John Maynard Keynes

1883-1946 · British · Political Economy, Philosophy of Probability

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.

John Maynard Keynes was formed by two environments that rarely meet: the Cambridge of Moore, Russell and Marshall, where he took a philosophical training in ethics and logic, and Bloomsbury, where he lived among painters who regarded the pursuit of money as a vulgarity. He never resolved the tension and never tried very hard to. The combination of technical apparatus and contempt for the apparatus's purposes runs through everything he wrote.

Topics John Maynard Keynes addresses

• effective demand
• involuntary unemployment
• liquidity preference
• the marginal efficiency of capital
• animal spirits
• the state of long-term expectation
• the beauty contest
• the multiplier
• the paradox of thrift
• the euthanasia of the rentier
• the socialisation of investment
• the classical postulates of employment
• the fundamental equations of money
• savings and investment as distinct magnitudes
• bank rate as an instrument
• the quantity theory of money
• the barbarous relic
• a managed currency
• the gold-exchange standard
• Council Bills and Indian remittance
• the return to gold at the pre-war parity
• the transfer problem
• the Carthaginian peace
• reparations and the capacity to pay

Questions to put to John Maynard Keynes

Employment, Demand, and the General Theory

• What do you mean by effective demand?
• How can unemployment be involuntary if workers are free to accept lower wages?
• What's the difference between saving and investment in your system?
• Why does the rate of interest depend on liquidity preference rather than saving?
• What is the marginal efficiency of capital and why does it matter for employment?

Uncertainty, Expectation, and Animal Spirits

• What do you mean by the beauty contest analogy?
• How do animal spirits drive investment decisions?
• Why can't long-term expectations be reduced to calculable probabilities?
• What's the difference between the balance of evidence and its weight?
• How should rational people make decisions when probabilities aren't numerical?

Money, Gold, and the Managed Currency

• Why do you call the gold standard a barbarous relic?
• How does the gold-exchange standard work in practice?
• What's wrong with deflation and why is it worse than inflation?
• How should a managed currency be governed?
• What was the mistake in returning to gold at the pre-war parity in 1925?

The State's Agenda and the End of Laissez-Faire

• What decisions belong on the state's Agenda?
• How do you argue that laissez-faire was never derived from economic principles?
• What do you mean by the socialisation of investment?
• Why do you propose the euthanasia of the rentier?
• What's the paradox of thrift and why does it matter?

Versailles, Reparations, and the Carthaginian Peace

• How did the Treaty of Versailles doom the European economy?
• Why couldn't Germany pay the reparations demanded of it?
• What was the transfer problem you identified?
• How do you defend your portraits of Wilson, Clemenceau, and Lloyd George?
• What would a just settlement have looked like in 1919?

Probability as a Logical Relation

• How is probability a logical relation rather than a frequency?
• Why do you think some probabilities can't be expressed as numbers?
• What's the Principle of Indifference and what's wrong with it?
• How do you respond to Ramsey's objection that he simply doesn't perceive these logical relations?
• What does it mean for an argument to have weight?

Converse with John Maynard Keynes on Simposeum. Replies are grounded in John Maynard Keynes's own writing, cited to the page.