John Maynard Keynes, an English native, professed economic concepts that form the headwaters of economic theory for many outstanding economists who succeeded him and is a testament to the magnitude and influence of his ideas.
A youth of prodigious intellect, Keynes attended Kings College to study mathematics, and it was here that his interest in economics began.
Keynes started a lectureship on economics that was funded by Alfred Marshall, and after being refused by Cambridge many times, he vowed a ban to build his reputation as an economist. Keynes` expertise was called upon after World War I as an adviser to the British chancellor of the Exchequer to the Treasury of Financial and Economic Questions where his responsibility was to design credit terms between Britain and its allies during the war.
After his promotion in 1919 to the Senior Treasury Official, he resigned to write his first book entitled Economic Consequences of Peace, in which he criticized President Woodrow Wilson as being a "blind, deaf Don Quixote" and France`s Georges Clemenceau as a xenophobe with "one illusion France, and one disillusion mankind" for their insistence that Germany pay war reparations.
In 1936, he published his most important book, A General Theory of Employment, Interest and Money, which revolutionized economic theory by showing how unemployment could occur involuntarily and how governments should engage in deficit spending to make up for the economic slowdowns caused when businesses reduce their investments.
In 1934, Keynes paid a visit to President Franklin D. Roosevelt, where he was unsuccessful in persuading the president to engage in deficit spending to bring America out of its economic tailspin. Instead, as the economy recovered during the latter part of Roosevelt`s first term, FDR used the opportunity to reduce spending and bring the budget closer to balance. Even though unemployment was still very high, the 1938 budget reduced expenditures by a sixth compared with 1936 and virtually eliminated the deficit. As Keynesian theory would have predicted, the sharp decline in budget stimulus led to reversal in the economic recovery.
It was not until the U.S. entered World War II that Roosevelt, having decided that he had no choice, reversed his long-held position of a balanced budget to one of using deficit spending to kick start the economy.
The English economist died on April 21, 1946. His name became attached to economic theories which only half reflected his views. Support for government spending to counter the effect of recessions is now widespread, but his disciplined expectation that during good times, governments would recoup their losses has proved too unpopular in practice.
---- Selected Quotes ----
Quotes by John Maynard Keynes.
Marxian Socialism must always remain a portent to the historians of opinion -- how a doctrine so illogical and so dull can have exercised so powerful and enduring an influence over the minds of men, and, through them, the events of history.
Regarding Government Work
I work for a Government I despise for ends I think criminal.
Regarding The Long Run
The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.
A Tract on Monetary Reform, 1923
Regarding Woodrow Wilson
To see the British Prime Minister watching the company, with six or seven senses not available to ordinary men, judging character, motive, and subconscious impulse, perceiving what each was thinking and even what each was going to say next, and compounding with telepathic instinct the argument or appeal best suited to the vanity, weakness, or self-interest of his immediate auditor, was to realize that the poor President would be playing blind man's buff in that party.
Observing the negotiations before the Treaty of Versailles
Regarding Treaty of Versailles
The future life of Europe was not their concern; its means of livelihood was not their anxiety.Their preoccupations, good and bad alike, related to frontiers and nationalities, to the balance of power, to imperial aggrandizements, to the future enfeeblement of a strong and dangerous enemy, to revenge, and to the shifting by the victors of their unbearable financial burdens on to the shoulders of the defeated.
"Economic Consequences of the Peace", 1919