John Maynard Keynes' Life - Essay Example

JOHN MAYNARD KEYNES Introduction John Maynard Keynes was born on 5th June 1883 in Cambridge, England. His father was named John Neville Keynes and was a famous economist. He was very close to his father. His mother was named Florence Ada Keynes and was once a mayor at Cambridge. Keynes had a younger brother named Geoffrey Keynes and a younger sister named Margaret Neville Keynes. He joined St Faith’s Preparatory school and then Eton where he gained his momentum for his career. He had a special interest in mathematics and history. He was then admitted to Cambridge university (King’s college) where he did Mathematics part one. In the campus, he attended regular Christian gatherings, but he later joined a group called “The Apostles”. In 1911, he became an editor of the Economic journal. Keynes then joined the civil service where he was sent to the India office. This office exposed him to real administration and financial management. In 1925, he married a Russian named Lydia Lopokova, but they had no children. Keynes had homosexual relations with his friends and was open about it (John Maynard Keynes biography). He then went back to Cambridge University where he specialized in Mathematics and Economics for approximately six years. He was promoted to a Lord in 1942 and later died of a heart attack on 21st April 1946. He lived in the years when the First and second world wars were happening. He was troubled by the ‘classical economics’ as he referred them; he meant the practices of communism versus capitalism. During his struggle to develop more realistic theories on economies, he became very famous. People liked his journals and books and that is why he is regarded as “the British Economist who created macro Economics”. When he was working at the Indian office, he made a famous publication called Indian Currency and Finance in 1913. This made the Indian government offer him a seat at the Indian Royal Commission. He carefully analyzed their currency, the effects of any change in the value of the Rupee, the Rupee’s foreign performance, government influence in the Economy, the Gold paper standard, paper currency, council bills and remittance, Indian banking, state’s reserves and cash balances among other key issues in the Indian Economy. His ideas were then adopted by the Indian government which made the Indian Economy more stable during the Second World War. In 1921, Keynes published another journal “A Treatise on Probability”. This publication was a very important addition to the probability theory. He developed the first upper and lower intervals in the probability theory approach. He also developed decision weight approach of decision making using conventional risk and weight coefficients. In the 1920’s, he worked as a journalist but also as a financial consultant. This raised his popularity in London. The government liked him and always involved him in decision making committees as a consultant. He also wrote another journal called “A Tract on Monetary Reform”, to criticize the 1st World War deflationary policies. In this journal, he recommended depreciation of the Sterling Pound; to help increase Britain’s exports thus increase the level of employment. He advised on expansion measures and more spending on public works to grow the British Economy and increase the level of employment. The chancellor Winston Churchill was not convinced enough to eliminate the Gold Standard, as advised by Keynes, so he re-introduced it. Britain faced a great depression that made them realize the truth. Keynes then wrote another journal “The Economic consequences of Mr. Churchill”. Britain abandoned the Gold Standard in 1931. Keynes developed the so called Keynesian Economics; this was in his urge to control the effects of economic cycles like recessions and depressions. He proposed the use of monetary and fiscal policies to control the effects of such economic cycles. He was a spearhead in the revolution of a better economic understanding. His Keynesian Economics steered social liberation first in the western countries and then in the whole world. He recommended policies to governments that helped create more employment, more output and an optimum combination of labor and capital for maximum production. This is evident from his theory of Employment, Interest and Money (Keynes John Maynard 2008). The Means to Prosperity was another publication by Keynes in 1933. He developed and recommended measures to counter Global Depression that was at that time caused by the World Wars. He also recommended policies that would increase employment all over the world. This was derived from his theory of Employment. He said that, if savings increase beyond investments, it would have a negative effect on employment. Later in the year Sweden and Germany adopted the above recommendations that saw them recover faster from the Global Depression. America then adopted the Keynesian policies though they had a lot of difficulty. The advantages started sprouting in the American Economy in 1939. In 1936, Keynes published one of his best works “General Theory of Employment, Interest and Money”. Research was done by Keynes favorite students and later David Bensusan-Butt. This was an overall solution for any government to handle a recession. This theory is an approach that is used to date to solve Economic issues like unemployment, redistribution of income, control of interest rates, balance of payments, appreciation and depreciation of currencies among other key issues. Basically, the theory was like a complex integration of all other small theories he had ever developed concerning Economies. He argued that aggregate demand and not supply is the key driver of the overall level of Economic activity (Keynes J.M. The General Theory of Employment, Interest and Money). He had a list of other publications like; The economics of war in Germany 1915, Revision of the treaty 1922, I am a liberal 1925, Treatise on money 1930, Economic possibilities for our grandchildren 1930, The end of the Gold standard (Sunday express) 1931 and Essays in persuasion 1931. (Wikipedia-John-Maynard-Keynes-publications) Keynes became a very influential person in Europe. Britain did not want to lose him, so it gave him a state job. He was made the Director of the Bank of England and a consultant to the Chancellor of the Exchequer. During his job, he could still print more publications, journals and formulate policies regarding their Economy. To appreciate his work, the British government raised him to peerage, that is; he was promoted to a Lord (1942). Keynes theories were extremely useful in the 2008-2009 depression. He actually taught the governments on how to stimulate the domestic and foreign markets and not to eliminate them. He made a world wide influence especially in the education sector. Modern universities, books, projects and research companies apply modern economics which is basically, neo-Keynesian version of economics. Although he created a legacy, he had his shortcomings. One of them is that he enlightened governments on the impact of controlled investments, which sometimes is a hindrance to development and contrary to equal opportunity creation policy of many governments. Brad Briggs (2010) refers Keynes, as the transformer of the economic world. The importance of his ideas is still evident especially in his proposals for the creation of a World Bank, International Monetary Fund (IMF), and International Bank for Reconstruction and Development (IBRD). He knew that such projects would help solve Economic problems in the future. He proposed these ideas when he attended The Versailles Peace Conference. He was among the 100 most important and influential people of the 20th century. He negotiated for his government to get a loan for reconstruction from the USA government and succeeded. World wide influence was evident from the following comments, “We are all Keynesians now” (U.S. President Richard Nixon as quoted in Time magazine 1965)After the death of Keynes, economists like John Hicks, Franco Modigliani and Paul Samuelson formulated Keynes’ theories into mathematical models. This formed the Neo-Classical Synthesis. They blended his thoughts with neo-classical economics to make neo-Keynesian economics which is in practice until today. Writers like Seymour E. Harris advanced his thoughts in their quest to make more influence. This is evident from his book “Keynes’ influence on theory and public policy”. There are also many other publications to develop Keynes’ thoughts including Robert Skidelsky’s “The Return of The Master” (Skidelsky, 2009). He is remembered for his Brainy quotes like: “The day is not far when the economic problem will take the back seat where it belongs” and the heart and head arena will be occupied or reoccupied, by our real problems - the problems of life and of human relations, of creation and behavior and religion”. (www.brainyquote.com) References Briggs B. (2010). John Maynard Keynes: The Man Who Transformed the Economic World, Retrieved 06.10.2011from http://www.investinganswers.com/a/john-maynard-keynes-man-who- transformed-economic-world-621 Keynes J.M. (2006). The General Theory of Employment, Interest and Money, Delhi: Atlantic Publishers & Dist. Skidelsky, Robert (2009), the return of the master, London: Penguin Adult Read More