John Maynard Keynes

"Keynes" redirects here. For other uses, see Keynes (disambiguation).
Not to be confused with John Neville Keynes.
The Right Honourable
The Lord Keynes
Keynes 1933.jpg
Keynes in 1933
Born (1883-06-05)5 June 1883
Cambridge, Cambridgeshire, England
Died 21 April 1946(1946-04-21) (aged 62)
Tilton, near Firle, Sussex, England
Institution King's College, Cambridge
School or
Keynesian economics
Alma mater
Influences Jeremy Bentham, Thomas Malthus, Alfred Marshall, Nicholas Johannsen, Knut Wicksell, Piero Sraffa, John Neville Keynes, Bertrand Russell [1]
Influenced John Kenneth Galbraith, Paul Samuelson, John Hicks, Nicholas Kaldor, Joan Robinson, Hyman Minsky, Amartya Sen, Abba Lerner, Franco Modigliani, James Tobin Robert Solow, Ha Joon Chang, Joseph Stiglitz, Steve Keen, Paul Krugman, Robert Shiller, George Akerlof, Brad DeLong, Thomas Piketty, Yanis Varoufakis, Robert Reich, Zhou Xiaochuan, Wolfgang Stützel, Mariana Mazzucato, Robin Hahnel, Axel Leijonhufvud, Manmohan Singh, New Keynesian economics, Post-Keynesian economics

John Maynard Keynes, 1st Baron Keynes [2] CB FBA ( z/ KAYNZ; 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 widely considered to be one of the most influential economists of the 20th century and the founder of modern macroeconomics. [3] [4] [5] [6] His ideas are the basis for the school of thought known as Keynesian economics and its various offshoots.

In the 1930s, Keynes spearheaded a revolution in economic thinking, challenging 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. He instead argued that aggregate demand determined the overall level of economic activity and that inadequate aggregate demand could lead to prolonged periods of high unemployment. Keynes advocated the use of fiscal and monetary policies to mitigate the adverse effects of economic recessions and depressions.

Following the outbreak of World War II, the leading Western economies adopted Keynes's policy recommendations, and in the two decades following Keynes's death in 1946, almost all capitalist governments had done so. Keynes's influence waned in the 1970s, partly as a result of the stagflation that plagued the Anglo-American economies during that decade, and partly because of criticism of Keynesian policies by Milton Friedman and other monetarists. [7] He and other economists had disputed the ability of government to regulate the business cycle favourably with fiscal policy. [8] However, the advent of the global financial crisis of 2007–08 caused a resurgence in Keynesian thought. Keynesian economics provided the theoretical underpinning for economic policies undertaken in response to the crisis by President Barack Obama of the United States, Prime Minister Gordon Brown of the United Kingdom, and other heads of governments. [9]

When Time magazine included Keynes among its Most Important People of the Century in 1999, it said that "his radical idea that governments should spend money they don't have may have saved capitalism." [10] The Economist has described Keynes as "Britain's most famous 20th-century economist." [11] In addition to being an economist, Keynes was also a civil servant, a director of the Bank of England, and a part of the Bloomsbury Group of intellectuals. [12]

Early life and education

King's College, Cambridge. Keynes's grandmother wrote to him saying that, since he was born in Cambridge, people will expect him to be clever.

John Maynard Keynes was born in Cambridge, Cambridgeshire, England, to an upper-middle-class family. His father, John Neville Keynes, was an economist and a lecturer in moral sciences at the University of Cambridge and his mother Florence Ada Keynes a local social reformer. Keynes was the first born, and was followed by two more children – Margaret Neville Keynes in 1885 and Geoffrey Keynes in 1887. Geoffrey became a surgeon and Margaret married the Nobel Prize-winning physiologist Archibald Hill.

According to the economist and biographer Robert Skidelsky, Keynes's parents were loving and attentive. They remained in the same house throughout their lives, where the children were always welcome to return. Keynes would receive considerable support from his father, including expert coaching to help him pass his scholarship exams and financial help both as a young man and when his assets were nearly wiped out at the onset of Great Depression in 1929. Keynes's mother made her children's interests her own, and according to Skidelsky, "because she could grow up with her children, they never outgrew home". [13]

In January 1889, at the age of five and a half, Keynes started at the kindergarten of the Perse School for Girls for five mornings a week. He quickly showed a talent for arithmetic, but his health was poor leading to several long absences. He was tutored at home by a governess, Beatrice Mackintosh, and his mother. In January 1892, at eight and a half, he started as a day pupil at St Faith's preparatory school. By 1894, Keynes was top of his class and excelling at mathematics. In 1896, St Faith's headmaster, Ralph Goodchild, wrote that Keynes was "head and shoulders above all the other boys in the school" and was confident that Keynes could get a scholarship to Eton. [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25]

In 1897, Keynes won a scholarship to Eton College, where he displayed talent in a wide range of subjects, particularly mathematics, classics and history. At Eton, Keynes experienced the first "love of his life" in Dan Macmillan, older brother of the future Prime Minister Harold Macmillan. [26] Despite his middle-class background, Keynes mixed easily with upper-class pupils. In 1902 Keynes left Eton for King's College, Cambridge, after receiving a scholarship for this also to read mathematics. Alfred Marshall begged Keynes to become an economist, [27] although Keynes's own inclinations drew him towards philosophy – especially the ethical system of G. E. Moore. Keynes joined the Pitt Club [28] and was an active member of the semi-secretive Cambridge Apostles society, a debating club largely reserved for the brightest students. Like many members, Keynes retained a bond to the club after graduating and continued to attend occasional meetings throughout his life. Before leaving Cambridge, Keynes became the President of the Cambridge Union Society and Cambridge University Liberal Club. He was said to be an atheist. [29] [30]

In May 1904, he received a first class B.A. in mathematics. Aside from a few months spent on holidays with family and friends, Keynes continued to involve himself with the university over the next two years. He took part in debates, further studied philosophy and attended economics lectures informally as a graduate student for one term, which constituted his only formal education in the subject. He also studied for Tripos in 1905 and, the following year took civil service exams.

The economist Harry Johnson wrote that the optimism imparted by Keynes's early life is a key to understanding his later thinking. [31] Keynes was always confident he could find a solution to whatever problem he turned his attention to, and retained a lasting faith in the ability of government officials to do good. [32] Keynes's optimism was also cultural, in two senses: he was of the last generation raised by an empire still at the height of its power, and was also of the last generation who felt entitled to govern by culture, rather than by expertise. According to Skidelsky, the sense of cultural unity current in Britain from the 19th century to the end of World War I provided a framework with which the well-educated could set various spheres of knowledge in relation to each other and to life, enabling them to confidently draw from different fields when addressing practical problems. [13]

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