Keynes Economist Quotes

The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist.

Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back

The master-economist must possess a rare combination of gifts .... He must be mathematician, historian, statesman, philosopher—in some degree. He must understand symbols and speak in words. He must contemplate the particular, in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man's nature or his institutions must be entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood, as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.

In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.

Keynes was a great economist. In every discipline, progress comes from people who make hypotheses, most of which turn out to be wrong, but all of which ultimately point to the right answer. Now Keynes, in The General Theory of Employment, Interest and Money,set forth a hypothesis which was a beautiful one, and it really altered the shape of economics. But it turned out that it was a wrong hypothesis. That doesn't mean that he wasn't a great man!

There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: "In the long run we are all dead." And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.

There’s a famous and often-told story about the great economist John Maynard Keynes: once, when accused of having flip-flopped on some policy issue, Keynes acerbically replied, “When the facts change, sir, I change my mind. What do you do?

Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.

The economist John Maynard Keynes once said, “When the facts change, I change my mind. What do you do, sir?

The science of public happiness was how Keynes saw his work as an economist.

the great British economist John Maynard Keynes, written 70 years ago: “It is dangerous . . . to apply to the future inductive arguments based on past experience, unless one can distinguish the broad reasons why past experience was what it was.

El estudio de la economía no parece exigir ningún don especializado de un orden excepcionalmente superior. ¿No es una disciplina muy fácil comparada con las ramas superiores de la filosofía o la ciencia pura?. Una disciplina fácil de la que muy pocos sobresalen. La paradoja tal vez tenga su explicación en que el economista experto debe poseer una rara combinación de dones. Debe ser en cierta medida matemático, historiador, estadista, filosofo. Debe comprender los símbolos y hablar en palabras. Debe contemplar lo particular desde la óptica de lo general y considerar en un mismo razonamiento lo abstracto y lo concreto. Debe estudiar el presente pensando en el futuro. Ningún aspecto de la naturaleza del hombre o de sus instituciones debe quedarse al margen de su consideración. Debe ser simultáneamente decidido y desinteresado; tan distante e incorruptible como un artista y, sin embargo a veces tan cerca del suelo como un político

What’s going on, I want to suggest, is that race and sex have become more than mechanisms to secure group loyalty for the Democratic left. In addition, they have become tactics of intimidation. The socialist left uses these mechanisms to force people to grovel and submit to its worldview. They want to overturn your moral code and replace it with their moral code. The economist John Maynard Keynes once called this “immoralism,” recognizing that it represented a kind of inversion of traditional moral values.

He never sat an examination in economics: his knowledge came from pondering problems and discussing them as much as from book-learning.

When the facts change, I change my mind,” the legendary British economist John Maynard Keynes declared.

When the facts change, I change my mind,” the economist John Maynard Keynes famously said. “What do you do, sir?

Keynes was not only inventing modern economics, he was helping invent the modern economist and placing him at the apex of a new intellectual power structure.

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back...But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.

Halfway through the second term of Franklin Roosevelt, the New Deal braintrusters began to worry about mounting popular concern over the national debt. In those days the size of the national debt was on everyone’s mind. Indeed, Franklin Roosevelt had talked himself into office, in 1932, in part by promising to hack away at a debt which, even under the frugal Mr. Hoover, the people tended to think of as grown to menacing size. Mr. Roosevelt’s wisemen worried deeply about the mounting tension ... And then, suddenly, the academic community came to the rescue. Economists across the length and breadth of the land were electrified by a theory of debt introduced in England by John Maynard Keynes. The politicians wrung their hands in gratitude. Depicting the intoxicating political consequences of Lord Keynes’s discovery, the wry cartoonist of the Washington Times Herald drew a memorable picture. In the center, sitting on a throne in front of a Maypole, was a jubilant FDR, cigarette tilted almost vertically, a grin on his face that stretched from ear to ear. Dancing about him in a circle, hands clasped together, their faces glowing with ecstasy, the braintrusters, vested in academic robes, sang the magical incantation, the great discovery of Lord Keynes: “We owe it to ourselves.” With five talismanic words, the planners had disposed of the problem of deficit spending. Anyone thenceforward who worried about an increase in the national debt was just plain ignorant of the central insight of modern economics: What do we care how much we - the government - owe so long as we owe it to ourselves? On with the spending. Tax and tax, spend and spend, elect and elect ...

In the conditions of this “New World Order,” a crucial part of the contemporary world economy is a criminal economy, in which the excess profits are accumulated not by the production of material comforts, but by drug-traffic, arms trafficking, and human trafficking, including prostitution. The contemporary world economy is an economy of the global organized criminality whose eminently form is the modern capitalist state. The contemporary world economy is an economy not of the real commodity production, but an economy of the jobbery; this is expressed directly in supply and demand of the capital of the speculation, i.e., in the fictitious capital trade, in the antagonistic games with share capital in the stock exchange. Just Wall Street’s stock exchange, i.e., the world speculative capital market, is the contemporary tremendous pump for inflation of the balloons of the world economic crises, the last one of which began in 2007. The aggregate amount of the bonds on the world market, as many economists know, is over one hundred trillion US dollars! Without taking in mind the derivatives! If including those, the aggregate amount is several times more! This is an enormous balloon as inflated as a red giant star! And when added to this amount the world market of the shares, the passing each other between real and fictitious capital grows to cosmic dimensions! This cosmic balloon will burst very soon! That means the most destructive capitalist crisis in human history lies just round the corner, the global economic apocalypse is just forthcoming! This ruin will be due to the stock exchange antagonistic games, the stock exchange that is, as a matter of fact, a gambling house! Because the securities and shares’ trading is sheer gambling! This becomes clear by the direct proportionality between risk and profitability, the more risk—the more profitability, and vice versa! However, this is gambling in which the stakes are not simply money, but millions and billions of human fates. So, this is a destroying-the-civilization-world crime economy!

Economists who simply advised leaving the economy alone, governments whose first instincts, apart from protecting the gold standard by deflationary policies, was to stick to financial orthodoxy, balance budgets and cut costs, were visibly not making the situation better. Indeed, as the depression continued, it was argued with considerable force not least by J.M. Keynes who consequently became the most influential economist of the next forty years - that they were making the depression worse. Those of us who lived through the years of the Great Slump still find it almost impossible to understand how the orthodoxies of the pure free market, then so obviously discredited, once again came to preside over a global period of depression in the late 1980s and 1990s, which, once again, they were equally unable to understand or to deal with. Still, this strange phenomenon should remind us of the major characteristic of history which it exemplifies: the incredible shortness of memory of both the theorists and practitioners of economics. It also provides a vivid illustration of society's need for historians, who are the professional remembrancers of what their fellow-citizens wish to forget.

Some heterodox economists today argue that growth will fall if finance becomes too big relative to the rest of the economy (industry) because real profits come from the production of new goods and services rather than from simple transfers of money earned from those goods and services.40 To ‘rebalance’ the economy, the argument runs, we must allow genuine profits from production to win over rents–which, as we can see here, is exactly the argument Ricardo made 200 years ago, and John Maynard Keynes was to make 100 years later.41

In 1936, the economist John Maynard Keynes bought a trunk of Newton’s papers at auction and discovered with astonishment that they were overwhelmingly preoccupied not with optics or planetary motions, but with a single-minded quest to turn base metals into precious ones. An

the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.

The master-economist must possess a rare combination of gifts. He must reach a high standard in several different directions and must combine talents not often found together. He must be mathematician, historian, statesman, philosopher - in some degree. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man's nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician.

John Maynard Keynes, one of the most influential economists of the twentieth century, summed up this phenomenon well when he said, “Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.” Succeeding unconventionally carries with it the risk of experiencing failure as a result of veering from the status quo.

Today it is generally accepted that much of what passes as Keynesian thought is not so much the work of Keynes himself as that of his popularizers. Other economists tend to see their own reflection in the works of Keynes. The General Theory of Employment, Interest, and Money (London,1936) has become a Procrustean bed whereby authors trim or stretch Keynes to suit their own purposes.

Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. ... in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest.

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.

The study of economics does not seem to require any specialized gifts of an unusually high order. Is it not, intellectually regarded, a very easy subject compared with the higher branches of philosophy and pure science? Yet good, or even competent, economists are the rarest of birds. An easy subject, at which very few excel! The paradox finds its explanation, perhaps, in that the master-economist must possess a rare combination of gifts. He must reach a high standard in several different directions and must combine talents not often found together. He must be mathematician, historian, statesman, philosopher – in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man's nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician.

Finance is concerned with the relations between the values of securities and their risk, and with the behavior of those values. It aspires to be a practical, like physics or chemistry or electrical engineering. As John Maynard Keynes once remarked about economics, “If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.” Dentists rely on science, engineering, empirical knowledge, and heuristics, and there are no theorems in dentistry. Similarly, one would hope that nance would be concerned with laws rather than theorems, with behavior rather than assumptions. One doesn’t seriously describe the behavior of a market with theorems.

Economists have always been haunted by the spectre of ‘diminishing returns’. Ricardo had famously seen ‘diminishing returns’ in agriculture leading to a progressive fall in the rate of profit, a progressive shift of the terms of trade between manufacturing and agriculture in favour of the latter and the eventual denouement of a stationary state where further growth became impossible. Even Keynes in the aforementioned work saw ‘diminishing returns’ in food production as undermining the Eldorado even if the war had not done so. And yet none of these fears have come true. The terms of trade between manufacturing and agriculture have shown a secular tendency to shift against, rather than in favour of, the latter; and while the growth rate under capitalism has come down of late, this has nothing to do with any fall in the profit rate caused by ‘diminishing returns’. Likewise, the advanced capitalist world has no difficulty to this day in meeting its food requirements, belying the fears of Keynes. How then do we explain this contrast between fears and reality?

Treaty and the reparations Germany was obliged to pay were ‘malignant and silly to an extent that made them obviously futile’. This was the theme of the young economist Maynard Keynes in his philippic The Economic Consequences of the Peace, which began a myth which has never died. In reality, the real disaster wasn’t the way the war had begun or who was responsible, but how it had ended; not the claim that Germany had started the war, but the Germans’ belief that they hadn’t lost it, a belief encouraged by both German generals and politicians. When returning troops marched through Berlin in December, they were told, by Ebert of all people, the Social Democratic leader, ‘No army has overcome you.’ With that belief implanted, when the Treaty was published it was easy for demagogues to offer an answer. If the army had been ‘im Feld unbesiegt’, undefeated in battle, it must have been betrayed by the ‘November criminals’, the treacherous politicians who had taken over, and then betrayed Germany, and then ‘stabbed in the back’ by civilians, and Jews. Thus was the seed planted that would bring forth a frightful blossom.

KEYNESIAN ECONOMICS AND STIMULUS Keynesian economics is based on the notion that unemployment arises when total or aggregate demand in an economy falls short of the economy’s ability to supply goods and services. When products go unsold, jobs are lost. Aggregate demand, in turn, comes from two sources: the private sector (which is the majority) and the government. At times, aggregate demand is too buoyant—goods fly off the shelves and labor is in great demand—and we get rising inflation. At other times, aggregate demand is inadequate—goods are hard to sell and jobs are hard to find. In those cases, Keynes argued in the 1930s, governments can boost employment by cutting interest rates (what we now call looser monetary policy), raising their own spending, or cutting people’s taxes (what we now call looser fiscal policy). By the same logic, when there is too much demand, governments can fight actual or incipient inflation by raising interest rates (tightening monetary policy), increasing taxes, or reducing its own spending (thus tightening fiscal policy). That’s part of standard Keynesian economics, too, although Keynes, writing during the Great Depression, did not emphasize it. Setting aside the underlying theory, the central Keynesian policy idea is that the government can—and, Keynes argued, should—act as a kind of balance wheel, stimulating aggregate demand when it’s too weak and restraining aggregate demand when it’s too strong. For decades, American economists took for granted that most of that job should and would be done by monetary policy. Fiscal policy, they thought, was too slow, too cumbersome, and too political. And in the months after the Lehman Brothers failure, the Federal Reserve did, indeed, pull out all the stops—while fiscal policy did nothing. But what happens when, as was more or less the case by December 2008, the central bank has done almost everything it can, and yet the economy is still sinking? That’s why eyes started turning toward Congress and the president—that is, toward fiscal stimulus—after the 2008 election.

Practical man, who believe themselves to be quite exempt from any intellectual influence, are usually the sleeves of some defunct economist

Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the sleeves of some defunct economist

When industrial work crippled and epidemic diseases killed, and where chance—freaks of fortune—produced what John Maynard Keynes, the economist, would later call “the radical uncertainties of capitalism,” luck as much as effort seemed to dictate outcomes.

paraphrase economist John Maynard Keynes: reputations fare better if we are conventionally wrong than if we are unconventionally right.

The economist John Maynard Keynes once said, “Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” He should have included defunct law professors. The state we find ourselves in today can be traced back to the economists of the Chicago School. We would not have highly concentrated industries if it were not for Robert Bork and the Chicago School. Like all revolutions, an organized group of ideologues developed the ideas and spread them zealously. The Chicago School, led by Milton Friedman and George Stigler, was the vanguard of attack against antitrust laws. The great irony is that they decried monopolies and concentration of power, but in practice they created all the conditions necessary for them.

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’s claimed that they can tell us most things about life. This trend isn’t just found in popular science books. At universities, economists analyse ever greater parts of existence as if it were a market. From suicide (the value of a life can be calculated like the value of a company, and now it’s time to shut the doors) to faked orgasms (he doesn’t have to study how her eyes roll back, her mouth opens, her neck reddens and her back arches – he can calculate whether she really means it). The question is what Keynes would think about an American economist like David Galenson. Galenson has developed a statistical method to calculate which works of art are meaningful. If you ask him what the most renowned work of the last century is, he’ll say ‘Les Demoiselles d’Avignon’. He has calculated it. Things put into numbers immediately become certainties. Five naked female prostitutes on Carrer d’Avinyó in Barcelona. Threatening, square, disconnected bodies, two with faces like African masks. The large oil painting that Picasso completed in 1907 is, according to Galenson, the most important artwork of the twentieth century, because it appears most often as an illustration in books. That’s the measure he uses. The same type of economic analysis that explains the price of leeks or green fuel is supposed to be able to explain our experience of art.

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.

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

May the spirit of John Maynard Keynes guide your plasma cannon.

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]

His father was a logician and economist, but his career was not a good omen for his son: it ended in university administration. Keynes’s mind was too wide-ranging, his spirit too active, for highly-specialized academic work. In writing his Treatise on Probability, he exhausted his serious interest in logic: it was too narrow for his mind. One must be able to use one’s brains aesthetically and practically. The psychology of money, and stock-exchange gambling, fascinated him from an early age; his administrative talents might have made him a high imperial civil servant; he was a wonderful writer. In the end, he was able to use economics as the vehicle for all his obsessions and talents, but it was the uncertain state of a war-shocked world which made economics his vocation.

Keynes emphatically rejected socialism as an economic remedy for the ills of capitalism. Both classical economists and socialists, he often said, believed in the same ‘laws of economics’. But whereas the former regarded them as true and inevitable, the latter saw them as true and intolerable. Keynes proposed to show they were not true.

Keynes had his own Utopia which inspired his work as an economist, expressed notably in his essay, ‘Economic Possibilities for our Grandchildren’, published in 1930.

Two forms of the quantity theory were available when Keynes started work as an economist – Irving Fisher’s ‘transactions’ version, and the Cambridge ‘cash balances’ approach, developed by Alfred Marshall, who taught Keynes his economics. Keynes used both in his pre-1914 lectures, saying they come to ‘practically the same thing’. Fisher’s equation of exchange, MV = PT, states that, in any period, the quantity of money (M) times its velocity of circulation – the average number of times per period which a pound or dollar is spent (V) – equals the average price of each transaction (P) multiplied by the total number of transactions (T). All this means is that the value of what is spent is equal to the value of what is bought, hardly a surprising conclusion. Three further propositions are needed to convert the equation of exchange into a theory of the price level. First, causation runs from money to prices. Secondly, the velocity of circulation is determined independently of the money supply by the community’s level of income and payments habits. These change only slowly. Thirdly, the volume of transactions is determined independently of the quantity of money by ‘real’ forces.

Like all economists, Keynes expected British employment to recover to ‘normal’ (as measured by pre-war standards) when prices ‘settled down’ in 1922. But unemployment remained obstinately stuck at above 10%. It was its failure to come down much below this rate for the rest of the 1920s which alerted Keynes to the possibility that the employment costs of a savage deflation might be more than ‘transitional’, with the economy remaining ‘jammed’ in a low-employment trap.

These discussions are not just of historic interest. Keynes was the first economist to put uncertainty at the heart of the economic problem, and thus raise the issue of the scope and meaning of rationality in economics. Is rationality possible in an uncertain world, and how is it to be specified?

Hayek was too polite to say so, but part of the problem was that Wick- sell wrote in German.6 In the Treatise Keynes had mentioned in passing his awareness of a “neo-Wicksell” school whose writings on savings, invest- ment, and the credit cycle (he identifies works by Mises and Neisser, as well as Hayek’s Geldtheorie und Konjunkturtheorie) were similar to his own. But he went on to add, fatefully, in a footnote, “In German I can only clearly understand what I know already!” (J. M. Keynes 1971c [1930], 178). This led the Swedish economist Gunnar Myrdal (1939 [1933]) to offer his well-known observation about “the attractive Anglo-Saxon kind of unnecessary originality, which has its roots in certain systematic gaps in the knowledge of the German language on the part of the majority of English economists

The Greek poet Archilochus once observed that the fox knows many things, but the hedgehog knows one important thing—a phrase later made famous by the philosopher Isaiah Berlin. Bogle was the quintessential hedgehog. He always believed in one big thing with a fiery passion. He had the integrity and intellectual suppleness to shift positions, though. When he was later confronted with his change of heart on the merits of active investing, he quoted the economist John Maynard Keynes: “When the facts change, I change my mind. What do you do, sir?

Experiment and reason, tempered by intuition, were to him preferable to solid plodding in the well-trodden paths of experience.

As the economist John Maynard Keynes once pointed out, buying stocks is like trying to anticipate who will win a beauty contest. You want to choose not the person who you think is the most beautiful but the person you think everyone else will see as most beautiful. So it is with stocks: prices rise not just when a company turns in great performance but when a lot of investors believe that the future will bring even better performance

When asked by the New York Times why she altered her position, she quoted the great economist John Maynard Keynes: “when the facts change, I change my mind.

Keynes is always ready to contradict not only his colleagues but also himself whenever circumstances make this seem appropriate,” reported a 1945 profile of the “consistently inconsistent” economist. “So far from feeling guilty about such reversals of position, he utilizes them as pretexts for rebukes to those he saw as less nimble-minded. Legend says that while conferring with Roosevelt at Quebec, Churchill sent Keynes a cable reading, ‘Am coming around to your point of view.’ His Lordship replied, ‘Sorry to hear it. Have started to change my mind.

It’s the very essence of science that its conclusions can change, that is, that its truths are not absolute. The intrinsic good sense of this is contained within the remark reportedly made by the eminent economist John Maynard Keynes, responding to the criticism that he had changed his position on monetary policy during the 1930s Depression: “When the facts change, I change my mind. What do you do, sir?

Thus, after all, the actual rates of aggregate saving and spending do not depend on Precaution, Foresight, Calculation, Improvement, Independence, Enterprise, Pride or Avarice. Virtue and vice play no part. It all depends on how far the rate of interest is favourable to investment, after taking account of the marginal efficiency of capital. No, this is an overstatement. If the rate of interest were so governed as to maintain continuous full employment, virtue would resume her sway;-- the rate of capital accumulation would depend on the weakness of the propensity to consume. Thus, once again, the tribute that classical economists pay to her is due to their concealed assumption that the rate of interest always is so governed.

If an equilibrium was invariably elusive in the real world, Hayek argued, then the a priori assumptions that theoretical economists make about the operation of an economy, or a market, tending toward an equilibrium would always fall short. An equilibrium can be predicted only if the intentions of each of the participants is known, and that is impossible both in theory and in practice.

Modern economics, by which I mean the style of economics taught and practised in today's leading universities, likes to start the enquiries from the ground up: from individuals, through the household, village, district, state, country, to the whole world. In various degrees, the millions of individual decisions shape the eventualities people face; as both theory, common sense, and evidence tell us that there are enormous numbers of consequences of what we all do. Some of these consequences have been intended, but many are unintended. There is, however, a feedback, in that those consequences in turn go to shape what people subsequently can do and choose to do. When Becky's family drive their cars or use electricity, or when Desta's family create compost or burn wood for cooking, they add to global carbon emissions. Their contributions are no doubt negligible, but the millions of such tiny contributions sum to a sizeable amount, having consequences that people everywhere are likely to experience in different ways. It can be that the feedbacks are positive, so that the whole contribution is greater than the sum of the parts. Strikingly, unintended consequences can include emergent features, such as market prices, at which the demand for goods more or less equals their supply. Earlier, I gave a description of Becky's and Desta's lives. Understanding their lives involves a lot more; it requires analysis, which usually calls for further description. To conduct an analysis, we need first of all to identify the material prospects the girls' households face - now and in the future, under uncertain contingencies. Second, we need to uncover the character of their choices and the pathways by which the choices made by millions of households like Becky's and Desta's go to produce the prospects they all face. Third, and relatedly, we need to uncover the pathways by which the families came to inherit their current circumstances. These amount to a tall, even forbidding, order. Moreover, there is a thought that can haunt us: since everything probably affects everything else, how can we ever make sense of the social world? If we are weighed down by that worry, though, we won't ever make progress. Every discipline that I am familiar with draws caricatures of the world in order to make sense of it. The modern economist does this by building models, which are deliberately stripped down representations of the phenomena out there. When I say 'stripped down', I really mean stripped down. It isn't uncommon among us economists to focus on one or two causal factors, exclude everything else, hoping that this will enable us to understand how just those aspects of reality work and interact. The economist John Maynard Keynes described our subject thus: 'Economics is a science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world.

So what have Keynes’s ‘madmen in authority’ done with the ideas they inherited from defunct economists? They have set about dismantling the properly economic powers and initiatives of the state.

It is impossible indeed not to look with considerable uneasiness at the type of the "modern economist" as he developed after Keynes' revolutionary book, whom Keynes himself regarded with alarm at the end of his days. It is the type of man who is obsessed by one thing, i.e. "effective demand," which he thinks must be kept up at whatever cost, while he forgets the working of the mechanism of prices, wages, interest and exchange rates.

This led the British economist John Maynard Keynes, writing on ‘Economic Possibilities for our Grandchildren’ in 1930, to hope that: When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money motive at its true value. The love of money as a possession – as distinguished from the love of money as a means to the enjoyments and realities of life – will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists on mental disease. All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting accumulation of capital, we shall then be free, at last, to discard.2

The system of profit equations that Jerome Levy wrote down in 1914 anticipated a similar set of equations written down by the Polish economist Michal Kalecki in 1935. And Kalecki’s system is regarded by a lot of people as containing nearly all of what’s useful in J. M. Keynes’ General Theory of Employment, Interest and Money, published in 1936 and widely accepted as one of the greatest works of economics ever. Levy went on to demonstrate that the proverb ‘if you’re so smart, why aren’t you rich?’ was not applicable in this case; aided by his sons, the Levy family went into finance with sufficient success that the Jerome Levy Forecasting Institute they endowed at Bard College continues to promote their approach to economics today. You used to be able to buy a copy of the book Jerome wrote in 1943, Economics Is an Exact Science, from them; I got mine in about 2002. In the introduction to that book, Levy sets out his view of the purpose of capitalism: The working class is the original and fundamental economic class . . . The function of the investing class is to serve the members of the working class by insuring them against loss and by providing them with desired goods. The justification for the existence of the investing class is the service it renders the working class, measured in terms of wages and desired goods. The contrary is not true. The working class does not exist to serve the investing class. The working class has the right to insure itself through organizations composed of its members or through government, thereby eliminating the investing class.

The problem, of course, is that most people live in the short run, and that, as economist John Maynard Keynes once cautioned, “In the long run, we’re all dead.

Human beings have always been infatuated with gambling because it puts us head-to-head against the fates, with no holds barred. We enter this daunting battle because we are convinced that we have a powerful ally: Lady Luck will interpose herself between us and the fates (or the odds) to bring victory to our side. Adam Smith, a masterful student of human nature, defined the motivation: “The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.”1 Although Smith was keenly aware that the human propensity to take risk propelled economic progress, he feared that society would suffer when that propensity ran amuck. So he was careful to balance moral sentiments against the benefits of a free market. A hundred and sixty years later, another great English economist, John Maynard Keynes, agreed: “When the capital development of a country becomes the by-product of the activities of a casino, the job is likely to be ill-done.

I am reminded of the quote often attributed to the great twentieth-century British economist John Maynard Keynes, who when challenged on just this, is said to have quipped, “When the facts change, I change my mind. What do you do, sir?” Changing one’s mind can be a sign of strength and wisdom, especially if new facts emerge or if what were thought to be facts are shown to be otherwise.

Economist John Keynes said in 1915, “For the first time since his creation man will be faced with his real, his permanent problem,” and that is “how to occupy the leisure.”2 Am I the only one who will say that my main problem in life is not “how to occupy the leisure”? In fact, I say, What leisure? Keynes was vastly wrong. That’s not what happened. In an article highlighting these developments, Derek Thompson noted one large change no one saw coming: how work itself and our view of it evolved. Work jumped from being a means of “material production” to being much more about “identity production.”3 In other words, work used to be about making things. Then all of a sudden, work was about making us.

British economist John Maynard Keynes. Note his insightful words, courtesy of the (Wikipedia): When the facts change, I change my mind. What do you do, sir? A study of the history of opinion is a necessary preliminary to the emancipation of the mind. Practical men who believe themselves to be quite exempt from any intellectual influences are usually the slaves of some defunct economist. The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.

In 1930, in a speech titled “Economic Possibilities for Our Grandchildren,” the economist John Maynard Keynes made a famous prediction: Within a century, thanks to the growth of wealth and the advance of technology, no one would have to work more than about fifteen hours a week. The challenge would be how to fill all our newfound leisure time without going crazy. “For the first time since his creation,” Keynes told his audience, “man will be faced with his real, his permanent problem—how to use his freedom from pressing economic cares.” But Keynes was wrong. It turns out that when people make enough money to meet their needs, they just find new things to need and new lifestyles to aspire to; they never quite manage to keep up with the Joneses, because whenever they’re in danger of getting close, they nominate new and better Joneses with whom to try to keep up. As a result, they work harder and harder, and soon busyness becomes an emblem of prestige. Which is clearly completely absurd: for almost the whole of history, the entire point of being rich was not having to work so much. Moreover,

When I was at business school, one of my professors told a story about a meeting between President Franklin Delano Roosevelt and the economist John Maynard Keynes. FDR was enormously busy, but he spent well over an hour with this academic. If FDR had understood Keynsian economics some think the Great Depression might have ended sooner and enormous suffering could have been prevented. But at the end of the meeting, the president was not persuaded. My professor asked the question, "Whose fault was it? FDR's for not understanding, or Keynes's for not explaining it well?" This was one of those moments in my education that changed my life. I'd always shifted the burden of responsibility for understanding to the listener, not to the explainer. But now I saw that if Keynes's genius was locked inside his head, it may as well not have existed. It was his responsibility to make the ideas that seemed so obvious to him equally obvious to FDR. He failed. Far too often we assume that if somebody doesn't understand what we're telling them, it's because they are "stupid" or "closed minded". That is rarely the case. While we know our subject matter, we may fail to know the person to whom we are explaining the subject, and therefore may fail to get our ideas across. p92

When I was at business school, one of my professors told a story about a meeting between President Franklin Delano Roosevelt and the economist John Maynard Keynes. FDR was enormously busy, but he spent well over an hour with this academic. If FDR had understood Keynsian economics some think the Great Depression might have ended sooner and enormous suffering could have been prevented. But at the end of the meeting, the president was not persuaded. My professor asked the question, "Whose fault was it? FDR's for not understanding, or Keynes's for not explaining it well?" This was one of those moments in my education that changed my life. I'd always shifted the burden of responsibility for understanding to the listener, not to the explainer. But now I saw that if Keynes's genius was locked inside his head, it may as well not have existed. It was his responsibility to make the ideas that seemed so obvious to him equally obvious to FDR. He failed. Far too often we assume that if somebody doesn't understand what we're telling them, it's because they are "stupid" or "closed minded". That is rarely the case. While we know our subject matter, we may fail to know the person to whom we are explaining the subject, and therefore may fail to get our ideas across. p92

The great economist John Maynard Keynes is supposed to have said “when the facts change, I change my mind. What do you do, sir?

As the economist J.M. Keynes said: “The difficulty lies not so much in developing new ideas, as in escaping from the old ones.

In the long term,” wrote the English economist John Maynard Keynes, “we are all dead.” The Scottish Enlightenment learned a different lesson from the changes brought by union with England. Its greatest thinkers, such as Adam Smith and David Hume, understood that change constantly involves trade-offs, and that short-term costs are often compensated by long-term benefits. “Over time,” “on balance,” “on the whole”—these are favorite sentiments, if not expressions, of the eighteenth-century enlightened Scot. More than any other, they capture the complex nature of modern society. And the proof came with the Act of Union. Here was a treaty, a legislative act inspired not by some great political vision or careful calculation of the needs of the future, or even by patriotism. Most if not all of those who signed it were thinking about urgent and immediate circumstances; they were in fact thinking largely about themselves, often in the most venal terms. Yet this act—which in the short term destroyed an independent kingdom, created huge political uncertainties both north and south, and sent Scotland’s economy into a tailspin—turned out, in the long term, to be the making of modern Scotland Nor did Scots have to wait that long. Already by the 1720s, as the smoke and tumult of the Fifteen was clearing, there were signs of momentous changes in the economy. Grain exports more than doubled, as Scottish agriculture recovered from the horrors of the Lean Years and learned to become more commercial in its outlook. Lowland farmers would be faced now not with starvation, but with falling prices due to grain surpluses. Glasgow merchants entered the Atlantic trade with English colonies in America, which had always been closed to them before. By 1725 they were taking more than 15 percent of the tobacco trade. Inside of two decades, they would be running it. A wide range of goods, not just tobacco but also molasses, sugar, cotton, and tea, flooded into Scotland. Finished goods, particularly linen textiles and cotton products, began to flood out, despite the excise tax. William Mackintosh of Borlum saw even in 1729 that Scotland’s landed gentry were living better than they ever had, “more handsomely now in dress, table, and house furniture.” Glasgow, the first hub of Scotland’s transatlantic trade, would soon be joined by Ayr, Greenock, Paisley, Aberdeen, and Edinburgh. By the 1730s the Scottish economy had turned the corner. By 1755 the value of Scottish exports had more than doubled. And it was due almost entirely to the effect of overseas trade, “the golden ball” as Andrew Fletcher had contemptuously called it, which the Union of 1707 had opened.

The slogan that ‘in the long run we are all dead’ is also a characteristic manifestation of an unwillingness to recognise that morals are concerned with effects in the long run – effects beyond our possible perception – and of a tendency to spurn the learnt discipline of the long view. Keynes also argued against the moral tradition of the ‘virtue of saving’, refusing, along with thousands of crank economists, to admit that a reduction of the demand for consumers’ goods is generally required to make an increase of the production of capital goods (i.e., investment) possible. And this in turn led him to devote his formidable intellectual powers to develop his ‘general’ theory of economics – to which we owe the unique world-wide inflation of the third quarter of our century and the inevitable consequence of severe unemployment that has followed it (Hayek, 1972/1978).

That the New Deal should have been bigger, sooner, is a conclusion of long standing: John Maynard Keynes told Roosevelt he needed to approximately double the rate of “direct stimulus to production deliberately applied by the administration” in 1934, at a time when Roosevelt had reduced such expenditures in response to political pressure just like the kind that later came from Grassley or King.29 Roosevelt soon moved in the direction that Keynes suggested, getting the so-called big bill—amounting to nearly $5 billion—from Congress and allowing him to create the WPA to employ Americans nationwide under the direction of Harry Hopkins. But a few years afterward, once recovery seemed well under way, Roosevelt again cut relief spending—again in response to political pressure. For many economists—including Keynes—that premature reduction in fiscal stimulus was the cause of the 1937‒1938 recession.30 Only after making that fiscally cautious error did the Roosevelt administration adopt a deliberately Keynesian budget. Soon afterward, mobilization for war began.31 In 1941 Hopkins took a new job, directing Lend-Lease operations; Congress approved nearly $50 billion for the program—an order of magnitude more than the “big bill” that created the WPA.32 So when Grassley says the war ended the Depression, he is not stating an argument against the New Deal: he is stating an argument for a bigger New Deal, an argument that New Dealer Harry Hopkins at WPA should have had a budget more like World War II–era Harry Hopkins at Lend-Lease.33

The great economist John Maynard Keynes once calculated that from “two thousand years before Christ down to the beginning of the eighteenth century, there was really no great change in the standard of living of the average man in the civilized centers of the earth.

This convergence between policy-makers and professors was significant. Keynes’s ideas provided a theoretical rationale for continued New Deal spending. In turn, Keynesianism suggested a route to power for economists. Going far beyond the sort of technical work that Friedman had done, Keynes’s ideas positioned economists as strategic policy experts, even arbiters of the government’s role in society.

Keynes said “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.” Meaning, if you don’t know what intellectual software you’re running, you’re probably running it unconsciously

It was a strike against the edifice of policy and politics coming to rest upon Keynesian concepts of savings and consumption. Years later, Friedman spelled out the ultimate implications. Dorothy and Rose’s paper fed into a much larger body of research, the permanent income hypothesis, that “removes completely one of the pillars of the ‘secular stagnation’ thesis.” It also had implications for the Keynesian proposition that there was “no automatic force in a monetary economy to assure the existence of a full-employment equilibrium.”9 On the surface, Dorothy and Rose had published a basic research report. Considered in the bigger picture, their conclusions spoke to the politically charged question of consumption. Was the paper deliberately framed as an attack upon Keynes?10 Both women were dedicated empiricists, and the problem in the data was compelling. At the same time, the solution they came up with dovetailed nicely with each woman’s intellectual inclinations. The paper’s emphasis on relative income reflected the traditional approach of consumption research that Dorothy knew well. Dorothy’s long tenure in reformist D.C. agencies suggests that like most consumption economists, she was probably sympathetic to New Deal social spending. By contrast, although Rose has left little trace of her thinking in this period, she was among the most loyal of Frank Knight’s students. His teachings would have primed her to be skeptical of both the New Deal and the Keynesian concepts that were newly popular among economists.

The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist. Madman in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.

full century on, John Maynard Keynes echoed Mill’s sentiments, asserting (rather wishfully) that ‘the day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems—the problems of life and of human relations, of creation and behaviour and religion’.

But in 1936 a huge archive of Newton’s private manuscripts was put up for auction at Sotheby’s, in London. The papers had been kept from the public for over two centuries. One hundred lots of the manuscripts were bought by the famous British economist, John Maynard Keynes, who found that many of Newton’s papers were written in a secret cypher. And for six years, Keynes struggled to decipher them. He hoped they would reveal the private thoughts of the founder of modern science. But what the code really revealed was another, far darker, side to Newton’s work. For, in the manuscripts, Keynes found a Newton unknown to the rest of the world—a Newton obsessed with religion, and a purveyor of practices of heresy and the occult.

The central argument, which seemed revolutionary to classical economists, was that the economy had no natural tendency towards full employment.

After purchasing and studying Newton’s alchemical works in 1942, economist John Maynard Keynes, for example, opined that “Newton was not the first of the age of reason, he was the last of the magicians.

Pre-analytic vision. Worldview. Paradigm. Frame. These are cousin concepts. What matters more than the one you choose to use is to realise that you have one in the first place, because then you have the power to question and change it. In economics, that’s an open invitation to look afresh at the mental models we employ in describing and understanding the economy. But it is no easy thing to do, as Keynes discovered. Coming up with his groundbreaking theory in the 1930s was, he admitted, ‘a struggle of escape from habitual modes of thought and expression . . . The difficulty lies not in the new ideas, but in the old ones which ramify, for those of us brought up as most of us have been, into every corner of our minds.

By 2008, the Nobel laureate economist Joseph Stiglitz has noted, global economic output reached a level sufficient to raise every man, woman, and child on the face of the earth above the U.S. poverty line—a very great improvement for the domestic poor and an astounding achievement for the global poor.

It would take expert navigators, like economists, to steer the world through the purgatory of capitalism and arrive at a future not just of leisure but also of morality. To ensure that human beings would be able to seize their opportunity for an ethical society, one devoted to good ends and rid of foul means, society would have to concern itself with both quality and quantity of population. As long as there was un- satisfied need, Keynes said in 1928, it would “remain reasonable to be economically purposive for others after it has ceased to be reasonable for oneself.” Here was the objective of Keynes’s idiosyncratic eugenics, one that connected the ethics of obligation to plans for social and economic management. Only when the condition of wantlessness “has become so general that the nature of one’s duty to one’s neighbour is changed” would progress truly have been made

A classic example is Keynes’ Beauty Contest, in which English economist John Maynard Keynes (1883–1946) likens investment in financial markets to a newspaper competition in which readers have to choose the “prettiest face”; the readers who choose the most frequently chosen face win.

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

The same rule of self-destructive financial calculation governs every walk of life. We destroy the beauty of the countryside because the un-appropriated splendors of nature have no economic value. We are capable of shutting off the sun and the stars because they do not pay a dividend.

1. The chief root of monetary troubles is the scientific authority the Keynesians gave the superstition that increasing the quantity of money can ensure prosperity and full employment. 2. The superstition was fought successfully by economists for two centuries of stable prices during the age of modern industrialism and the gold standard. 3. Before then inflation largely dominated history. 4. Keynes’s (macro-economic) error was to suppose that labour demand and supply can be equated (and unemployment avoided) by managing total demand. Employment depends on demand in each sector of the economy. Managing total demand by expanding money supply created only temporary and therefore unstable employment. 5. A “lost generation” of economists who have learned nothing else continues to offer the quack “full employment” remedy and to win short-term popularity for it. 6. No government, national or international, that wants to remain in office can be expected to limit the quantity of money better than a gold standard or any other (semi-) automatic system because in practice it succumbs to sectional pressures for additional cheap money and expenditure. 7. The gold standard, balanced budgets, fixed exchanges, enabled governments to resist sectional importunities. The removal of these “shackles” has enabled governments to act more irresponsibly. 8. The only hope for stable money and resistance to inflation is to protect money from politics by removing the power of government to require its citizens to use its money as the only legal tender. 9. Government would then not inflate its supply, because it would be forsaken for other currencies. 10. Inflation can therefore be stopped by introducing competition in currency. The notion that it is a proper function of government to issue the national currency is false. Citizens should be free to use and refuse any currencies they wish: politicians would then have to limit their quantities. Then inflation would be avoided.

as British economist John Maynard Keynes reportedly stated, “we are all dead.

Economic science is characterized by different ‘schools’, which do not only differ in terms of their fundamental theoretical assumptions, but also fundamentally contradict one another. It is therefore no wonder that economists with an orientation towards John Maynard Keynes and Karl Marx raised criticisms: they pointed out that Piketty’s empirical research was important, but that he shared premises with the economic mainstream, the neoclassical school.

Speaking in a city on the precipice of disaster, the British economist hazarded a counterintuitive prediction. By 2030, Keynes said, mankind would be confronted with the greatest challenge it had ever faced: what to do with a sea of spare time. Unless politicians make “disastrous mistakes” (austerity during an economic crisis, for instance), he anticipated that within a century the Western standard of living would have multiplied to at least four times that of 1930. The conclusion? In 2030, we’ll be working just fifteen hours a week.

rise of the Nazis posed other problems for Keynes’ worldview. In his letters to Lydia, Keynes at times used “Jewish” and “circumcised” as synonyms for “greedy.” The economist Robert Solow has even suggested that Keynes’ attacks on “love of money” in “Economic Possibilities for Our Grandchildren” reflect a “polite anti-semitism.”20 Solow presses his case too far, but Keynes’ jokes with Lydia do represent more than some unfortunate, outdated terminology. In 1926, he had written a brief sketch of Albert Einstein, one of his intellectual heroes, after meeting him in Berlin. Einstein, according to Keynes, was one of the good Jews—“a sweet imp” who had “not sublimated immortality into compound interest.” Keynes knew many such good Jews in Germany. There was a Berlin banker named Fuerstenberg “who Lydia liked so much” and the “mystical” German economist Kurt Singer and even his “dear” friend Carl Melchior, whom he had met at the Paris Peace Conference. “Yet if I lived there, I felt I might turn anti-Semite. For the poor Prussian is too slow and heavy on his legs for the other kind of Jews, the ones who are not imps but serving devils, with small horns, pitch forks, and oily tails. It is not agreeable to see a civilisation so under the ugly thumbs of its impure Jews who have all the money and the power and the brains.”21 The sketch was rancid even by the standards of his own time. Keynes may have realized it. The piece was not published until after his death. After the Nazis came to power, Keynes became more considerate with his vocabulary. In August

rise of the Nazis posed other problems for Keynes’ worldview. In his letters to Lydia, Keynes at times used “Jewish” and “circumcised” as synonyms for “greedy.” The economist Robert Solow has even suggested that Keynes’ attacks on “love of money” in “Economic Possibilities for Our Grandchildren” reflect a “polite anti-semitism.”20 Solow presses his case too far, but Keynes’ jokes with Lydia do represent more than some unfortunate, outdated terminology. In 1926, he had written a brief sketch of Albert Einstein, one of his intellectual heroes, after meeting him in Berlin. Einstein, according to Keynes, was one of the good Jews—“a sweet imp” who had “not sublimated immortality into compound interest.” Keynes knew many such good Jews in Germany. There was a Berlin banker named Fuerstenberg “who Lydia liked so much” and the “mystical” German economist Kurt Singer and even his “dear” friend Carl Melchior, whom he had met at the Paris Peace Conference. “Yet if I lived there, I felt I might turn anti-Semite. For the poor Prussian is too slow and heavy on his legs for the other kind of Jews, the ones who are not imps but serving devils, with small horns, pitch forks, and oily tails. It is not agreeable to see a civilisation so under the ugly thumbs of its impure Jews who have all the money and the power and the brains.”21 The sketch was rancid even by the standards of his own time. Keynes may have realized it. The piece was not published until after his death. After the Nazis came to power, Keynes became more considerate

In it he shifted from classical orthodoxy by denying the short-term efficacy of the quantity theory of money, while accepting its truth ‘in the long run in which we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.’15