John Maynard Keynes (5 June 1883 – 21 April 1946), a British economist known also as the father of modern theoretical economics, had made a great impact on contemporary economic as well as political theory. His ideas were tapped by governments for their fiscal policies. He is most well known on his interventionist policy when it comes to fiscal and monetary measures, specifically, to mitigate the undesirable effect of recessions, depressions, and even booms.
An article from Time magazine on the 100 Most Important People of the Century, contend that “[h]is radical idea that governments should spend money they don’t have may have saved capitalism” (Reich, no date).
As an economist, his first share of international fame was when he was selected as a delegate of the Paris Peace Conference of 1918–1919. It was during this conference that the victors of the World War 1 (specifically, Woodrow Wilson, Georges Clemenceau, and David Lloyd George) imposed war reparations on Germany. Keynes held his tongue during the conference but let out a roar as soon as he returned to England (Reich, no date).
He wrote a book entitled The Economic Consequences of Peace. He wrote that the Germans would not be able to pay the victors. He called Wilson a “blind, deaf Don Quixote”, Clemenceau a xenophobe with “one illusion — France, and one disillusion — mankind”, and Lloyd George a “goat-footed bard, this half-human visitor to our age from the hag-ridden magic and enchanted woods of Celtic antiquity. ” Keynes predicted that the reparations demanded by the victors would keep Germany impoverished and might ultimately threaten the neighboring countries if not all of Europe (Reich, no date).
And we know that he is indeed right as if it was a prophecy. The book sold almost a hundred thousand copies on that period. But it was only later on after three decades that the real effect of his treatise was felt. After the end of World War II, both US and Britain (as victors of the war) remembered Keynes’ admonition. The best way to attain a lasting peace is by helping the vanquished start all over again – public investing to create trading partners and building solid democracies (like n the case of Germany, Italy, and Japan during that war; Reich, no date).
Keynes founded that branch of economics that is termed “macroeconomics” today. This is his greatest influence in the history of economics. This actually came from a book he wrote during the depths of the Great Depression. The book was called “The general theory of employment, interest and money” (published on 1936). The idea is pretty much easy to understand: Governments should not leave the market alone when, and especially, the economy is running slow (interventionist policy of the government).
It is during periods of dull economy or recession that markets are saturated and businesses either do not invest or reduce their investment. Such situation, according to Keynes, is a prologue for a very dangerous cycle: “less investment, fewer jobs, less consumption and even less reason for business to invest” (Keynes, in Wikipedia, The Free Encyclopedia). In 1942, John Maynard Keynes was raised to the House of Lords and was accord the title Baron Keynes of Tilton, County of Sussex.
Keynes played a crucial role in the negotiations that transpired in the creation of the Bretton Woods system (the system/conference that created the World Bank, International Monetary Fund, and the World Trade Organization, as we know it today). He was the head of the British Commission and the chairman of the World Bank Commission. He was the brainchild behind the management of currencies between and among countries. He advocated the creation of a world central bank, the International Clearing Union, that will be responsible for the common world currency unit (Reich, no date; Keynes, in Wikipedia, The Free Encyclopedia).