Keynes Best Quotes

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become "profiteers," who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

Keynes declared capitalism the best system ever devised to achieve a civilized economic society. But he recognized in it two major faults—“its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.

Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.

The best for me, perhaps, would be if I could lie down one evening and not wake up again.

We should not conclude from this that everything depends on waves of irrational psychology. On the contrary, the state of long-term expectation is often steady, and, even when it is not, the other factors exert their compensating effects. We are merely reminding ourselves that human decisions affecting the future, whether personal or political or economic, cannot depend on strict mathematical expectation, since the basis for making such calculations does not exist; and that it is our innate urge to activity which makes the wheels go round, our rational selves choosing between the alternatives as best we are able, calculating where we can, but often falling back for our motive on whim or sentiment or chance.

Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that teach competitor has to pick not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view. It is not a case of choosing those which, to the best of one's judgement are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth and higher degrees.

Imperialism as an arrangement, however, has remained largely invisible to the discipline of economics, even to its best practitioners and even in the colonial period. No less a person than John Maynard Keynes, in his classic work The Economic Consequences of the Peace (1919), where he talks of the ‘economic Eldorado’ that prewar Europe represented, fails to mention that this Eldorado rested upon an elaborate framework of imperialism. Europe’s accessing of food from the ‘new world’, an important aspect of this Eldorado, would not have been possible if this food had not been paid for, through an intricate arrangement, by Britain’s appropriation gratis of a part of the surplus of its colonies and semi-colonies (‘drain of wealth’), and by its export of manufactured goods to its colonies and semi-colonies at the expense of their local producers (‘de-industrialization’).

Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency.

Keynes died in 1946, exhausted by his wartime labors. But he had long since demonstrated that neither capitalism nor liberalism would survive very long without one another. And since the experience of the interwar years had clearly revealed the inability of capitalists to protect their own best interests, the liberal eral state would have to do it for them whether they liked it or not.

Ancient Egypt was doubly fortunate, and doubtless owed to this its fabled wealth, in that it possessed two activities, namely, pyramid-building as well as the search for the precious metals, the fruits of which, since they could not serve the needs of man by being consumed, did not stale with abundance. The Middle Ages built cathedrals and sang dirges. Two pyramids, two masses for the dead, are twice as good as one; but not so two railways from London to York. Thus we are so sensible, have schooled ourselves to so close a semblance of prudent financiers, taking careful thought before we add to the 'financial' burdens of posterity by building them houses to live in, that we have no such easy escape from the sufferings of unemployment. We have to accept them as an inevitable result of applying to the conduct of the State the maxims which are best calculated to 'enrich' an individual by enabling him to pile up claims to enjoyment which he does not intend to exercise at any definite time.

The Keynesian world is a world in which there are two distinct classes of actors: the skilled investor, ‘who, unperturbed by the prevailing pastime, continues to purchase investments on the best genuine long-term expectations he can frame’, and, on the other hand, the ignorant ‘game-player’. It does not seem to have occurred to Keynes that either of these two may learn from the other, and that, in particular, company directors and even the managers of investment trusts may be the wiser for learning from the market what it thinks about their actions. In this Keynesian world the managers and directors already know all about the future and have little to gain by devoting their attention to the misera plebs of the market. In fact, Keynes strongly feels that they should not! This pseudo-Platonic view of the world of high finance forms, we feel, an essential part of what Schumpeter called the ‘Keynesian vision’. This view ignores progress through exchange of knowledge because the ones know all there is to be known whilst the others never learn anything.

Keynes was a voracious reader. He had what he called ‘one of the best of all gifts – the eye which can pick up the print effortlessly’. If one was to be a good reader, that is to read as easily as one breathed, practice was needed. ‘I read the newspapers because they’re mostly trash,’ he said in 1936. ‘Newspapers are good practice in learning how to skip; and, if he is not to lose his time, every serious reader must have this art.’ Travelling by train from New York to Washington in 1943, Keynes awed his fellow passengers by the speed with which he devoured newspapers and periodicals as well as discussing modern art, the desolate American landscape and the absence of birds compared with English countryside.54 ‘As a general rule,’ Keynes propounded as an undergraduate, ‘I hate books that end badly; I always want the characters to be happy.’ Thirty years later he deplored contemporary novels as ‘heavy-going’, with ‘such misunderstood, mishandled, misshapen, such muddled handling of human hopes’. Self-indulgent regrets, defeatism, railing against fate, gloom about future prospects: all these were anathema to Keynes in literature as in life. The modern classic he recommended in 1936 was Forster’s A Room with a View, which had been published nearly thirty years earlier. He was, however, grateful for the ‘perfect relaxation’ provided by those ‘unpretending, workmanlike, ingenious, abundant, delightful heaven-sent entertainers’, Agatha Christie, Edgar Wallace and P. G. Wodehouse. ‘There is a great purity in these writers, a remarkable absence of falsity and fudge, so that they live and move, serene, Olympian and aloof, free from any pretended contact with the realities of life.’ Keynes preferred memoirs as ‘more agreeable and amusing, so much more touching, bringing so much more of the pattern of life, than … the daydreams of a nervous wreck, which is the average modern novel’. He loved good theatre, settling into his seat at the first night of a production of Turgenev’s A Month in the Country with a blissful sigh and the words, ‘Ah! this is the loveliest play in all the world.’55 Rather as Keynes was a grabby eater, with table-manners that offended Norton and other Bloomsbury groupers, so he could be impatient to reach the end of books. In the inter-war period publishers used to have a ‘gathering’ of eight or sixteen pages at the back of their volumes to publicize their other books-in-print. He excised these advertisements while reading a book, so that as he turned a page he could always see how far he must go before finishing. A reader, said Keynes, should approach books ‘with all his senses; he should know their touch and their smell. He should learn how to take them in his hands, rustle their pages and reach in a few seconds a first intuitive impression of what they contain. He should … have touched many thousands, at least ten times as many as he reads. He should cast an eye over books as a shepherd over sheep, and judge them with the rapid, searching glance with which a cattle-dealer eyes cattle.’ Keynes in 1927 reproached his fellow countrymen for their low expenditure in bookshops. ‘How many people spend even £10 a year on books? How many spend 1 per cent of their incomes? To buy a book ought to be felt not as an extravagance, but as a good deed, a social duty which blesses him who does it.’ He wished to muster ‘a mighty army … of Bookworms, pledged to spend £10 a year on books, and, in the higher ranks of the Brotherhood, to buy a book a week’. Keynes was a votary of good bookshops, whether their stock was new or second-hand. ‘A bookshop is not like a railway booking-office which one approaches knowing what one wants. One should enter it vaguely, almost in a dream, and allow what is there freely to attract and influence the eye. To walk the rounds of the bookshops, dipping in as curiosity dictates, should be an afternoon’s entertainment.

As is the way of India, where things take decades to get started, the first official proposal to have a central bank came in 1913. Austen Chamberlain, a politician, was asked to analyse the gold exchange standard, which was used to maintain the exchange rate of the rupee at one shilling four pence. His commission contained no Indians but it did have John Maynard Keynes. The commission’s report was highly critical of the way things had been run till then, not because Indians were at the receiving end but because the British were not getting the best of it. It

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However, for Keynes it had become self-evident that the best defense against political extremism and economic collapse was an increased role for the state, including but not confined to countercyclical economic intervention.

Keynes died in 1946, exhausted by his wartime efforts. But he had long since demonstrated that neither capitalism nor liberalism would survive very long without one another. And since the experience of the interwar years had clearly revealed the inability of capitalists to protect their own best interests, the liberal state would have to do it for them whether they liked it or not.

When the time came to apply for college, I decided against physics and other technical fields, and ended up at the Stockholm School of Economics, focusing on environmental issues. I wanted to do my small part to make our planet a better place, and felt that the main problem wasn't that we lacked technical solutions, but that we didn't properly use the technology we had. I figured that the best way to affect people's behavior was through their wallets, and was intrigued by the idea of creating economic incentives that aligned individual egoism with the common good. Alas, I soon grew disillusioned, concluding that economics was largely a form of intellectual prostitution where you got rewarded for saying what the powers that be wanted to hear. Whatever a politician wanted to do, he or she could find an economist as advisor who had argued for doing precisely that. Franklin D. Roosevelt wanted to increase government spending, so he listened to John Maynard Keynes, whereas Ronald Reagan wanted to decrease government spending, so he listened to Milton Friedman.

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. The measure of success attained by Wall Street, regarded as an institution of which the proper social purpose is to direct new investment into the most profitable channels in terms of future yield, cannot be claimed as one of the outstanding triumphs of laissez-faire capitalism—which is not surprising, if I am right in thinking that the best brains of Wall Street have been in fact directed towards a different object.

Keynes had the happiest of marriages, and the best of wives for him, but marital contentment narrowed his outlook and temper.77

there is no single Keynesian way out of depression, so there is no single Keynesian system of political economy. Keynesianism can at best be a common element in very different systems of mixed economic life. In terms of economic policy it has only one proposition: that governments should make sure that aggregate demand is sufficient to maintain a full-employment level of activity. By what mix of politics, policy and institutional innovation this is to be done is a political-economy question. One thing of which we can be tolerably sure is that the next phase of political economy will see less reliance on export-led growth, a more restricted financial system, an expanded public sector, and a more modest role for economics as tutor of governments.

Eighty years ago, John Maynard Keynes put it best: I do not feel that selling at very low prices is a remedy for having failed to sell at high ones. . . . I would say that it is from time to time the duty of the serious investor to accept the depreciation of his holdings with equanimity and without reproaching himself.

ground on which John Maynard Keynes treads. Anyway, must be off . . .” Saffron watched her friend pedal off down the road and thought about how strange it was that one could like someone so much and disagree with them so fundamentally. Quentin Edery wanted to create an entirely new society, one in which people like her would no longer enjoy the privileges of wealth and possession and ordinary men and women, like the people he grew up with, would have their fair share of the prosperity they worked to create. In principle, Saffron could hardly argue with that proposition: she could hardly say that she believed in unfair shares. But she was African at heart, used to a world of predators and prey, in which life was an eternal contest for survival and the strongest always came out on top. So as much as she liked the idea of everyone living in peace, sharing everything equally, she simply couldn’t believe it could ever work in practice. Her ideals, therefore, were aimed at working with the grain of human nature, accepting man as the competitive, but also fallible animal that he was, and making the best of what was sometimes bound to be a bad business.

In the last chapter of the /General Theory, /quoted above,^35 he [Keynes] falls into the fallacy of supposing that there is some kind of /neutral /policy that a Government can pursue, to maintain effective demand in general, without having any influence upon any particular demand for anything. The Government has to undertake “the task of adjusting to one another the propensity to consume and the inducement to invest” but everything else is best left to “the free play of economic forces.”^36 This is a metaphysical conception as unseizable as /abstract labour /or /total utility. /What is a policy which /merely /adjusts the demand for investable resources to the supply? To increase effective demand when it threatens to flag, various means can be used: to reduce taxation or to shift the burden from those most likely to increase their consumption to those most likely to reduce their savings; to foster competition so as to reduce profit margins; to increase subsidies or outlays on social services — all means which tend to reduce inequalities in consumption. Or Government expenditure on investment can be increased, directly or through nationalized industries, or reductions in taxation and credit policy can be used to encourage private investment. Contrariwise, when effective demand seems excessive, taxes to discourage consumption, credit restriction and reduced Government expenditure can be brought into play. And all this has to be worked out so as to preserve the balance of trade at some level or other, as well as to preserve employment. What is a /neutral /policy? What mixture of these means is it that leaves private enterprise unaffected in content and acts only on the quantity? [pp. 89-90]

The /utility /economists, according to Wicksell, were committed to a “thoroughly revolutionary programme” precisely on this question of distribution of income.^9 Marshall, and to some extent Pigou, got out of the fix that their theory had landed them in by emphasizing the danger to total physical national income that would be associated with an attempt to increase its /utility /by making its distribution more equal. This argument has been spoiled by the Keynesian revolution. If, as Keynes expected, saving is more than sufficient for a satisfactory rate of private investment, to use it for social purpose is not only harmless but actually beneficial to National Income, while if more total saving is needed than would be forthcoming under /laisser faire /it can easily be supplemented by budget surpluses. Edgworth, as we saw above,^10 and many after him, took refuge in the argument that we do not really know that greater equality would promote greater happiness, because individuals differ in their capacity for happiness, so that, until we have a thoroughly scientific hedonimeter, “the principle ‘every man, and every woman, to count for one,’ should be very cautiously applied.”^11 Many years ago, this point of view was expressed by Professor Harberler: “How do I know that it hurts you more to have your leg cut off than it hurts me to be pricked by a pin?” It seemed at the time that it would have been more telling if he had put it the other way round. Such arguments are getting rather dangerous nowadays, for though we shall presumably never have a hedonimeter whose findings would be unambiguous, the scientific measurement of pain is fairly well developed, and it would be very surprising if a national survey of the distribution of susceptibility to pain turned out to have just the same skew as the distribution of income. If the question is once put: Would a greater contribution to human welfare be made by an investment in capacity to produce knick-knacks that have to be advertised in order to be sold or an investment in improving the health service, it seems to me that the answer would be only too obvious; the best reply that /laisser-faire /ideology can offer is not to ask the question. [pp. 127-8]

Keynes thought that professional money managers were playing an intricate guessing game. He likened picking the best stocks to a common competition in the male-dominated London financial scene in the 1930s: picking out the prettiest faces from a set of photographs: Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole: so that each competitor has to pick, not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view. It is not a case of choosing those which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth, and higher degrees.

The social sciences are lagging far behind physics when it comes to theoretical rigor and validity, but physics today has advanced far beyond where it was when the Wright brothers were working on their flight project. The brothers saw the necessity in seeking out the available theories and data and making the best of their material. Within practical politics and political philosophy, the situation is different. Classical philosophers such as Hobbes and Locke did not have the social sciences at their disposal and relied on their common sense, peppered with fragments of stories from abroad. Social scientists have evolved, but philosophy and praxis remain relatively unaltered, by and large proceeding in their pre-scientific state. Keynes once noted that “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist,” and many a political philosopher takes after them in this respect. Political praxis has evolved, in economic arenas most of all, but the focus that economists have placed on the market has led to a serious imbalance in the relationship between social sciences and policy making. Even more than political philosophy, politics suffers from what psychologists call selective perception: decision-makers tend to seek out research that supports (or that they believe supports) their current positions.

It was the economist John Maynard Keynes, a liberal who believed socialists were well-intentioned idiots, who presented the best approach of the time to taming capitalism. The methods laid out in his 1936 work, The General Theory of Employment, Interest and Money, once implemented, would help spur employment, ensure productive investment, and mitigate crises. Before the Keynesian revolution, the reigning classical theory

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Keynes’s letter was an attack on this faith in markets. In his view, no invisible hand ensured markets automatically would deliver the best possible outcomes. Businesses uncertain about the future would refrain from investing; people would remain unemployed. The government, he said, needed to borrow and spend until “animal spirits” were revived.3

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and [148] unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers’, who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

The great successes of the postwar economy -- the rapid increase in living standards, with the fastest progress for less advantaged groups -- depended on interaction of the forces that I have described in this book. Investments made possible a better future. A shift in political power enabled more Americans to claim their fair share of the economy's gains. A change in the culture allowed the country to retain some of the best parts of its individualist ethos, like the willingness to take risks, while also avoiding the excesses of the Gilded Age and the Roaring Twenties. As the economist John Maynard Keynes wrote, 'The political problem of mankind is to combine three things: economic efficiency, social justice, and individual liberty.' In the middle years of the twentieth century, the United States moved closer to ahappy medium among these competing objectives. It discovered a system that avoided both the inefficiencies of socialism and the excesses of rough-and-tumble capitalism. The country was still terribly flawed and unjust during those decades, but it was moving in the right direction. No other country was doing a better job of providing decent living standards to its citizens and raising those living standards over time.