Maynard Keynes Quotes

When my information changes, I alter my conclusions. What do you do, sir?

It is better to be roughly right than precisely wrong.

If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.

Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.

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.

When the facts change, I change my mind - what do you do, sir?

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

Markets can remain irrational longer than you can remain solvent.

The political problem of mankind is to combine three things: economic efficiency, social justice and individual liberty.

The difficulty lies not so much in developing new ideas as in escaping from old ones.

Words ought to be a little wild for they are the assault of thoughts on the unthinking.

When the final result is expected to be a compromise, it is often prudent to start from an extreme position.

Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.

Ideas shape the course of history.

Capitalism is the extraordinary belief that the nastiest of men for the nastiest of motives will somehow work together for the benefit of all.

In the long run, we are all dead!

But my lord, when we addressed this issue a few years ago, didn't you argue the other side?" He said, "That's true, but when I get more evidence I sometimes change my mind. What do you do?

The avoidance of taxes is the only intellectual pursuit that carries any reward.

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

By this means the government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.

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.

A study of the history of opinion is a necessary preliminary to the emancipation of the mind.

Too large a proportion of recent "mathematical" economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols.

The businessman is only tolerable so long as his gains can be held to bear some relation to what, roughly and in some sense, his activities have contributed to society.

How long will it be necessary to pay City men so entirely out of proportion to what other servants of society commonly receive for performing social services not less useful or difficult?

[People] will do the rational thing, but only after exploring all other alternatives.

Newton was not the first of the age of reason. He was the last of the magicians, the last of the Babylonians and Sumerians, the last great mind that looked out on the visible and intellectual world with the same eyes as those who began to build our intellectual inheritance rather less than 10,000 years ago.

When somebody persuades me I am wrong, I change my mind.

John Maynard Keynes, wrote the following: “The love of money as a possession … 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 in mental disease.

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.

In the long run we are all dead.

I’m heartened by our dissatisfaction, because dissatisfaction is a world away from indifference. The widespread nostalgia, the yearning for a past that never really was, suggests that we still have ideals, even if we have buried them alive. True progress begins with something no knowledge economy can produce: wisdom about what it means to live well. We have to do what great thinkers like John Stuart Mill, Bertrand Russell, and John Maynard Keynes were already advocating 100 years ago: to “value ends above means and prefer the good to the useful.

The fact that a thesis is flawed does not mean that we should not invest in it as long as other people believe in it and there is a large group of people left to be convinced. The point was made by John Maynard Keynes when he compared the stock market to a beauty contest where the winner is not the most beautiful contestant but the one whom the greatest number of people consider beautiful. Where I have something significant to add is in pointing out that it pays to look for the flaws; if we find them, we are ahead of the game because we can limit our losses when the market also discovers what we already know. It is when we are unaware of what could go wrong that we have to worry.

The decadent international but individualistic capitalism in the hands of which we found ourselves after the war is not a success. It is not intelligent. It is not beautiful. It is not just. It is not virtuous. And it doesn't deliver the goods.

Words ought to be a little wild, for they are the assault of thoughts on the unthinking.

The ideas which are here expressed so laboriously are extremely simple and should be obvious. 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.

I would rather be vaguely right than precisely wrong.

So it is not an accident that the Nazi lads vent a particular fury against (Einstein). He does truly stand for what they most dislike, the opposite of the blond beast intellectualist, individualist, supernationalist, pacifist, inky, plump... How should they know the glory of the free-ranging intellect and soft objective sympathy to whom money and violence, drink and blood and pomp, mean absolutely nothing?

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.

The appeal to the intellectually insecure is also more important than it might seem. Because economics touches so much of life, everyone wants to have an opinion. Yet the kind of economics covered in the textbooks is a technical subject that many people find hard to follow. How reassuring, then, to be told that it is all irrelevant -- that all you really need to know are a few simple ideas! Quite a few supply-siders have created for themselves a wonderful alternative intellectual history in which John Maynard Keynes was a fraud, Paul Samuelson and even Milton Friedman are fools, and the true line of deep economic thought runs from Adam Smith through obscure turn-of-the-century Austrians straight to them.

Men will not always die quietly.

The power to become habituated to his surroundings is a marked characteristic of mankind.

When the facts change, I change my mind. What do you do, sir?

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?

The difficulty lies not so much in developing new ideas as in escaping the old ones.

If human nature felt no temptation to take a chance, no satisfaction (profit apart) in constructing a factory, a railway, a mine or a farm, there might not be much investment merely as a result of cold calculation.

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 in mental disease.

I work for a Government I despise for ends I think criminal.

Asked whether history had ever seen anything like the Depression, John Maynard Keynes replied: “Yes. It was called the Dark Ages, and it lasted four hundred years.

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

How can I accept the Communist doctrine, which sets up as its bible, above and beyond criticism, an obsolete textbook which I know not only to be scientifically erroneous but without interest or application to the modern world? How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeoisie and the intelligentsia, who with all their faults, are the quality of life and surely carry the seeds of all human achievement? Even if we need a religion, how can we find it in the turbid rubbish of the red bookshop? It is hard for an educated, decent, intelligent son of Western Europe to find his ideals here, unless he has first suffered some strange and horrid process of conversion which has changed all his values.

I belong to a culture that includes Proust, Henry James, Tchaikovsky, Cole Porter, Plato, Socrates, Aristotle, Alexander the Great, Michelangelo, Leonardo da Vinci, Christopher Marlowe, Walt Whitman, Herman Melville, Tennessee Williams, Byron, E.M. Forster, Lorca, Auden, Francis Bacon, James Baldwin, Harry Stack Sullivan, John Maynard Keynes, Dag Hammarskjold… These are not invisible men. Poor Bruce. Poor frightened Bruce. Once upon a time you wanted to be a soldier. Bruce, did you know that an openly gay Englishman was as responsible as any man for winning the Second World War? His name was Alan Turing and he cracked the Germans' Enigma code so the Allies knew in advance what the Nazis were going to do — and when the war was over he committed suicide he was so hounded for being gay. Why don't they teach any of this in the schools? If they did, maybe he wouldn't have killed himself and maybe you wouldn't be so terrified of who you are. The only way we'll have real pride is when we demand recognition of a culture that isn't just sexual. It's all there—all through history we've been there; but we have to claim it, and identify who was in it, and articulate what's in our minds and hearts and all our creative contributions to this earth. And until we do that, and until we organize ourselves block by neighborhood by city by state into a united visible community that fights back, we're doomed. That's how I want to be defined: as one of the men who fought the war.

It is a mistake to think businessmen are more immoral than politicians.

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.

True progress begins with something no knowledge economy can produce: wisdom about what it means to live well. We have to do what great thinkers like John Stuart Mill, Bertrand Russell, and John Maynard Keynes were already advocating 100 years ago: to “value ends above means and prefer the good to the useful.” We have to direct our minds to the future. To stop consuming our own discontent through polls and the relentlessly bad news media. To consider alternatives and form new collectives. To transcend this confining zeitgeist and recognize our shared idealism.

I cannot leave this subject as though its just treatment wholly depended either on our own pledges or economic facts. The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable, - abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe. Some preach it in the name of Justice. In the great events of man's history, in the unwinding of the complex fates of nations Justice is not so simple. And if it were, nations are not authorized, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents of rulers.

I find economics increasingly satisfactory, and I think I am rather good at it. I want to manage a railroad or organise a Trust or at least swindle the investing public

The difficulty lies, not in the new ideas,” John Maynard Keynes famously observed, “but in escaping from the old ones.

As John Maynard Keynes said, “The market can stay irrational longer than you can stay solvent.

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

With the breakdown of money economy the practice of international barter is becoming prevalent.

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.

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 immense accumulations of fixed capital which, to the great benefit of mankind, were built up during the half century before the war, could never have come about in a Society where wealth was divided equitably.

The missing step in the standard Keynesian theory [is] the explicit consideration of capitalist finance within a cyclical and speculative context . . . finance sets the pace for the economy. As recovery approaches full employment . . . soothsayers will proclaim that the business cycle has been banished [and] debts can be taken on . . . But in truth neither the boom, nor the debt deflation… and certainly not a recovery can go on forever. Each state nurtures forces that lead to its own destruction. So

John Maynard Keynes saw the truth at the bottom of all this, which is that our fixation on what he called “purposiveness”—on using time well for future purposes, or on “personal productivity,” he might have said, had he been writing today—is ultimately motivated by the desire not to die. “The ‘purposive’ man,” Keynes wrote, “is always trying to secure a spurious and delusive immortality for his actions by pushing his interests in them forward into time. He does not love his cat, but his cat’s kittens; nor in truth the kittens, but only the kittens’ kittens, and so on forward forever to the end of cat-dom. For him, jam is not jam unless it is a case of jam tomorrow and never jam today. Thus by pushing his jam always forward into the future, he strives to secure for his act of boiling it an immortality.” Because he never has to “cash out” the meaningfulness of his actions in the here and now, the purposive man gets to imagine himself an omnipotent god, whose influence over reality extends infinitely off into the future; he gets to feel as though he’s truly the master of his time. But the price he pays is a steep one. He never gets to love an actual cat, in the present moment. Nor does he ever get to enjoy any actual jam. By trying too hard to make the most of his time, he misses his life.

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.

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’).

Prosperity is not hard-wired into human beings; it must be orchestrated and sustained by political leadership.

I only wish I had drunk more champagne.

[People] will do the rational thing, but only after exploring all other altertives.

Successful investing is anticipating the anticipations of others

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

I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject from economic thinking twenty years ago.

There is a danger of expecting the results of the future to be predicted from the past.

A monetary economy, we shall find, is essentially one in which changing views about the future are capable of influencing the quantity of employment and not merely its direction.

I wanted to get rich so I could be independent, like Lord John Maynard Keynes.' Independence is the end that wealth serves for Charlie, not the other way around.

Our problem is to work out a social organization which shall be as efficient as possible without offending our notions of a satisfactory way of life.” —JOHN MAYNARD KEYNES

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

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

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 ...

If we consistently act on the optimistic hypothesis, this hypothesis will tend to be realised; whilst by acting on the pessimistic hypothesis we can keep ourselves for ever in the pit of want.

NED: I belong to a culture that includes Proust, Henry James, Tchaikovsky, Cole Porter, Plato, Socrates, Aristotle, Alexander the Great, Michelangelo, Leonardo da Vinci, Christopher Marlowe, Walt Whitman, Herman Melville, Tennessee Williams, Byron, E. M. Forster, Lorca, Auden, Francis Bacon, James Baldwin, Harry Stack Sullivan, john Maynard Keynes, Dag Hammarskjöld . . . These are not invisible men.

A ‘sound’ banker, alas, is not one who sees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him.

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.

John Maynard Keynes saw the truth at the bottom of all this, which is that our fixation on what he called “purposiveness”—on using time well for future purposes, or on “personal productivity,” he might have said, had he been writing today—is ultimately motivated by the desire not to die. “The ‘purposive’ man,” Keynes wrote, “is always trying to secure a spurious and delusive immortality for his actions by pushing his interests in them forward into time. He does not love his cat, but his cat’s kittens; nor in truth the kittens, but only the kittens’ kittens, and so on forward forever to the end of cat-dom. For

After leaving the Arts Council in 2009, he pointed out that, in the official portraits of past Council chairmen, John Maynard Keynes was the only one smiling. That was because Keynes died before ever having to chair a Council meeting.25

The great twentieth-century economist John Maynard Keynes is often credited with having popularized the idea that “if you owe the bank one hundred pounds, that’s your problem. If you owe the bank one hundred million pounds, that’s the bank’s problem.

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.

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

My feelings about Das Kapital are the same as my feelings about the Koran. I know that it is historically important and I know that many people, not all of whom are idiots, find it a sort of Rock of Ages and containing inspiration. Yet when I look into it, it is to me inexplicable that it can have this effect. Its dreary, out-of-date, academic controversialising seems so extraordinarily unsuitable as material for the purpose … How could either of these books carry fire and sword round half the world? It beats me. [writing to George Bernard Shaw]

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.

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.

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

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.

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

My only regret is that I have not drunk more champagne in my life.

It was not the power of Keynes’ argument that propelled the book to such wild success. It was the vicious, detailed personal portraits of the Great Men he lambasted.

In this autumn of 1919, in which I write, we are at the dead season of our fortunes.

Once we allow ourselves to be disobedient to the test of an accountant's profit, we have begun to change our civilisation.

When the facts change, I change my mind

saving" became nine-tenths of virtue and the growth

Our attitude to these criticisms must be determined by our whole moral and emotional reaction to the future of international relations and the Peace of the World.

Our old ideas are not so much overthrown as upset. The old is not destroyed; it is replaced. We simply learn to see new things in a different light.

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.

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.

As Keynes explained his own methods in The General Theory: “The object of our analysis is, not to provide a machine, or method of blind manipulation, which will furnish an infallible answer, but to provide ourselves with an organised and orderly method of thinking out particular problems….Too large a proportion of recent ‘mathematical’ economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols.”8

It is not sufficient that the state of affairs which we seek to promote should be better than the state of affairs which preceded it; it must be sufficiently better to make up for the evils of transition

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.

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.

Ideas, knowledge, science, hospitality, travel – these are the things that should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national.

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 commonest virtues of the individual are often lacking in the spokesmen of nations; a statesman representing not himself but his country may prove, without incurring excessive blame—­as history often records—­vindictive, perfidious, and egotistic.

Classical economics saw money as something static, like a painting. Keynes saw it as creating narratives of economic possibility, more like a film or a novel. “The importance of money essentially flows from its being a link between the present and the future.

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.

The Bretton Woods saga unfurled at a unique crossroads in modern history. An ascendant anticolonial superpower, the United States, used its economic leverage over an insolvent allied imperial power, Great Britain, to set the terms by which the latter would cede its dwindling dominion over the rules and norms of foreign trade and finance. Britain cooperated because the overriding aim of survival seemed to dictate the course. The monetary architecture that Harry White designed, and powered through an international gathering of dollar-starved allies, ultimately fell, its critics agree, of its own contradictions.

Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits—a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.

A valuation, which is established as the outcome of the mass psychology of a large number of ignorant individuals is liable to change violently as the result of a sudden fluctuation of opinion due to factors which really do not make much difference . . . since there will be no strong roots of conviction to hold it steady.

Jowell fell back on the same justification for funding the arts that the first chairman of the Arts Council, John Maynard Keynes, had deployed in 1945. Art was something produced by people with special skills, who set their own standards of excellence; they needed to be supported to do this, and the audience needed to be encouraged to appreciate this excellence, by being given subsidised access to it. And for all of Jowell’s attempts to transcend instrumentalism, the purpose of culture continued to be to help the government ‘to transform our society into a place of justice, talent and ambition where individuals can fulfil their true potential’.22

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.

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.

But if America recalls for a moment what Europe has meant to her and still means to her, what Europe, the mother of art and of knowledge, in spite of everything, still is and still will be, will she not reject these counsels of indifference and isolation, and interest herself in what may prove decisive issues for the progress and civilization of all mankind?

I sympathize, therefore, with those who would minimize, rather than with those who would maximize, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel--these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national.

As one broods over these queer collections, it seems easier to understand - with an understanding which is not, I hope, distorted in the other direction - this strange spirit, who was tempted by the Devil to believe at the time when within these walls he. was solving so much, that he could reach all the secrets of God and Nature by the pure power of mind Copernicus and Faustus in one.

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.

Prior to The General Theory, economics was almost exclusively concerned with scarcity and efficiency. The very word for the productive output of society—economy—was a metaphor for making do with less. The root cause of human suffering was understood to be a shortage of resources to meet human needs. Social reformers might protest the extravagances of the rich, but poverty and squalor were driven not

If we aim deliberately at the impoverishment of Central Europe, vengeance, I dare predict, will not limp. Nothing can then delay for very long that final civil war between the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the late German war will fade into nothing, and which will destroy, whoever is victor, the civilization and the progress of our generation.

It is not true that individuals possess a prescriptive ‘natural liberty’ in their economic activities,” Keynes wrote. “There is no ‘compact’ conferring perpetual rights on those who Have or on those who Acquire. The world is not so governed from above that private and social interests always coincide. It is not a correct deduction from the principles of economics that enlightened self-interest always operates in the public interest.

Good work is not done by ‘humble’ men. It is one of the first duties of a professor, for example, in any subject, to exaggerate a little both the importance of his subject and his own importance in it. A man who is always asking ‘Is what I do worthwhile?’ and ‘Am I the right person to do it?’ will always be ineffective himself and a discouragement to others. He must shut his eyes a little, and think a little more of his subject and himself than they deserve. G. H. Hardy

What an extraordinary episode in the economic progress of man that age was which came to an end in August 1914! The greater part of the population, it is true, worked hard and lived at a low standard of comfort, yet were, to all appearances, reasonably contented with this lot. But escape was possible, for any man of capacity or character at all exceeding the average, into the middle and upper classes, for whom life offered, at a low cost and with the least trouble, conveniences, comforts, and amenities beyond the compass of the richest and most powerful monarchs of other ages. The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend. He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate without passport or other formality, could despatch his servant to the neighbouring office of a bank for such supply of the precious metals as might seem convenient, and could then proceed abroad to foreign quarters, without knowledge of their religion, language, or customs, bearing coined wealth upon his person, and would consider himself greatly aggrieved and much surprised at the least interference. But, most important of all, he regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous, and avoidable. The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion, which were to play the serpent to this paradise, were little more than the amusements of his daily newspaper, and appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalisation of which was nearly complete in practice.

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.

Lenin is said to have declared that the bestway 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 confiscatearbitrarily; 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.

The war has ended with every one owing every one else immense sums of money. Germany owes a large sum to the Allies, the Allies owe a large sum to Great Britain, and Great Britain owes a large sum to the United States. The holders of war loan in every country are owed a large sum by the States, and the States in its turn is owed a large sum by these and other taxpayers. The whole position is in the highest degree artificial, misleading, and vexatious. We shall never be able to move again, unless we can free our limbs from these paper shackles.

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.

Instead of using their vastly increased material and technical resources to build a wonder-city, they built slums; and they thought it right and advisable to build slums because slums, on the test of private enterprise, "paid", whereas the wonder-city would, they thought, have been an act of foolish extravagance, which would, in the imbecile idiom of the financial fashion, have "mortgaged the future"; though how the construction to-day of great and glorious works can impoverish the future, no man can see until his mind is beset by false analogies from an irrelevant accountancy.

The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend. He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate without passport or other formality, could despatch his servant to the neighboring office of a bank for such supply of the precious metals as might seem convenient, and could then proceed abroad to foreign quarters, without knowledge of their religion, language, or customs, bearing coined wealth upon his person, and would consider himself greatly aggrieved and much surprised at the least interference. But, most important of all, he regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous, and avoidable. The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion, which were to play the serpent to this paradise, were little more than the amusements of his daily newspaper, and appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice.

In November 1914, the British government issued the first war bond, aiming to raise £350 million from private investors at an interest rate of 4.1% and a maturity of ten years. Surprisingly, the bond issue was undersubscribed, and the British public purchased less than a third of the targeted sum. To avoid publicizing this failure, the Bank of England granted funds to its chief cashier and his deputy to purchase the bonds under their own names. The Financial Times, ever the bank’s faithful mouthpiece, published an article proclaiming the loan was oversubscribed. John Maynard Keynes worked at the Treasury at the time, and in a secret memo to the bank, he praised them for what he called their “masterly manipulation.” Keynes’s fondness for surreptitious monetary arrangements would go on to inspire thousands of economic textbooks published worldwide. The Bank of England had set the tone for a century of central bank and government collusion behind the public’s back. The Financial Times would only issue a correction 103 years later,7 when this matter was finally uncovered after some sleuthing in the bank’s archives by some enterprising staff members and published on the bank’s blog.8

Bitcoin was in theory and in practice inseparable from the process of computation run on cheap, powerful hardware: the system could not have existed without markets for digital moving images; especially video games, driving down the price of microchips that could handle the onerous business of guessing. It also had a voracious appetite for electricity, which had to come from somewhere - burning coal or natural gas, spinning turbines, decaying uranium - and which wasn't being used for something arguably more constructive than this discovery of meaningless hashes. The whole apparatus of the early twenty-first century's most complex and refined infrastructures and technologies was turned to the conquest of the useless. It resembled John Maynard Keynes's satirical response to criticisms of his capital injection proposal by proponents of the gold standard: just put banknotes in bottles, he suggested, and bury them in disused coal mines for people to dig up - a useless task to slow the dispersal of the new money and get people to work for it. 'It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.

I also want to emphasise strongly the point about economics being a moral science. I mentioned before that it deals with introspection and with values. I might have added that it deals with motives, expectations, psychological uncertainties. One has to be constantly on guard against treating the material as constant and homogeneous in the same way that the material of the other sciences, in spite of its complexity, is constant and homogeneous. It is as though the fall of the apple to the ground depended on the apple's motives, on whether it is worth while falling to the ground, and whether the ground wanted the apple to fall, and on mistaken calculations on the part of the apple as to how far it was from the centre of the earth.

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?

The German economic system as it existed before the war depended on three main factors: I. Overseas commerce as represented by her mercantile marine, her colonies, her foreign investments, her exports, and the overseas connections of her merchants; II. The exploitation of her coal and iron and the industries built upon them; III. Her transport and tariff system. Of these the first, while not the least important, was certainly the most vulnerable. The Treaty aims at the systematic destruction of all three, but principally of the first two. I (1) Germany has ceded to the Allies all the vessels of her mercantile marine exceeding 1600 tons gross, half the vessels between 1000 tons and 1600 tons, and one quarter of her trawlers and other fishing boats.[9] The cession is comprehensive, including not only vessels flying the German flag, but also all vessels owned by Germans but flying other flags, and all vessels under construction as well as those afloat.[10] Further, Germany undertakes, if required, to build for the Allies such types of ships as they may specify up to 200,000 tons[11] annually for five years, the value of these ships being credited to Germany against what is due from her for Reparation.[12]

I believe that the clue to his mind is to be found in his unusual powers of continuous concentrated introspection. A case can be made out, as it also can with Descartes, for regarding him as an accomplished experimentalist. Nothing can be more charming than the tales of his mechanical contrivances when he was a boy. There are his telescopes and his optical experiments, These were essential accomplishments, part of his unequalled all-round technique, but not, I am sure, his peculiar gift, especially amongst his contemporaries. His peculiar gift was the power of holding continuously in his mind a purely mental problem until he had seen straight through it. I fancy his pre-eminence is due to his muscles of intuition being the strongest and most enduring with which a man has ever been gifted. Anyone who has ever attempted pure scientific or philosophical thought knows how one can hold a problem momentarily in one's mind and apply all one's powers of concentration to piercing through it, and how it will dissolve and escape and you find that what you are surveying is a blank. I believe that Newton could hold a problem in his mind for hours and days and weeks until it surrendered to him its secret. Then being a supreme mathematical technician he could dress it up, how you will, for purposes of exposition, but it was his intuition which was pre-eminently extraordinary - 'so happy in his conjectures', said De Morgan, 'as to seem to know more than he could possibly have any means of proving'. The proofs, for what they are worth, were, as I have said, dressed up afterwards - they were not the instrument of discovery.

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.

The economic theory propounded by John Maynard Keynes in the 1930s dwelled heavily on the role of governments vis-à-vis cycles. Keynesian economics focuses on the role of aggregate demand in determining the level of GDP, in contrast with earlier approaches that emphasized the role of the supply of goods. Keynes said governments should manage the economic cycle by influencing demand. This, in turn, could be accomplished through the use of fiscal tools, including deficits. Keynes urged governments to aid a weak economy by stimulating demand by running deficits. When a government’s outgo—its spending—exceeds its income—primarily from taxes—on balance it puts funds into the economy. This encourages buying and investing. Deficits are stimulative, and thus Keynes considered them helpful in dealing with a weak economy. On the other hand, when economies are strong, Keynes said governments should run surpluses, spending less than they take in. This removes funds from the economy, discouraging spending and investment. Surpluses are contractionary and thus an appropriate response to booms. However, the use of surpluses to cool a thriving economy is little seen these days. No one wants to be a wet blanket when the party is going strong. And spending less than you bring in attracts fewer votes than do generous spending programs. Thus surpluses have become as rare as buggy whips.

Markets can remain irrational longer than you can remain solvent. —JOHN MAYNARD KEYNES

party passions led to muddled or dishonest thinking, made people unreasonable or stereotypical, and lacked long-term perspective.

Keynes was patrician in outlook. He suspected that liberty was incompatible with equality, and had a sharp preference for liberty over the chimera of equality.

American Capitalism had celebrated the end of scarcity. Now The Affluent Society decried the country’s increasing dependence on unnecessary production to establish the financial security of most families.

In 1883, Paul Lafargue (who was Karl Marx’s son-in-law) wrote a tract promoting The Right to Be Lazy. In the first decades of the twentieth century, on the heels of early victories in the fight for a forty-hour workweek, some labor unions began to push to reduce work further. Calls for a thirty-hour week became increasingly prominent, and some of the more radical unions sought still shorter hours (the Industrial Workers of the World even went so far as to print T-shirts calling for a “four-day week, four-hour day”). Disinterested observers took these calls to be expressing a serious proposition. No less than John Maynard Keynes, writing around 1930, predicted that technological innovation would effectively eliminate long (or even moderate) human hours and labor effort for the masses, imagining that a three-hour workday might be possible within a century. Keynes and others hoped that these developments would usher in something approaching a utopia—a new world in which everyone might enjoy a form of life that, in their world, only elites could afford. These hopes were natural in their time. Work remained drudgery, and leisure still constituted honor. The idea that through industrialization, machine power would relieve the working classes of the yoke of their labor naturally captivated hopeful dreamers. Much of what was predicted has in fact come to pass, although not in the way that was expected, and with results more nearly ruinous than utopian.

In much of Europe, shorter workweeks are an explicit and uncontroversial public policy goal. Germans, for instance, work an average of twenty-six hours a week when vacation time is averaged out over the year.18

The economic fuel for the rise of Hitler had been the suffering and despair generated by deflation—not the social welfare policies Hayek decried as “socialism

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.

If .. spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die.

Like John Maynard Keynes three decades later, Hobson urged instead that advanced nations increase their domestic markets by making more of their citizens rich enough to buy domestically produced goods. “If apportionment of incomes were such as to evoke no excessive saving, full constant employment for capital and labor would be furnished at home.”7 But the world war Hobson feared would occur before enough citizens had the wherewithal to buy a substantial portion of what they produced.

The years 1880–1913 constitute the great era of laissez-faire in world economic history—the reign of the classical gold standard, in which governments around the globe had allowed an unprecedented degree of economic activity within and between their nations to be regulated by the market-driven transfer of gold claims across borders (the physical stuff itself just shifted around in central bank vaults). The year 1933, in stark contrast, saw the world mired in the Great Depression, with the gold standard in tatters, trade decimated, and unemployment at previously unimagined levels.

Under the gold standard, exchange rates were fixed, so that the balance of payments had to adjust through domestic deflation. White, like Keynes, concluded that it should be the other way around. “I believe there is definitive evidence,” White wrote, “that alterations in the domestic price level are far more costly to the nation than frequent alterations in the exchange rate would be.” The United States “would be courting trouble to place ourselves in a position similar to that which we found ourselves between 1929 and 1933,” a period of persistent deflation.

White therefore wanted to rewrite the rules of the American monetary system to give a revamped Federal Reserve far more discretionary powers than the gold standard could accommodate, and then convince the rest of the world to help make such a new system stick internationally.

The fraying relic of the gold-exchange standard that remained at the end of the 1920s had collapsed entirely by 1934. Britain, its inspiration and foundation in the nineteenth century, abandoned it with great reluctance and bitterness in September 1931. Twenty-five nations followed in short order. The United States refused to throw in the towel until April 1933, shortly after Roosevelt took office.

President Herbert Hoover had tried to preserve the gold standard by means of trade restrictions; Roosevelt maneuvered in the other direction, moving away from multilateralism in money while trying to preserve it in trade.

The drama of the final collapse of the gold-exchange standard would poison Anglo-American relations for decades. To the British way of thinking, Britain had been ignominiously forced off gold by selfish and short-sighted American and French policies: the Americans with their abominable import tariffs, and the French with their wretched devaluations. The Americans, for their part, saw themselves as innocent victims of an odious British default.

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.

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’.

The real struggle of today…is between that view of the world, termed liberalism or radicalism, for which the primary object of government and of foreign policy is peace, freedom of trade and intercourse, and economic wealth, and that other view, militarist, or, rather, diplomatic, which thinks in terms of power, prestige, national or personal glory, the imposition of a culture, and hereditary or racial prejudice.

was a rhetorically deft presentation, delivered by a master storyteller. But there were problems with the story. Keynes himself had predicted a postwar boom, not a depression (so had Galbraith, in “194Q”). He had never claimed that monetary policy didn’t matter. He had opposed using high interest rates as a policy device because they were the most socially destructive method available for bringing down prices. He never claimed it didn’t work. And although it was true that Keynes had

John Maynard Keynes: "Markets can remain irrational longer than you can remain solvent.

The purpose of the margin of safety is to render the forecast unnecessary.” The more flexibility you have, the less you need to know what happens next. And never forget John Maynard Keynes: “In the long run we’re all dead.

If the European Civil War is to end with France and Italy abusing their momentary victorious power to destroy Germany and Austria-Hungary now prostrate, they invite their own destruction also, being so deeply and inextricably intertwined with their victims by hidden psychic and economic bonds.

The great events of history are often due to secular changes in the growth of population and other fundamental economic causes, which, escaping by their gradual character the notice of contemporary observers, are attributed to the follies of statesmen or the fanaticism of atheists.

Perhaps it is historically true that no order of society ever perishes save by its own hand.

Those who controlled the Conference may bow before the gusts of popular opinion, but they will never lead us out of our troubles.

Once we allow ourselves to become disobedient to the test of an accountant's profit, we have begun to change our civilization.

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.

Los tratados de la posguerra edificados sobre las cenizas del patrón oro fueron diseñados de manera consciente para facilitar la gestión económica por parte de las autoridades políticas nacionales. La contribución clave de John Maynard Keynes a la salvación del capitalismo fue reconocer que requería una gestión económica nacional. El capitalismo sólo funcionaba en un país cada vez, y las interacciones económicas entre países tenían que regularse para asegurarse de que no afectaran demasiado a las negociaciones sociales y políticas nacionales.

Los tratados de la posguerra edificados sobre las cenizas del patrón oro fueron diseñados de manera consciente para facilitar la gestión económica por parte de las autoridades políticas nacionales. La contribución clave de John Maynard Keynes a la salvación del capitalismo fue reconocer que requería una gestión económica nacional. El capitalismo sólo funcionaba en un país cada vez, y las interacciones económicas entre países tenían que regularse para asegurarse de que no afectaran demasiado a las negociaciones sociales y políticas nacionales. La iniciativa del mercado único europeo y, aún más, la moneda única era contraria a esta idea.

The difficulty lies not in the new ideas, but in escaping from the old ones. —John Maynard Keynes, Cambridge, 1906

Spirit of the Years Observe that all wide sight and self-command Deserts these throngs now driven to demonry By the Immanent Unrecking. Nought remains But vindictiveness here amid the strong, And there amid the weak an impotent rage.

In his important book, How to Pay for the War, John Maynard Keynes explained what Kennedy later understood: Coming up with the money is the easy part. The real challenge lies in managing your available resources—labor, equipment, technology, natural resources, and so on—so that inflation does not accelerate. If Kennedy had used the wrong lens, America might never have gone to the moon. If Keynes had used the wrong lens, the British war effort may very well have been too little too late.

bailouts of 2008 and 2009 saved the global financial system. But they did not save the American middle class.

But the principles of laissez-faire have had other allies besides economic textbooks. It must be admitted that they have been confirmed in the minds of sound thinkers and the reasonable public by the poor quality of the opponent proposals - protectionism on one hand, and Marxian socialism on the other. Yet these doctrines are both characterised, not only or chiefly by their infringing the general presumption in favour of laissez-faire, but by mere logical fallacy. Both are examples of poor thinking, of inability to analyse a process and follow it out to its conclusion. The arguments against them, though reinforced by the principle of laissez-faire, do not strictly require it. Of the two, protectionism is at least plausible, and the forces making for its popularity are nothing to wonder at. But Marxian socialism must always remain a portent to the historians of opinion - how a doctrine so illogical and so dull can have exercised so powerful and enduring an influence over the minds of men and, through them, the events of history. At any rate, the obvious scientific deficiencies of these two schools greatly contributed to the prestige and authority of nineteenth-century laissez-faire.

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

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.

The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable,—abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe.

In the great events of man's history, in the unwinding of the complex fates of nations Justice is not so simple. And if it were, nations are not authorized, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.

It is, however, generally supposed that if the whole of a man's surplus production is taken from him, his efficiency and his industry are diminished, The entrepreneur and the inventor will not contrive, the trader and the shopkeeper will not save, the laborer will not toil, if the fruits of their industry are set aside, not for the benefit of their children, their old age, their pride, or their position, but for the enjoyment of a foreign conqueror.

We have been moved already beyond endurance, and need rest. Never in the lifetime of men now living has the universal element in the soul of man burnt so dimly. For these reasons the true voice of the new generation has not yet spoken, and silent opinion is not yet formed. To the formation of the general opinion of the future I dedicate this book.

Benjamin Graham said, “The purpose of the margin of safety is to render the forecast unnecessary.” The more flexibility you have, the less you need to know what happens next. And never forget John Maynard Keynes: “In the long run we’re all dead.

After the war, John Maynard Keynes predicted countries wrecked by war would go on to have a “craving for social and personal security.” Which is what happened. Historian Tony Judt notes that the state of affairs was so bad in postwar Europe that only the state could offer hope of salvation to the masses of displaced people. So it did. Everything from generous unemployment insurance to universal health care became common after the war in ways that never caught on in America.

When the facts change, I change my mind. What do you do?

Markets can remain irrational a lot longer than you and I can remain solvent.

John Maynard Keynes, writing in his “Economic Possibilities for Our Grandchildren” (1930) suggests that “We are suffering . . . from the growing-pains of over-rapid changes, from the painfulness of readjustment between one economic period and another. The increase of technical efficiency has been taking place faster than we can deal with the problem of labour absorption.

Maxims Hidden in the Text Try, fail, analyze, adjust, try again. John Maynard Keynes cycled through these steps ceaselessly. 178 An imperfect decision made in time is better than a perfect one made too late. 215-216 Plans are merely a platform for change. Israeli Defense Forces slogan. 222 If we ask many tiny pertinent questions, we can close in on an answer for the big question. 263

The game of professional investment is intolerably boring and overexacting to anyone who is entirely exempt from the gambling instinct; whilst he who has it must pay to this propensity the appropriate toll

Artistically it is a failure,” Keynes conceded. “I have changed my mind too much during the course of writing it for it to be a proper unity.

intuition had to be grounded in lived experience.

The Great Society’s civil rights agenda did help spread the gains of the roaring economy more equally. The black poverty rate dropped to 32.2 percent, a dramatic improvement from the rate of 55 percent that had prevailed when Galbraith had published The Affluent Society. But the statistical chasm between black and white poverty remained an unresolved crisis in American democracy. The black poverty rate would not drop below 30 percent until 1995. It is 21.8 percent today, compared to 8.8 percent among white households.

John Maynard Keynes’s famous view about long-term forecasts: ‘About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know.

The earth heaves and no one … is aware of the rumblings.

Mark Twain defined a classic as something everyone wants to have read and nobody wants to read. One classic that deserves the attention of all investors is John Maynard Keynes’s General Theory of Employment, and more specifically chapter 12, “The State of Long-Term Expectation.” Expectations are embedded in all the decisions we make, especially investment decisions, but we rarely step back and consider how and why we form our expectations. Keynes guides this reflection.

It is necessarily part of the business of a banker to profess a conventional respectability which is more than human. Life-long practices of this kind make them the most romantic and the least realistic of men.