John Maynard Keynes

(Source: Richard T. Gill, Encyclopedia of Biography) John Maynard Keynes (1883-1946) was one of the most influential economists in the 20^th century. Keyne's range of activities was exceptional. In addition to his work as an economist, he was-often simultaneously- a high government official, an editor of an academic journal, a businessman (who managed his investments in bed each morning at breakfast), a teacher at Cambridge University, a college bursar, a collector of rare books, a patron of the arts, and a member of the literary set called the Bloomsbury Group.

Keyne's main work, The General Theory of Employment, Interest and Money (1936). . . was Keyne's answer to the riddle of the Great Depression of the 1930's-that millions of people, willing to work, could not find employment-and the analysis offered in it is the basis of his enduring reputation. A central proposition of the General Theory is that times exist in a market economy when the total demand of consumers and investors may be insufficient to purchase all the goods the society has produced. (Traditional economics had held that supply creates its own demand.) Business managers, finding that they cannot sell all they have on hand, will cut back on production and employment, and a depression will result. Keynes held that part of the solution during periods of high unemployment was for government to increase the money supply, thus lowering interest rates and stimulating business investment. But Keynes also advocated an active government fiscal policy of deficit spending on public works and other projects and the maintenance during depressions of an unbalanced budget to increase the aggregate demand for goods and services.

Keyne's opinions were a sharp departure from conventional economics, and his theory remains controversial. In the years after World War II, however, his views in one form or another became widely accepted among economists in England and the United States, while his critics were in the minority.