John Maynard Keynes Essays

John Maynard Keynes, 1st Baron Keynes of Tilton (5 June1883 – 21 April1946) was a British economist whose ideas, known as Keynesian economics, had a major impact on modern economic and political theory and on many governments' fiscal policies.

See also:
The General Theory of Employment, Interest and Money


  • That she [France] has anything to fear from Germany in the future which we can forsee, except what she may herself provoke, is a delusion. When Germany has recovered her strength and pride, as in due time she will, many years must pass before she again casts her eyes Westwards. Germany's future now lies to the East, and it is in that direction her hopes and ambitions, when they revive, will certainly turn.
    • A Revision of the Treaty (London: Macmillan, 1922), p. 186
  • The real struggle today, just as in the second quarter of the nineteenth century, is between a view of the world termed liberalism or radicalism, for which the primary object of government and of foreign policy is peace, freedom of trade and intercourse, and economic wealth and that other view, militarist or rather diplomatic, which thinks in terms of power, prestige, national or personal glory, the imposition of a culture and hereditary or racial prejudice. To the good English radical, the latter is so unreal, so crazy in its combination of futility and evil, that he is often in danger of forgetting or disbelieving its actual existence.
    • published in Manchester Guardian (1922); in Collected Writings, Volume 17, p. 370
  • When, therefore, we enter the realm of State action, everything is to be considered and weighed on its merits. Changes in death duties, income tax, land tenure, licensing, game laws, church establishment, feudal rights, slavery, and so on through all ages, have received the same denunciations from the absolutists of contract, who are the real parents of revolution.
    • A Tract on Monetary Reform (1923), Ch. 2 : Public Finance and Changes in the Value of Money
  • But this 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 long past, the ocean is flat again.
    • A Tract on Monetary Reform (1923), Ch. 3, p. 80
  • Those who advocate the return to a gold standard do not always appreciate along what different lines our actual practice has been drifting. If we restore the gold standard, are we to return also to the pre-war conceptions of bank-rate, allowing the tides of gold to play what tricks they like with the internal price-level, and abandoning the attempt to moderate the disastrous influence of the credit-cycle on the stability of prices and employment? Or are we to continue and develop the experimental innovations of our present policy, ignoring the "bank ration" and, if necessary, allowing unmoved a piling up of gold reserves far beyond our requirements or their depletion far below them? In truth, the gold standard is already a barbarous relic.
    • A Tract on Monetary Reform (1923), p. 172
  • He was the nicest, and the only talented person I saw in all Berlin, except perhaps old Fuerstenberg … and Kurt Singer. And he was a Jew; and so was Fuerstenberg. And my dear Melchior is a Jew too. Yet if I lived there, I felt I might turn anti-Semite. For the poor Prussian is too slow and heavy on his legs for the other kind of Jews, the ones who are not imps but serving devils, with small horns, pitch forks, and oily tails. It is not agreeable to see civilization so under the ugly thumbs of its impure Jews who have all the money and the power and brains. I vote rather for the plump hausfraus and thick fingered Wandering Birds. But I am not sure that I wouldn’t even rather be mixed up with Lloyd George than with the German political Jews.
    • Notes after a meeting with Albert Einstein in 1926, The Collected Writings of John Maynard Keynes, Vol. 10, p. 383
  • The ignorance of even the best-informed investor about the more remote future is much greater than his knowledge, and he cannot but be influenced to a degree which would seem wildly disproportionate to anyone who really knew the future, and be forced to seek a clue mainly here to trends further ahead. But if this is true of the best-informed, the vast majority of those who are concerned with the buying and selling of securities know almost nothing whatever about what they are doing. They do not possess even the rudiments of what is required for a valid judgement, and are the prey of hopes and fears easily aroused by transient events and as easily dispelled.
    • A Treatise on Money, Volume II (1930), pp. 360–61

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  • Words ought to be a little wild, for they are the assault of thoughts on the unthinking.
    • New Statesman and Nation (15 July 1933)
  • The decadent international but individualistic capitalism in the hands of which we found ourselves after the war is not a success. It is not intelligent. It is not beautiful. It is not just. It is not virtuous. And it doesn't deliver the goods. In short we dislike it, and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed.
  • Nothing mattered except states of mind, chiefly our own.
    • On the Cambridge Apostles of Cambridge University, in Essays in Biography (1933) Ch. 39; also later used in My Early Beliefs, a memoir he read to the Bloomsbury Group's Memoir Club in 1943.
  • The boys, who cannot grow up to adult human nature, are beating the prophets of the ancient race — Marx, Freud, Einstein — who have been tearing at our social, personal and intellectual roots, tearing with an objectivity which to the healthy animal seems morbid, depriving everything, as it seems, of the warmth of natural feeling. What traditional retort have the schoolboys but a kick in the pants? ...
    To our generation Einstein has been made to become a double symbol — a symbol of the mind travelling in the cold regions of space, and a symbol of the brave and generous outcast, pure in heart and cheerful of spirit. Himself a schoolboy, too, but the other kind — with ruffled hair, soft hands and a violin. See him as he squats on Cromer beach doing sums, Charlie Chaplin with the brow of Shakespeare...
    So it is not an accident that the Nazi lads vent a particular fury against him. He does truly stand for what they most dislike, the opposite of the blond beast — intellectualist, individualist, supernationalist, pacifist, inky, plump... How should they know the glory of the free-ranging intellect and soft objective sympathy to whom money and violence, drink and blood and pomp, mean absolutely nothing? Yet Albert and the blond beast make up the world between them. If either cast the other out, life is diminished in its force. When the barbarians destroy the ancient race as witches, when they refuse to scale heaven on broomsticks, they may be dooming themselves to sink back into the clods which bore them.
    • Collected Writings volume xxviii pages 21-22
  • Economics is a science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world. It is compelled to be this, because, unlike the typical natural science, the material to which it is applied is, in too many respects, not homogeneous through time. The object of a model is to segregate the semi-permanent or relatively constant factors from those which are transitory or fluctuating so as to develop a logical way of thinking about the latter, and of understanding the time sequences to which they give rise in particular cases.
    Good economists are scarce because the gift for using "vigilant observation" to choose good models, although it does not require a highly specialised intellectual technique, appears to be a very rare one.
    • Letter to Roy Harrod (4 July 1938), in The Collected Writings of John Maynard Keynes, Vol. XIV (1971), p. 297
  • It is a grand book worthy of one’s hopes of you. A most powerful piece of well organized analysis with high aesthetic qualities, though written more perhaps than you see yourself for the cognoscenti in the temple and not for those at the gate. Anyhow I prefer it for intellectual enjoyment to any recent attempts in this vein.
    • Letter to Abba Lerner, 1942, On The Economics of Control
  • The old saying holds. Owe your banker £1000 and you are at his mercy; owe him £1 million and the position is reversed.
    • "Overseas Financial Policy in Stage III" (unpublished memo distributed to the British Cabinet on 15 May 1945, in Collected Writings volume 24, p. 258).
  • If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy.
  • Variant reported in Time magazine, Monday, Feb. 17, 1947
  • If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.
  • As quoted in The Economist (13 February 1982), p. 11
  • The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems — the problems of life and of human relations, of creation and behaviour and religion.
    • First Annual Report of the Arts Council (1945-1946)
  • They offer me neither food nor drink — intellectual nor spiritual consolation... [Conservatism] leads nowhere; it satisfies no ideal; it conforms to no intellectual standard, it is not safe, or calculated to preserve from the spoilers that degree of civilisation which we have already attained.
    • On the Conservative Party; Skidelsky (1992:231) quoting Collected Writings Volume IX page 296-297
  • There was an attraction at first that Mr Baldwin should not be clever. But when he forever sentimentalises about his own stupidity, the charm is broken.
    • Skidelsky (1992:232) quoting Keynes Papers PS/6
  • The book, as it stands, seems to me to be one of the most frightful muddles I have ever read, with scarcely a sound proposition in it beginning with page 45 [Hayek provided historical background up to page 45; after that came his theoretical model], and yet it remains a book of some interest, which is likely to leave its mark on the mind of the reader. It is an extraordinary example of how, starting with a mistake, a remorseless logician can end up in bedlam.
    • On Friedrich Hayek's Prices and Production, in Collected Writings, vol. XII, p. 252

The Economic Consequences of the Peace (1919)[edit]

Full text online
  • The power to become habituated to his surroundings is a marked characteristic of mankind.
  • The great events of history are often due to secular changes in the growth of population and other fundamental economic causes, which, escaping by their gradual character the notice of contemporary observers, are attributed to the follies of statesmen or the fanaticism of atheists.
    • Chapter II, Section I, pp. 14-15
  • The disruptive powers of excessive national fecundity may have played a greater part in bursting the bonds of convention than either the power of ideas or the errors of autocracy.
    • Chapter II, Section I, p. 15
  • The immense accumulations of fixed capital which, to the great benefit of mankind, were built up during the half century before the war, could never have come about in a Society where wealth was divided equitably.
    • Chapter II, Section III, p. 19
  • The duty of "saving" became nine-tenths of virtue and the growth of the cake the object of true religion.
    • Chapter II, Section III, p. 20
  • Perhaps a day might come when there would be at last be enough to go round, and when posterity could enter into the enjoyment of our labors.
    • Chapter II, Section III, p. 21
  • He had one illusion — France; and one disillusion — mankind, including Frenchmen, and his colleagues not least.
  • The glory of the nation you love is a desirable end, — but generally to be obtained at your neighbor's expense.
  • 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 bluff in that party.
  • 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.
  • The division of the spoils between the victors will also provide employment for a powerful office, whose doorsteps the greedy adventurers and jealous concession hunters of twenty or thirty nations will crowd and defile.
    • Chapter IV, Section I, p. 77
  • But the dreams of designing diplomats do not always prosper, and we must trust the future.
    • Chapter IV, Section III, p. 105
  • Men will not always die quietly.
  • Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
    Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
  • Perhaps it is historically true that no order of society ever perishes save by its own hand.
  • Economic privation proceeds by easy stages, and so long as men suffer it patiently the outside world cares little.
  • The forces of the nineteenth century have run their course and are exhausted.
  • If we aim deliberately at the impoverishment of Central Europe, vengeance, I dare predict, will not limp.
    • Chapter VII, Section 1, p. 268

Essays in Persuasion (1931)[edit]

Social Consequences of Changes in The Value of Money (1923)[edit]

  • Money is only important for what it will procure. Thus a change in the monetary unit, which is uniform in its operation and affects all transactions equally, has no consequences. If, by a change in the established standard of value, a man received and owned twice as much money as he did before in payment for all rights and for all efforts, and if he also paid out twice as much money for all acquisitions and for all satisfactions, he would be wholly unaffected.
  • During the lengthy process of production the business world is incurring outgoings in terms of money-paying out in money for wages and other expenses of production-in the expectation of recouping this outlay by disposing of the product for money at a later date. That is to say, the business world as a whole must always be in a position where it stands to gain by a rise of price and to lose by a fall of price. Whether it likes it or not, the technique of production under a regime of money-contract forces the business world always to carry a big speculative position; and if it is reluctant to carry this position, the productive process must be slackened.
  • The best way to cure this mortal disease of individualism must be to provide that there shall never exist any confident expectation either that prices generally are going to fall or that they are going to rise; and also that there shall be no serious risk that a movement, if it does occur, will be a big one. If, unexpectedly and accidentally, a moderate movement were to occur, wealth, though it might be redistributed, would not be diminished thereby.
  • Inflation is unjust and Deflation is inexpedient. Of the two perhaps Deflation is, if we rule out exaggerated inflations such as that of Germany, the worse; because it is worse, in an impoverished world, to provoke unemployment than to disappoint the rentier. But it is not necessary that we should weigh one evil against the other. It is easier to agree that both are evils to be shunned.

The Great Slump of 1930 (1930)[edit]

appeared in the Nation and Athenaeum (1930)
  • This is a nightmare, which will pass away with the morning. For the resources of nature and men's devices are just as fertile and productive as they were. The rate of our progress towards solving the material problems of life is not less rapid. We are as capable as before of affording for everyone a high standard of life … and will soon learn to afford a standard higher still. We were not previously deceived. But to-day we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time — perhaps for a long time.

The Economic Consequences of Mr. Churchill (1925)[edit]

  • This state of affairs is not an inevitable consequence of a decreased capacity to produce wealth. I see no reason why, with good management, real wages need be reduced on the average. It is the consequence of a misguided monetary policy.
  • By what modus operandi does credit restriction attain this result? In no other way than by the deliberate intensification of unemployment.
  • Why should coal miners suffer a lower standard of life than other classes of labour? They may be lazy, good-for-nothing fellows who do not work so hard or so long as they should. But is there any evidence that they are more lazy or more good-for-nothing than other people?
    On grounds of social justice, no case can be made out for reducing. the wages of the miners. They are the victims of the economic Juggernaut. They represent in the flesh the "fundamental adjustments" engineered by the Treasury and the Bank of England to satisfy the impatience of the City fathers to bridge the "moderate gap" between $4.40 and $4.86. They (and others to follow) are the "moderate sacrifice" still necessary to ensure the stability of the gold standard. The plight of the coal miners is the first, but not—unless we are very lucky—the last, of the Economic Consequences of Mr. Churchill.

The End of Gold Standard (1931)[edit]

  • Are the solutions offered us always to be too late? Shall we in Great Britain invite three-quarters of the world, including the whole of our Empire, to join with us in evolving a new currency system which shall be stable in terms of commodities? Or would the gold standard countries be interested to learn the terms, which must needs be strict, on which we should be prepared to re-enter the system of a drastically reformed gold standard?

A Short View of Russia (1925)[edit]

Originally three essays for the Nation and Athenaeum, later published separately as A Short View of Russia (1925), then edited down for publication in Essays in Persuasion (1931)
  • Leninism is a combination of two things which Europeans have kept for some centuries in different compartments of the soul — religion and business. We are shocked because the religion is new, and contemptuous because the business, being subordinated to the religion instead of the other way round, is highly inefficient.
  • Comfort and habits let us be ready to forgo, but I am not ready for a creed which does not care how much it destroys the liberty and security of daily life, which uses deliberately the weapons of persecution, destruction and international strife. How can I admire a policy which finds a characteristic expression in spending millions to suborn spies in every family and group at home, and to stir up trouble abroad?
  • How can I accept a doctrine which sets up as its bible, above and beyond criticism, an obsolete economic textbook which I know to be not only scientifically erroneous but without interest or application for the modern world? How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeois and the intelligentsia who, with whatever faults, are the quality in life and surely carry the seeds of all human advancement?

Am I a Liberal? (1925)[edit]

  • I can be influenced by what seems to me to be justice and good sense; but the class war will find me on the side of the educated bourgeoisie.

The End of Laissez-faire (1926)[edit]

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  • I do not know which makes a man more conservative — to know nothing but the present, or nothing but the past.
  • The phrase laissez-faire is not to be found in the works of Adam Smith, of Ricardo, or of Malthus. Even the idea is not present in a dogmatic form in any of these authors. Adam Smith, of course, was a Free Trader and an opponent of many eighteenth-century restrictions on trade. But his attitude towards the Navigation Acts and the usury laws shows that he was not dogmatic. Even his famous passage about 'the invisible hand' reflects the philosophy which we associate with Paley rather than the economic dogma of laissez-faire.
  • MarxianSocialism 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.
  • For my part I think that capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself it is in many ways extremely objectionable.

Clissold (1927)[edit]

appeared in the Nation and Athenaeum (1927)
  • Most men love money and security more, and creation and construction less, as they get older.

Economic Possibilities for our Grandchildren (1930)[edit]

appeared in the Nation and Athenaeum (1930)
  • When the accumulation of wealth is no longer of high social importance, there will be greatchanges in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental diseaseBut beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.
  • If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.
  • For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us!

Essays In Biography (1933)[edit]


  • I have sought with some touches of detail to bring out the solidarity and historical continuity of the High Intelligentsia of England, who have built up the foundations of our thought in the two and a half centuries, since Locke, in his Essay Concerning Human Understanding, wrote the first modern English book. I relate below the amazing progeny of Sir George Villiers. But the lineage of the High Intelligentsia is hardly less interbred and spiritually inter-mixed. Let the Villiers Connection fascinate the monarch or the mob and rule, or seem to rule, passing events. There is also a pride of sentiment to claim spiritual kinship with the Locke Connection and that long English line, intellectually and humanly linked with one another, to which the names in my second section belong. If not the wisest, yet the most truthful of men. If not the most personable, yet the queerest and sweetest. If not the most practical, yet of the purest public conscience. If not of high artistic genius, yet the most solid and sincere accomplishment within many of the fields which are ranged by the human mind.

Mr. Lloyd George: A Fragment[edit]

Originally published in The Nation and the Athenaeum, May 26, 1923.
  • If Mr. Lloyd George had no good qualities, no charms, no fascinations, he would not be dangerous. If he were not a syren, we need not fear the whirlpools.

Trotsky On England[edit]

Originally published in The Nation and the Athenaeum, March 27, 1926.
  • All the political parties alike have their origins in pastideas and not in new ideas — and none more conspicuously so than the Marxists.
  • The next move is with the head, and fists must wait.

Robert Malthus: The First of the Cambridge Economists[edit]

  • Adam Smith and Malthus and Ricardo! There is something about these three figures to evoke more than ordinary sentiments from us their children in the spirit.

Alfred Marshall[edit]

Originally published in The Economic Journal, September 1924.
  • The study of economics does not seem to require any specialized gifts of an unusually high order. Is it not, intellectually regarded, a very easy subject compared with the higher branches of philosophy and pure science? Yet good, or even competent, economists are the rarest of birds. An easy subject, at which very few excel! The paradox finds its explanation, perhaps, in that the master-economist must possess a rare combination of gifts. He must reach a high standard in several different directions and must combine talents not often found together. He must be mathematician, historian, statesman, philosopher – in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man's nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician. Much, but not all, of this many-sidedness Marshall possessed. But chiefly his mixed training and divided nature furnished him with the most essential and fundamental of the economist's necessary gifts – he was conspicuously historian and mathematician, a dealer in the particular and the general, the temporal and the eternal, at the same time.
    • p. 170; as cited in: Donald Moggridge (2002), Maynard Keynes: An Economist's Biography, p. 424
  • There is no harm in being sometimes wrong — especially if one is promptly found out.
  • Jevons saw the kettle boil and cried out with the delighted voice of a child; Marshall too had seen the kettle boil and sat down silently to build an engine.
  • Economists must leave to Adam Smith alone the glory of the Quarto, must pluck the day, fling pamphlets into the wind, write always sub specie temporis, and achieve immortality by accident, if at all.
  • The general theory of economic equilibrium was strengthened and made effective as an organon of thought by two powerful subsidiary conceptions — the Margin and Substitution. The notion of the Margin was extended beyond [Utility]] to describe the equilibrium point in given conditions of any economic factor which can be regarded as capable of small variations about a given value,or in its functional relation to a given value.
  • There were endless possibilities, not out of reach.

Francis Tsidro Edgeworth[edit]

Originally published in The Economic Journal, March 1926.
  • The atomic hypothesis which had worked so splendidly in Physics breaks down in Psychics.

F. P. Ramsey[edit]

Originally published in The Economic Journal, March 1930. and The New Statesman and Nation, October 3, 1931.
  • Logic, like lyrical poetry, is no employment for the middle-aged,
  • I don't feel the least humble before the vastness of the heavens.

Newton, the Man[edit]

address to the Royal Society Club (1942), read by Geoffrey Keynes at the Newton Tercentenary Celebrations (1946), and published in later edition of Essays in Biography
  • His peculiar gift was the power of holding continuously in his mind a purely mental problem until he had seen it through.
  • Newton was not the first of the age of reason. He was the last of the magicians, the last of the Babylonians and Sumerians, the last great mind that looked out on the visible and intellectual world with the same eyes as those who began to build our intellectual inheritance rather less than 10 000 years ago.
    • Address to the Royal Society Club (1942), as quoted in A Dictionary of Scientific Quotations (1977) by Alan L. MacKay, p. 140

The General Theory of Employment, Interest and Money (1936)[edit]

Main article: The General Theory of Employment, Interest and Money

  • The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.
    • Ch. 24 "Concluding Notes" p. 383-384

How to Pay for the War (1940)[edit]

  • It is not easy for a free community to organise for war. We are not accustomed to listen to experts or prophets. Our strength lies in an ability to improvise. Yet an open mind to untried ideas is also necessary. No-one can say when the end will come. In the war services it is recognised that the best security for an early conclusion is a plan for long endurance.
    • Ch. 1 : The Character of the Problem
  • Courage will be forthcoming if tile leaders of opinion in all parties will summon out of tile fatigue and confusion of war enough lucidity of mind to understand for themselves and to explain to tile public what is required; and then propose a plan conceived in a spirit of social justice, a plan which uses a time of general sacrifice, not as an excuse for postponing desirable reforms, but as an opportunity for moving further than we have moved hitherto towards reducing in equalities.
    • Ch. 1 : The Character of the Problem
  • Nothing can be settled in isolation. Every use of our resources is at the expense of an alternative use.
    • Ch. 1 : The Character of the Problem
  • It is extraordinarily difficult to secure the right outcome for this resultant of many separate policies. It depends on weighing one advantage against another. There is hardly a conceivable decision within the range of the supply services which does not affect it.
    • Ch. 1 : The Character of the Problem
  • In peace time, that is to say, the size of the cake depends on the amount of work done. But in war time the size of the cake is fixed. If we work harder, we can fight better. But we must not consume more.
    • Ch. 1 : The Character of the Problem
  • The general character of our solution must be, therefore, that it withdraws from expenditure a proportion of the increased earnings. This is the only way, apart from shortages of goods or higher prices, by which we can secure a balance between money to be spent and goods to be bought.
    • Ch. 2 : The Character of the Solution
  • In order to calculate the size of the cake which will be left for civilian consumption, we have to estimate (1) the maximum current output that we are capable of organising from our resources of men and plant and materials, (2) how fast we can safely draw on our foreign reserves by importing more than we export, (3) how much of all this will be used up by our war effort.
    • Ch. 3 : Our Output Capacity and the National Income
  • The nature of unemployment today is totally different from what it was a year ago. It is no longer caused by a deficiency of demand. There is no longer a potential surplus supply of the things we want. The transition to full employment is hindered by two obstacles. The first is due to the difficulty of shifting labour to the points where it is wanted. The second— and, for the time being, the chief—-obstacle is caused by the difficulties, other than the shortage of labour, in the way of existing demand becoming effective.
    • Ch. 3 : Our Output Capacity and the National Income
  • I have now reached a stage in the argument where I have to choose between being too definite or being too vague. If I set forth a concrete proposal in all its particulars, I expose myself to a hundred criticisms on points not essential to the principle of the plan. If I go further in the use of figures for illustration, I am involved more and more in guess-work; and I run the risk of getting the reader bogged in details which may be inaccurate and could certainly be amended without injury to the main fabric. Yet if I restrict myself to generalities, I do not give the reader enough to bite on; and am in fact shirking the issue, since the size, the order of magnitude, of the factors involved is not an irrelevant detail.
    • Ch. 5 : A Plan for Deferred Pay, Family, Allowances and a Cheap Ration
  • For each individual it is a great advantage to retain the rights over the fruits of his labour even though he must put off the enjoyment of them. His personal wealth is thus increased. For that is what wealth is,—command of the right to postponed consumption.
    • Ch. 5 : A Plan for Deferred Pay, Family, Allowances and a Cheap Ration
  • For the Trade Unions such a scheme as this offers great and evident advantages compared with progressive inflation or with a wages tax. In spite of the demands of war, the workers would have secured the enjoyment, sooner or later, of a consumption fully commensurate with their increased effort; whilst family allowances and the cheap ration would actually improve, even during the war, the economic position of the poorer families. We should have succeeded in making the war an opportunity for a positive social improvement. How great a benefit in comparison with a futile attempt to evade a reasonable share of the burden of a just war, ending in a progressive inflation!
    • Ch. 5 : A Plan for Deferred Pay, Family, Allowances and a Cheap Ration
  • The appropriate time for the ultimate release of the deposits will have arrived at the onset of the first post-war slump.
    • Ch. 7 : The Release of Deferred Pay and a Capital Levy
  • The mechanism of reaching equilibrium by means of a rising cost of living, which is vainly pursued by a rising level of wages, will be described in the next chapter. But it is admitted on all hands that this is the worst possible solution.
    • Ch. 8 : Rationing Price Control and Wage Control


  • Capitalism is “the astonishing belief that the nastiest motives of the nastiest men somehow or other work for the best results in the best of all possible worlds.”
    • Attributed by Sir George Schuster, Christianity and human relations in industry (1951), p. 109
    • Recent variant: Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.
      • As quoted in Moving Forward: Programme for a Participatory Economy (2000) by Michael Albert, p. 128
  • The avoidance of taxes is the only intellectual pursuit that still carries any reward.
    • As quoted in A Dictionary of Scientific Quotations (1977) by Alan L. MacKay, p. 140
  • Education is the inculcation of the incomprehensible into the ignorant by the incompetent.
    • From hearer's memory in Jewish Frontier, vol. 29 (1962).
    • Alternate version: Education: the inculcation of the incomprehensible into the indifferent by the incompetent.
      • As quoted in Infinite Riches: Gems from a Lifetime of Reading (1979) by Leo Calvin Rosten, p. 165
  • I don't really start until I get my proofs back from the printers. Then I can begin my serious writing.
    • As quoted in The Guardian (8 June 1983). p. 82
  • When my information changes, I alter my conclusions. What do you do, sir?
    • Reply to a criticism during the Great Depression of having changed his position on monetary policy, as quoted in "The Keynes Centenary" by Paul Samuelson, in The Economist Vol. 287 (1983), p. 19; later in The Collected Scientific Papers of Paul Samuelson, Volume 5 (1986), p. 275; also in "Understanding Political Development: an Analytic Study" (1987) by Myron Weiner, Samuel P. Huntington and Gabriel Abraham Almond, p. xxiv; this has also been paraphrased as "When the facts change, I change my mind. What do you do, sir?"
  • Successful investing is anticipating the anticipations of others.
    • As quoted in Isms (2006) by Gregory Bergman, p. 105
  • Markets can remain irrational longer than you can remain solvent.
    • As quoted in When Genius Failed (2000) by Roger Lowenstein, p. 123; actually "Markets can remain irrational a lot longer than you and I can remain solvent." from A. Gary Shilling, Forbes (1993) v. 151, iss. 4, p. 236.
  • I should have drunk more champagne.
    • Last Words, as quoted in Ben Trovato's Art of Survival (2007) by Ben Trovato, p. 196
  • If farming were to be organised like the stock market, a farmer would sell his farm in the morning when it was raining, only to buy it back in the afternoon when the sun came out.
  • We will not have any more crashes in our time.
    • Conversation with Felix Somary in 1927, reported in Felix Somary, The Raven of Zurich, London: C. Hurst, 1986 (1960), 146-7


  • It is better to be roughly right than precisely wrong.
    • Not attributed to Keynes until after his death. The original quote comes from Carveth Read and is:
    • It is better to be vaguely right than exactly wrong.
      • Logic, deductive and inductive (1898), p. 351 [1]

Quotes about Keynes[edit]

Sorted alphabetically by author or source
  • His [Keynes's] own leisure was admirably as it was variously employed: in inspecting his pigs; in attending a sale of pictures; in perusing (unlike some bibliophiles) a minor Elizabethan poet, his latest acquisition; in listening to a piano recital, recumbent in a box of the theatre he had built; in gossip and good talk and a glass of wine. ‘My only regret’, he said at the close of a College feast, ‘is that I have not drunk more champagne in my life.’ And so it was that he knew what leisure could give and desired that all should share the gift.
    • King's College (University of Cambridge). John Maynard Keynes, 1883-1946: Fellow and Bursar. King's College at the University Press, 1949.
  • Following the financial crisis of September 2008 when the American investment bank Lehman Brothers collapsed, threatening to engulf the entire banking system, the British economist John Maynard Keynes returned to center stage. In the popular press and in the writings of many economists, Keynes featured prominently as governments around the world urgently sought ways to avoid economic collapse.
    • Roger E. Backhouse and Bradley W. Bateman, Ch. 1 : "Keynes Returns, but Which Keynes?" Capitalist revolutionary : John Maynard Keynes (2011)
  • Keynes was a man of prodigious intellectual gifts, who straddled the worlds of banking, politics, the City, journalism and the arts, playing a significant role in all of them. But that doesn't express the nub of his attitude to the world and to human behaviour. What I admire is his belief in the moral responsibility of society towards its members, an attitude he brought to bear on his economic theories.
  • After careful research along these lines, I came to the annoying conclusion that Keynes had been 100 percent right in the 1930s. Previously, I had thought the opposite. But facts were facts and there was no denying my conclusion. It didn’t affect the argument in my book, which was only about the rise and fall of ideas. The fact that Keynesian ideas were correct as well as popular simply made my thesis stronger.
  • I think it is pretty hard to explain most governments’ responses to the crisis and recession without a healthy dose of Keynes.
    • Alan S. Blinder, "Teaching Macro Principlesafterthe Financial Crisis", The Journal of Economic Education (2010)
  • Keynes was no revolutionary, but his ideas revolutionized 20th-century economics.
    • Samuel Bowles, Richard Edwards, and Frank Roosevelt. Understanding Capitalism: Competition, Command, and Change (3rd ed., 2005), p.82
  • With all his beguiling power of expression and great, but disorderly force of intellect, Keynes will be best remembered as the man who made inflation respectable.
    • Brendan Bracken, in 1953, quoted in William Sydney Robinson, If I Remember Rightly: The Memoirs of W. S. Robinson, 1876-1963 (1967)
  • Why does Camelot lie in ruins? Intellectual error of monumental proportion has been made, and not exclusively by the politicians. Error also lies squarely with the economists. The "academic scribbler" who must bear substantial responsibility is Lord Keynes...
    • James M. Buchanan, in The Consequences of Keynes written with Richard E. Wagner and John Burton (1978)
But this long run is a misleading guide to current affairs. In the long run we are all dead.
Words ought to be a little wild for they are the assault of thoughts on the unthinking.
To our generation Einstein has been made to become a double symbol — a symbol of the mind travelling in the cold regions of space, and a symbol of the brave and generous outcast, pure in heart and cheerful of spirit.
The day is not far off when the economic problem will take the back seat where it belongs...
Perhaps a day might come when there would be at last be enough to go round, and when posterity could enter into the enjoyment of our labors.
Men will not always die quietly.
MarxianSocialism 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.
Most men lovemoney and security more, and creation and construction less, as they get older.
When the accumulation of wealth is no longer of high social importance, there will be greatchanges in the code of morals...
When my information changes, I alter my conclusions. What do you do, sir?
I should have drunk more champagne.
He was an economist, of course — a Cambridge don with all the dignity and erudition that go with such an appointment; but when it came to choosing a wife he eschewed the ladies of learning and picked the leading ballerina from Diaghilev’s famous company. ~ Robert L. Heilbroner
Keynes's intellect was the sharpest and clearest that I have ever known. When I argued with him, I felt that I took my life in my hands, and I seldom emerged without feeling something of a fool. ~ Bertrand Russell

John Maynard Keynes 1883-1946

English economist.

Keynes is considered one of the foremost economists of all time. His The General Theory of Employment, Interest and Money transformed the course of economic thought with its controversial interpretation of the causes of unemployment and prescriptions for its remedy. The impact of this book on twentieth-century economic history—known as the Keynesian Revolution—has been profound, encompassing economic method, theory, and policy.

Biographical Information

Born and raised in Cambridge, England, Keynes grew up in an atmosphere that fostered intellectual achievement. His father, John Neville Keynes, was a noted logician, economist, and a registrar at Cambridge University, while his mother, Florence Ada Keynes, was a writer and social welfare advocate as well as the first woman mayor of Cambridge. Keynes attended Eton from 1897 until 1902 and then entered King's College, Cambridge, on a scholarship in mathematics and the classics. During his freshman year at Cambridge, Keynes was invited to join an intellectual group called "The Apostles" that met periodically to discuss literary, philosophical, political, and aesthetic questions. Among the members of the Apostles were Leonard and Virginia Woolf, Lytton Strachey, E. M. Forster, and Bertrand Russell, all of whom would later become leaders of the exclusive circle of intellectuals and artists known as the Bloomsbury Group. Through his association with the Apostles, Keynes became introduced to the philosophy of G. E. Moore; critics note the pervasive influence of Moore's Principia Ethica on Keynes's A Treatise on Probability, his only philosophical work, as well as on his economic methodology. After graduating from Cambridge with a master's degree in mathematics, Keynes studied economics for a year in preparation for a civil service examination. In 1906 he was assigned by the British government to the India Office; the knowledge he gained there formed the basis of his first book, Indian Currency and Finance. Keynes resigned from the India Office in 1908 to join the economics faculty at Cambridge. He taught at Cambridge until 1915, when he returned to government service as a Treasury official. By the end of World War I, Keynes had risen to a prominent position in the Treasury and was responsible for managing foreign-exchange arrangements. Although he seemed destined for great success as a public official, Keynes's trip to the Paris Peace Conference as economic adviser to Prime Minister Lloyd George caused his career to change directions once again. Appalled by the political maneuverings of the conference and convinced that the reparations policies imposed upon Germany were excessive, Keynes resigned from his Treasury post. Shortly after, he published a stinging indictment of the Versailles Treaty, The Economic Consequences of the Peace, which provoked international controversy and made Keynes famous. During the 1920s, Keynes resumed his teaching duties at Cambridge, pursued an active business life in London as a financial consultant and insurance company executive, and was named bursar at King's College. Around the middle of the decade, Keynes became convinced that he needed to develop a strong theoretical foundation to support his belief that public expenditures would be useful in lowering unemployment. This conclusion became the impetus for A Treatise on Money and the General Theory. By the time the General Theory appeared, politicians and economists all over the world were searching for a way to reverse one of the longest depressions in economic history; orthodox, or classical, economic policy, which held that prosperity would return if prices and wages were lowered, was not promoting recovery anywhere. Keynes's General Theory was quickly accepted by many economists as an answer to the world's economic tragedies, and when Keynesian fiscal measures began to produce the desired results, he became widely viewed as the savior of capitalism. The General Theory also influenced economic thinking on how World War II should be financed. When the war commenced, Keynes returned to the British Treasury and was consulted on all important questions regarding the economic management of the conflict. He was a principal negotiator at the Bretton Woods Conference in 1944, where he played a significant role in the inauguration of the International Monetary Fund and the World Bank. His last major public service was his negotiation in 1945 of a multi-billion-dollar U.S. loan to England. He died of a heart attack on April 21, 1946, shortly after returning from an economic conference in Savannah, Georgia.

Major Works

The revolutionary content of Keynes's economic theory, the bulk of which is contained in A Treatise on Money, the General Theory, and, to a lesser extent, A Tract on Monetary Reform, developed out of his active involvement in England's economic problems during the 1920s and 1930s. During the 1920s, he advocated economic policies, either in an official capacity or as an independent expert, that he arrived at largely by intuition. In The End of Laissez-Faire and Can Lloyd George Do It?, he recommended a government-sponsored program of public works to get the unemployed off welfare, but these works lacked a theoretical foundation, and A Tract on Monetary Reform, which also suggested that government intervention could curb unemployment, was unsuccessful at refuting the classical argument, or so-called "Treasury view," that government spending financed by loans would cause inflation or crowd out private investment. In A Treatise on Money and the General Theory, Keynes sought to establish a firm theoretical basis that would explain the reasoning behind his policy proposals. In A Treatise on Money, he attempted to replace the classical explanation of money and its function in the economy, known as the quantity theory of money, with a more dynamic model that related booms and slumps to oscillations in the credit cycle and that described the causal processes by which the price level is determined. It was not until he began composing the General Theory, however, that Keynes was able to completely break away from the quantity theory of money. When the General Theory was published, it was viewed as a powerful challenge to orthodox economic theory, which held that a decrease in the wage level would stimulate employment because firms would take on more labor at a lower price, and that the interest rate would always adjust in such a manner as to prevent variations in savings and investment from causing any change in spending. Keynes declared this theory nonsense, tracing the origins of unemployment not to excessively high wages but to the total purchasing power in the economy, or aggregate demand. While classical economists focused on the individual firm or household, Keynes looked at output and employment as a whole. He maintained that a decrease in wages would not stimulate employment because it would lower the overall demand for goods and services, thereby causing prices to drop. He also contended that the classical economists erred in thinking that savings would always be equal to investment, arguing that there are times when savers wish to save more than investors are willing to invest, causing part of output to go unsold and leading producers to cut back on employees. Keynes placed great emphasis on the idea that private investment was a function not only of interest rates but also of expectations about costs and demand for products in the future. He was skeptical that monetary policy in the form of lower interest rates would provide a sufficient stimulus to business investment in times of severe economic depression to bring the economy back up to a level of full employment. He therefore proposed that fiscal measures such as public works or subsidies to afflicted groups were the only possible correctives to prolonged unemployment.

Critical Reception

On January 1, 1935, during the course of writing the General Theory, Keynes wrote to George Bernard Shaw: "I believe myself to be writing a book on economic theory which will largely revolutionise—not I suppose at once but in the course of the next ten years—the way the world thinks about economic problems." Keynes's prophecy proved accurate. Quickly after the publication of the General Theory, governments everywhere began adopting policies advocated by Keynes or associated with his name, a trend that continued for over thirty years. By the late 1940s, his theories had been incorporated into textbooks in the United States and England, and millions of students were introduced to the idea of national income accounting. Keynes was not without his critics, however. While many scholars attributed the economic prosperity experienced after World War II to the adoption of Keynesian policies, some insisted that it was the result of other factors, such as rearmament in Europe and the United States after the outbreak of the Korean War, improved international economic relations, and new technology that stimulated large amounts of private investment. Keynes was also attacked by hard-line communists, who argued that the General Theory was an attempt to save capitalism with remedies he knew to be ineffective. In the 1970s, with the onset of rising inflation and unemployment, the popularity of Keynes's ideas plummeted. Many economists traced the weakening of private investment to growing budget deficits and maintained that inflation was the result of the Keynesian policy of high employment, which had caused too great an increase in wages. Today, Keynes's policies remain in a state of official disfavor, but there are large numbers of economists who contend that the world's current economic problems are the result of the pursuit of anti-Keynesian ideas. The dispute over the validity of Keynes's ideas has taken shape in a vast amount of literature written by professional and academic economists. Immediately after the publication of the General Theory, classical economists sought to dispel the notion that Keynes was proposing a drastic change in economic thought by arguing that Keynes's ideas were a special case of orthodox equilibrium theory. In the ensuing years, additional attempts have been made to reconcile classical economic theory with the existence of involuntary employment, further undermining the revolutionary content of the General Theory. Other economists, and a large number of socialists, have read the General Theory as a radical threat to the capitalist system. These conflicting interpretations have resulted in large part from the vagueness and incomprehensibility of certain parts of the General Theory, which has allowed scholars to conjecture what Keynes meant to be saying. Among the most common types of studies on Keynes are expositions of specific aspects of his theory, such as investment, savings, consumption, and interest; analyses of the development of his economic thought, primarily as revealed in A Tract on Monetary Reform, A Treatise on Money, and the General Theory; examinations of the relationship between his theories and his policy proposals; and studies attempting to establish the difference between Keynes's own ideas and the various schools of Keynesian thought his works have inspired. The publication of Keynes's collected works by the Royal Economic Society and the centenary of his birth in 1983 prompted countless reassessments that further added to the growing literature on Keynes. In recent years, scholars have placed greater emphasis on Keynes's philosophical beliefs as expressed in A Treatise on Probability, studying the moral underpinnings of his economic method and tracing his theory of investment expectations to his ideas on probability and induction. As many of Keynes's critics point out, the passionate controversy he has inspired is evidence of the depth and range of his ideas. In the minds of most scholars, this fertility of thought, combined with his enormous influence on economic theory and policy, justifies his reputation as the twentieth-century's most important economist.

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