Life
John Maynard Keynes was born in Cambridge, England, the eldest of three children. His father, John Neville Keynes, was a Cambridge don (and later Registrary of the University) who lectured in logic and political economy.
His Scope and Method of Political Economy (1891) remains an important text in economic methodology. Maynard’s mother, Florence Ada Keynes, was the daughter of a Congregationalist minister. She was educated at Newnham College in the pioneering days of women’s education at Cambridge. She was active in progressive social projects and became a magistrate and the first woman mayor of Cambridge.Maynard’s father supervised his early studies; they worked together in the father’s study. Maynard was perceived as exceptionally intelligent from an early age and was pushed rather hard, but where a lesser child might have found this onerous or have rebelled, he revelled in the work and excelled. He won a scholarship to Eton, where he developed his knowledge of philosophy and began to collect rare books. (He later made a substantial contribution to the history of science by collecting Newton’s alchemical papers.) He went from there to King’s College, Cambridge, where philosophy and ethics claimed his attention more than the subject he was reading: mathematics. He and those in his circle were much influenced by the philosophy of G.E. Moore, for whom the contemplation of beauty and the enjoyment of friendship were the true purposes of life, a view deeply subversive of Victorian values of duty and convention.
Keynes took a first class degree in 1905 and then, with Alfred Marshall’s encouragement and supervision, stayed on in Cambridge with a view to studying for the (then new) economics examinations. In the end he elected to sit the Civil Service examinations instead. He came second and joined the India Office, where he spent just two years.
He found the work less than a challenge and began to write his dissertation for a fellowship at King’s. From 1908 he was back in Cambridge, lecturing in economics and revising his dissertation, which was accepted the following year and published much later (A Treatise on Probability, 1921). In 1911 (aged 28) he was appointed editor of the Economic Journal and in 1913 published his first book, Indian Currency and Finance. Cambridge was his centre of gravity until the outbreak of the First World War, though he kept up his friendships with what became known as the Bloomsbury Group, including the painters Duncan Grant and Vanessa Bell, and the writers Virginia Woolf and Lytton Strachey, sharing a series of houses with several of them.Whether by association with these people, exposure to Moore’s ideas, or natural inclination, Keynes embraced the arts with enthusiasm. His artistic interests spanned theatre, ballet, painting and rare books. His greatest contributions to the arts were to establish the Arts Council and to give the Arts Theatre to Cambridge. He also secured some very important pictures for the National Gallery; his own collection is now on long loan from King’s College to the Fitzwilliam Museum. In Keynes’s personality these goals were balanced by the acceptance of a duty to contribute to public life, which he did in abundance.
Keynes went to the Treasury in January 1915 to work on wartime internal and external finance, and at the end of the war he was the Treasury’s chief representative at the Paris peace conference. He strongly opposed the punitive settlement France wanted to impose on Germany, arguing that the attempt to pay what France was asking would first bankrupt Germany and then embitter her, and a bitter Germany was dangerous (as it proved).
When his view made no headway, Keynes resigned in protest and spent the summer at Charleston, the farmhouse in Sussex that Vanessa Bell and Duncan Grant had leased, writing The Economic Consequences of the Peace (1919).
The book was a sensation, both for the depth of its analysis of the economic background to the war and the consequences of the proposed peace settlement, but also for its vivid depiction of the strong political forces at work in the conference and its devastating characterization of the chief participants. Keynes was now famous, not as an academic but in world affairs (he became a subject of David Low’s cartoons). In official circles, however, the book was (understandably) deeply offensive. He left the Treasury to return only when the next war, which he had predicted, broke out.In the 1920s, Keynes returned to lecturing at Cambridge (unpaid, in order to leave time for writing - he now made his money mainly by playing various financial and commodity markets). But he was not only a don: journalism, financial dealings, chairmanship of a life assurance company and the pursuit of the good life enriched his days - and sometimes his pocket. He served King’s as Bursar. As Skidelsky (1992) put it, the academic was balanced by the man of affairs, the manager by the aesthete.
Recovery from the First World War, price instability and the debate over the related questions of whether Britain should return to the gold standard (to which he was strongly opposed) and, if so, at what parity were key issues for Keynes in the early 1920s, while he revised and published his fellowship dissertation (A Treatise on Probability, 1921). He returned to the reparations issue (A Revision of the Treaty, 1922), collected up his writings on price stability and the gold standard into A Tract on Monetary Reform (1923) and in 1924 began work on A Treatise on Money (1930).
He spent part of each week at King’s and part in London at 46 Gordon Square in Bloomsbury. During the 1920s, Diaghilev’s Ballets Russes had captivated London - and Keynes, after a lifetime of homosexual affairs, fell deeply in love with its prima ballerina, Lydia Lopokova. They married in 1925, took sole possession of 46 Gordon Square and also took a lease on Tilton, a farmhouse in Sussex very near Charleston.
He kept up a close relationship with the Liberal Party. He took a particularly active role in the 1929 election campaign, in which he advised and wrote pamphlets on unemployment policy and its finance (for example, the pamphlet written with Hubert Henderson, Can Lloyd George Do It?, Keynes 1929 [1972]), and spoke on the hustings in support of Liberal candidates. He was urged to stand for the Cambridge University constituency but refused.
Britain left the gold standard in 1931, which left interest rates free to fall. Keynes organized the conversion of the huge War Loan, issued in 1917 at 5 per cent, to a much lower rate. But neither of these events did much to alleviate the high unemployment that Britain had suffered since 1921, now intensified by the Wall Street crash and the collapse of American prosperity and world trade. Arguing from A Treatise on Money in the Macmillan Committee on Finance and Industry, Keynes realized that neither he nor his contemporaries could explain the persistence of unemployment. Keynes began to work toward The General Theory of Employment, Interest and Money (1936), aided by the criticisms of his younger Cambridge colleagues.
In 1937, Keynes suffered his first heart attack, by which his activities were much reduced. By the time war was declared, his health had improved. He returned to the Treasury and devoted himself first to How to Pay for the War (1940) with low interest costs and limited inflation. He made several trips to the United States to negotiate the Lend Lease agreement. He was elevated to the peerage in 1942. When he turned to preparing for post-war arrangements for trade and international payments, his Clearing Union became the official British proposal at the Bretton Woods conference in 1944. Its core proposal was defeated by the Americans. Later that year he had another serious heart attack.
In late 1945, he returned to America to negotiate a loan. The terms were harsh, but he defended them in the House of Lords as the best that could be got. He returned to the US for the inauguration of the International Monetary Fund (IMF) and the World Bank and suffered another heart attack on the way back. The next heart attack, at Tilton on 21 April 1946, was fatal.