John Maynard Keynes

From Conservapedia

John Maynard Keynes (5 June 1883 - 21 April 1946) was a British economist. His ideas were highly influential leading to him generally being credited as being one of the founding fathers of modern theoretical macroeconomics. Breaking with the neoclassical orthodoxy of his era, Keynes argued that macroeconomic relationships differ from their microeconomic counterparts. He went on to advocate government intervention into markets and proposed a demand-driven model for money. His theories formed the basis of what came to be known as Keynesian economics.

1 Biography
2 Keynesian Economics
3 Criticism of Keynes and Keynesian Economics
4 External Links

Biography

Keynes was born in Cambridge, and went on to attend Eton College where he displayed an aptitude in a number of subjects, notably mathematics, classics, and history. In 1902 he entered King's College, Cambridge to read for a degree in mathematics, however, due to his interest in politics he found himself increasingly drawn toward economics. It was at Cambridge that he found himself under the tutelage of Alfred Marshall and A.C. Pigou. Keynes accepted an economics lectureship at Cambridge funded personally by Marshall. Soon thereafter he took a leave of absence to work for the British Treasury, an institution in which his expertise was frequently called upon during the First World War. Indeed, at the end of the war, Keynes was selected to be the Treasury's principal representative at the Paris Peace Conference of 1919. The subsequent Treaty of Versailles precipitated Keynes' resignation from the Treasury, as he felt it was draconian in its treatment of Germany.

He returned to Cambridge and resumed teaching, however, the publication of The Economic Consequences of Peace in 1920, elevated him to a new level of fame. He furthered these ideas in 1922's A Revision of the Treaty, in which he argued that the reparations that Germany was being forced to pay would lead to the collapse of the German economy. In 1923, the German economy entered a period of hyperinflation, in the eyes of many validating Keynes' critique. As the decade progressed, Keynes found himself becoming increasingly involved in the political process. First supporting the Liberal Party's 1929 Election Manifesto, and later as an advisor to Ramsay MacDonald's Labour government.

Keynes' magnum opus, however, would not come until 1936 with the publication of The General Theory of Employment, Interest, and Money. Largely a reaction to the high unemployment that had characterised post-war Britain, the book is widely seen as being among the most revolutionary works of modern economics, signalling a paradigm shift within modern economic thought. As the era went on his prestige and celebrity grew, in 1942 he was made a lord, and was Britain's representative at the 1944 Bretton Woods Conference. He died of myocardial infarction (heart attack) in 1946.

Keynesian Economics

Keynesianism centres around the concept of total spending within an economy, what Keynes terms aggregate demand and its effect upon output and inflation. In the eyes of Keynesians, the free market does not necessarily tend toward full employment. Periods such as this were witnessed in the 1930's during the Great Depression, and in the eyes of Keynes could only be solved by increasing the level of expenditure within the economy. In order to do this Keynes advocated increasing government expenditure, frequently in the form of deficit spending, in order to extricate the economy from recession. At the same time Keynes argued that if expenditure within the economy was too high and the economy was at full employment then this would inevitably lead to inflation, as such in periods such as this Keynes advocated tax increases, and a reduction in government expenditure in order to "deflate" the economy.

As is evident, Keynesian thinking went on to influence the fiscal policy of many governments, as well as influencing a generation of economists. That being said, Keynes was not without his critics, most notably Friedrich von Hayek, whose critiques of Keynesian theory went on to form the basis of the Supply-side, monetarist, and Austrian School's objections to Keynesianism.

Criticism of Keynes and Keynesian Economics

Although Keynes was not a socialist, he did have left-leaning tendencies and was criticized by conservatives both during the Bretton Woods Conference and afterwards for his pro big government stance. His policies about expanded government intervention were criticized for infringing on free markets. Opponents to Keynes argue that in time the invisible hand of the markets would correct any problem that would arise.