February 24, 2002
I don’t recall that John Maynard Keynes got many votes for “Man of the Century” a couple of years ago, when that was a popular game. Einstein swept the field, reasonably enough; but Keynes should have been on everyone’s short list. After all, he discovered the economic equivalent of a cure for the common cold. He wrote a brave, wise, eloquent, and influential book protesting the Treaty of Versailles, which concluded the First World War; and if his book had been a little more influential, it might have prevented the Second. Between the wars, in response to the Great Depression, he published a theoretical magnum opus that converted most of the economics profession (even Richard Nixon eventually saw the light). After World War II a new international financial structure largely devised by Keynes helped launch the most prosperous 25 years in history. And more than any other contender for “man of the century,” Keynes was a genuinely 20th-century man: complex and many-sided, dedicated though disillusioned, with a private life as rich and fascinating as his public one.
Keynes was born in 1883 of very Victorian parents: prosperous, professional, Protestant, and public-spirited. Young Maynard (only his mother called him “John”) was an ideal student, winning every school prize in sight, including scholarships to Eton and Cambridge. At Cambridge he studied mathematics and moral philosophy, coming under the influence of the philosopher G.E. Moore. Moore’s “Principia Ethica,” which taught the primacy of the intellectual and aesthetic pleasures and virtues, was a kind of Bible for two generations of English university students. As a freshman Keynes was elected to the “Apostles,” an intensely talky group of Cambridge’s best and brightest, which included Moore, Bertrand Russell, Lytton Strachey, Leonard Woolf, and other luminaries.
Through Strachey and Woolf, Keynes became one of the original members of Bloomsbury, the famous literary and artistic coterie. Virginia Woolf and her sister Vanessa Bell were his lifelong friends. So was the handsome painter Duncan Grant, who was Strachey’s, then Keynes’s, and finally Vanessa’s lover. The whole menagerie lived together for many years; and even after Keynes became a public figure and a wealthy (and happily married) country gentleman, he was close to the Bloomsberries.
After Cambridge Keynes spent a few uneventful years in the India Office, at the same time writing “A Treatise on Probability” – he was still as much a philosopher as an economist. The First World War ended this pleasant indecision. He went to work full-time at the Treasury, and at the end of the war he was sent to Versailles with the British delegation to negotiate a peace treaty.
What Keynes saw at the negotiations appalled him. England and France were determined to extract heavy reparations from Germany without leaving it enough resources to pay them. The country would be crippled and Europe’s economic recovery severely hampered. He resigned in protest and wrote “The Economic Consequences of the Peace,” a bitter indictment of the treaty and an unflattering portrait of the Allied leaders. It was a bestseller.
Throughout the 1920s and 30s Keynes divided his time between Cambridge and London as a teacher, college administrator, editor of a leading economics journal, owner of a leading political journal, director of a large insurance company, independent investor, active patron of the arts, frequent advisor to the government, and author of several large books and many articles on economic theory and policy. He was always burning several candles – very brightly – at both ends.
As it became clear that Britain’s pre-World War I prosperity would not return, economists debated what to do. Classical economic theory, unchallenged before 1914 (except by Marxists), taught that the economy tended naturally toward equilibrium if left alone by the government. The only useful functions of government were to enforce property laws and maintain a stable currency. Unemployment insurance, social security, public works, and other well-meaning measures could only delay the general reduction of wages that would restore equilibrium.
Keynes’s innovation was to show that what had seemed natural was really accidental. A long, undisturbed epoch of economic stability had created expectations of future stability, and these expectations themselves had led most people to behave in ways that produced continued stability. But once there was a break in expectations – once enough people felt insecure and began to hoard money rather than spend or invest it – the economy could seize up. Keynes called this state of affairs a “liquidity trap.” The solution was “demand management” – getting money to flow freely again. The government could do this by itself spending money, thus creating employment, or by directly channeling purchasing power to those who lacked it. (Not to the richest 1% -- George W. Bush is no Keynesian.) This newly active role for government was the essence of the Keynesian Revolution.
Keynes’s last decade was a blaze of glory. In 1936 he published “The General Theory of Employment, Interest, and Money,” which dominated economic thinking for the next three decades. In 1940 he wrote “How to Pay for the War” (i.e., by compulsory saving rather than inflation or rationing), which everyone except the government immediately recognized as an original and brilliant idea. He led the British delegation that negotiated Lend-Lease and was the chief architect of the post-World War II international economy, tirelessly browbeating two very stubborn and shortsighted governments – his own and ours. Throughout these protracted negotiations he drove himself to exhaustion, despite medical advice. He collapsed and died in early 1946, a national hero.
Robert Skidelsky’s three-volume life will certainly go down as one of the immortal biographies. Of its 1500-plus pages, some are difficult but none is slack or superfluous. Skidelsky is an economic historian, but his nuanced accounts of Keynes’s protean personality, his early philosophical preoccupations, and the cultural milieus of Cambridge, Bloomsbury, and late-Victorian, Edwardian, and interwar England generally, could hardly be bettered. The many pages explaining the evolution of modern economics and detailing Keynes’s theoretical controversies and policy battles are wonderfully lucid – very nearly intelligible even to an economic illiterate like this reviewer.
One of the book’s keenest pleasures (as with other great biographies, like Hermione Lee’s of Virginia Woolf and Michael Holroyd’s of Bernard Shaw) is the abundance of quotation from the biographical subject’s prose, especially letters. Keynes’s prose was exquisite, and he knew everyone. There are delightful letters here to and from Shaw, Strachey, and other friends, along with many to his wife Lydia Lopokova, a celebrated Russian dancer (whose letters to him, in charmingly idiosyncratic English, are equally delightful). One wonders: will it still be possible to write an intimate biography once email has made letters obsolete?