The Pathos of Politics (64) John Maynard Keynes

John Maynard Keynes

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. ~ John Maynard Keynes

English economist John Maynard Keynes (1883–1946) worked as a civil servant in the British treasury department during the 1st World War. He resigned in disgust at the odious terms imposed on Germany after the war.

Politicians are awful. Their stupidity is inhuman. I work for a government I despise for ends I think criminal. ~ John Maynard Keynes

In the 1920s, as an academic, Keynes had only mild skepticism about laissez-faire economics, which was conventional wisdom at the time.

The parallelism between economic laissez-faire and Darwinism is now seen, as Herbert Spencer was foremost to recognize, to be very close indeed. ~ John Maynard Keynes

Economic developments changed Keynes’ mind. In the grip of the unrelenting Great Depression in the 1930s, Keynes challenged the neoclassical assumption that free markets would self-correct, particularly in providing full employment. Keynes instead argued that aggregate demand determined overall economic vitality, and that stagnant demand could cause prolonged periods of high unemployment. His recommended remedy was state intervention to moderate the “boom and bust” cycles typical of capitalist bipolarity: optimistic exuberance followed by pessimism that stunts investment.

Keynes thought that governments had also played a part in creating conditions for the depression.

This progressive deterioration in the value of money through history is not an accident, and has had behind it two great driving forces: the impecuniosity of governments and the superior political influence of the debtor class. ~ John Maynard Keynes

Keynes influenced government policies in both Britain and the United States during the Great Depression. Both nations intervened with monetary and fiscal largesse to stimulate the economy.

The important thing for government is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all. ~ John Maynard Keynes

The success of those efforts was modest. Economic revival only came with the 2nd World War, when vast manufactures were swiftly consumed in the ravenous fire of the war.

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. ~ John Maynard Keynes

Keynes influence lasted until the 1970s, when pessimism arose from monetarist economists about governments’ ability to regulate the business cycle. Keynesian economics resurged with the global financial crisis of 2007–2008, as governments larded the banks which had caused the panic in the first place with reward money.

The political problem of mankind is to combine 3 things: economic efficiency, social justice, and individual liberty. ~ John Maynard Keynes