Keynesian economics and the idea of spending more when times get rough

Early Life

John Maynard Keynes was born in 1883 in Cambridge to a very academic upper-middle-class family. His father was an economist and lecturer in moral sciences at Cambridge University. His mother was a local social reformer who went on to be the first female councillor on the Cambridge City Council. He showed great aptitude for arithmetic early and was awarded the King’s scholarship to attend Eton College, where he excelled in various topics, especially mathematics, history and classics.

Education

Keynes then received another scholarship, this time to read mathematics at Cambridge University. In 1904 he completed a first-class B.A. in mathematics yet remained in the university as a graduate for two more years, participating in debates, studying philosophy and attending various economics lectures. During his time at the university, Keynes was persuaded by another famous economist Alfred Marshall to switch to the fields of economics and politics, moving from mathematics, history and classics despite showing lots of potential in these subjects.

Published Works

Keynes’ best-known work, The General Theory of Employment, Interest and Money, was published in 1936 and became a benchmark for future economic thought. His methodologies separated from the conventional free-market capitalist economies of Smith and planned socialist economies of Marx into a class of his own in what is now known as Keynesian economics. He was a very influential and outspoken writer but faced many critics due to his unorthodox ways of thinking. Instead of focusing on profit or power, Keynes felt it was more important to solve contemporary problems, such as lowering unemployment rates or using government intervention to help end recessions. Other works by John include Indian Currency and Finance (1913), The Economic Consequences of the Peace (1919) and A Treatise on Money (1930), to name only a few.

How did Keynes think economies should be run?

As mentioned earlier, Keynes developed a new economics school of thought known as Keynesian economics, which emphasised government intervention in the market by increasing national spending and reducing taxes. This would stimulate demand in the event of a recession, and it followed his principle that it was, in fact, demand and not supply that drove production. Following this hypothesis, raising demand would allow the market to start working functionally again, pulling the economy from recession. However, at the time of publication, the economy was relatively strong. As a result, Keynes’ methods were ignored and ridiculed as they were deemed unnecessary and only gained recognition when countries began falling into recession. One such example of when most economies relied on his thinking was in 2008-2009 in one of the biggest global market crashes ever seen. Still, unfortunately, John Maynard Keynes passed away in 1946, so his work was never properly appreciated until after his death.

---

Related Posts