (1936). In this work, he challenged the classical economic theory that markets are always clear and that unemployment is a result of wage rates being too high. Instead, Keynes argued that insufficient aggregate demand could lead to prolonged periods of high unemployment. He advocated for government policies to increase demand through fiscal stimulus, such as increased government spending and tax cuts.

Keynesian Economics

Keynesian economics has had a profound impact on modern economic policy. Keynes's theory was initially adopted by many Western governments in response to the Great Depression. His ideas also influenced the creation of the International Monetary Fund (IMF) and the World Bank to promote economic stability and development globally.

Legacy

Keynes's work has continued to influence economic thought and policy. While his theories were challenged by the rise of monetarism and neoliberalism in the late 20th century, the global financial crisis of 2007-2008 led to a resurgence of interest in Keynesian economics as governments around the world adopted stimulus measures to combat the recession.

Keynes was also a prolific writer beyond economics, contributing to the fields of probability, philosophy, and art criticism. He was a founding member of the Bloomsbury Group, a circle of intellectuals and artists in the early 20th century.

Keynes died in 1946, but his ideas and theories continue to be debated and applied in economics and beyond. His contributions to economic theory and policy have made him one of the most influential economists of the 20th century.