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John Maynard Keynes
: Journal of Post Keynesian Economics, Spring95, Vol. 17 Issue 3, p313, 12p
Deprez, Johan
Robert Skidelsky's John Maynard Keynes: The Economist as Savior 1920-1937[1] is the long-awaited second volume of his three-volume biography of Keynes. The mature Keynes during the era of his most significant economic writings, of major nonacademic accomplishments, and of personal stability is discussed. This volume deals with the heart of Keynes' theoretical work from A Treatise on Probability, through A Tract on Monetary Reform and A Treatise on Money, to The General Theory of Employment, Interest, and Money. It explores Keynes' participation in interwar policy formulation and his related political activities. Skidelsky's biography also looks at the development of Keynes' personal side and his business and art interests.
John Maynard Keynes' work has been extensively scrutinized, analyzed, and interpreted during his lifetime and since his death, so there exists a general and opinionated familiarity about Keynes' accomplishments among economists. While the extensive biographical work on Keynes is notably less voluminous, it has also created a general state of awareness and knowledge in the profession. The two most notable full-length biographies in this literature are Roy Harrod's The Life of John Maynard Keynes (1951) and D.E. Moggridge's Maynard Keynes: An Economist's Biography (1992).[2] Given this context, how is it possible for Skidelsky's biography to succeed so well in making a significant contribution?
Part of the answer lies in the differences between the general approach of Skidelsky and that of the Harrod and Moggridge biographies. Harrod portrays Keynes as a person waging a multidimensional struggle against established views in economics and politics in order to make the world a better place. Harrod's biography not only presents this straggle but argues the accuracy and justice of this fight and aims to defend an honorable place in history for Keynes. Moggridge's biography benefits from forty additional years of explorations into Keynes' life and work. As such, Moggridge is able to present certain things that were ignored or omitted by Harrod. Moggridge's vision is of getting to the "math" about Keynes. There is no higher calling of interpretation and justification in that Keynes' place in history has already been assured. This perspective, however, allows Moggridge to avoid, as he does, committing himself to any of the variety of interpretations of Keynes' work that exist in any significant fashion.[3]
Skidelsky's biography continues the vivid picture of Keynes' multidimensional persona that was begun in his first volume. In this it goes beyond Harrod's (1951) "official"[4] and "Victorian"[5] biography by being more complete, open, and personal. It also benefits from the interval of time that has elapsed in being able to deal, like Moggridge's biography, with new information and ideas. Yet, Skidelsky's biography is superior to Moggridge's because Skidelsky takes a similar vision as Harrod, but without the limitations. Skidelsky (see 1994, pp. 219-241) describes Keynes as the visionary of the Middle Way. Hence, part of Skidelsky's goal is to argue this idea out. This leads him to make many judgments on Keynes' work and ideas and on how this relates to other interpretations. Skidelsky takes a stand where Moggridge sees no need to. Consequently, Skidelsky succeeds in challenging a number of myths that the economics profession in general has about Keynes. That, in the end, is what makes Skidelsky's second volume an invaluable contribution to the life of Keynes and the economics of Keynes.
Skidelsky's vision of Keynes
Too many biographies describe the historical sequence of the events involving a particular person without capturing the internal motivation of the person. In contrast, Skidelsky is able to get "inside Keynes' head" and, as he did in his first volume, capture the rich depth of the man. Keynes comes across as more complex than the hero that Harrod paints and more driven and passionate than the university don that Moggridge describes. Keynes was a person more complex than most, with a wide range of interests and activities, as well as interesting contradictions and idiosyncrasies. Skidelsky not only gives us a complete picture, warts and all, but also one that points out frailties, contradictions, and passions, and examines the motivations and logic behind this complex person. In the end, the reader "understands" Keynes.
For Skidelsky (see 1994, pp. xviii-xxv) the overriding vision that ties Keynes' life together is of a person who challenged Victorian society in terms of its morals, religion, politics, and economics, and strove, in a rational and pro active manner, for a civilized society where the good life could be enjoyed by all. This shows up in Keynes' personal life through his intimate affairs and his wide and eclectic range of friends. Having significant business interests, becoming wealthy and enjoying the good life, including a significant focus on the arts, fits into this overall vision. A persistent involvement in politics and policy formulation reflects the practical side of fighting for a better civilization. The overall rejection of Victorian economic society and its ancillary morals and thinking explains Keynes' persistent movement over his lifetime away from classical economics and its emphasis on sacrifice, saving, and natural outcomes. Hence, it is fully consistent to see that while Keynes was "intellectually . . . drawn to the left, socially he was increasingly tethered to the right" (Skidelsky, 1994, p. 144).
Personal life
During the time period covered by Skidelsky's second volume, Lydia Lopokova is the focus of Keynes' personal life. Though the early post-World War I period saw a continuation of Keynes' close links to Bloomsbury and his homosexual affairs,[6] the war had already initiated changes in Keynes' links to Bloomsbury and his intimate relationships. The transition which culminated in his marriage to Lopokova would provide both the stability and changed circle of friends that allowed for his great theoretical achievements.
In the context of this transition Skidelsky (1994, pp. 36-38, 51-55) relates the tragically Inn episode of Naomi Bentwich, Keynes' half-time secretary for seven months starting in October 1920. She became infatuated with Maynard, seeing all he did as a sign of his mutual love for her. When she finally on April 29, 1921 revealed her feelings to him, Keynes' reaction was one of extreme surprise. The situation resolved itself by Keynes removing her from his employ. For someone like Keynes who thought of himself as very unattractive (see Skidelsky, 1983, p. 67), this may have helped open the possibility of the later relationship with Lydia.[7]
An interesting relationship that Skidelsky (1994, pp. 275-278) brings out and that neither Harrod nor Moggridge mention is Keynes' friendship and thirty-four-year correspondence with the "eccentric French financial journalist" Marcel Labordere.[8] Skidelsky sees this correspondence as important in that Keynes and Labordere discuss liquidity, speculation, "love of money," psychology of investment, and "animal spirits," and that it seems to have influenced Keynes in emphasizing these ideas in his work (Skidelsky, 1994, pp. 276-277, 312-313). Labordere also influenced directly and indirectly (through Keynes) Dennis Robertson (Skidelsky, 1994, p. 275), who in turn was a major influence on Keynes.
Biographers are fond of quoting Mary Marshall's statement that Maynard's marriage to Lydia "was the best thing Maynard ever did" (see Harrod, 1951, p. 365; Moggridge, 1992, p. 400; Skidelsky, 1994, p. 217). While Harrod hints at the reasons for this, and Moggridge makes a deeper attempt to explain, Skidelsky is able to present a complete understanding of the appropriateness of this statement. With his relationship with Lydia, Keynes completed the transition of his sexuality and developed a tranquil home life, making him more "worldly" and more "human" (Skidelsky, 1994, p. 210), and giving him direct access to the Soviet Union.[9] The relationship with Lydia moved Maynard away from the Bloomsbury group--not because of the change in sexual preferences it reflects--many other Bloomsberries had made similar changes earlier than Keynes (see Skidelsky, 1983, pp. 328-333)--but because she was considered an outsider both as a foreigner and as one supposedly not up to the intellectual levels of Bloomsbury (see Skidelsky, 1994, pp. 141-143,210-211). The marriage shows Keynes as his own man independent of Bloomsbury, independent of the Cambridge community, the City, or the British elite in general.
The marriage to Lydia allowed Keynes an artistic focus not dictated by Bloomsbury. He continued his collecting of paintings and of books (see Skidelsky, 1994, pp. 427, 527-528), but he actively supported Lydia's work in the ballet (pp. 212-213) and the theater (pp. 502-503). This support took the form of putting up money for shows she was involved in and participating in some type of organizational capacity (pp. 92, 295), as he had done in financially supporting the artistic endeavors of Duncan Grant, Vanessa Bell, and others (p. 527). This type of artistic involvement culminates in the construction of the Arts Theater in Cambridge, partially financed by Keynes (p. 529). The Arts Theater opened February 3, 1936, the day before The General Theory of Employment, Interest, and Money was published (p. 536).
Business interests and wealth
As Skidelsky (1983, pp. 179, 349) already pointed out in his first volume, Keynes early on in his life developed a taste for the arts. Keynes' business activities provided the means of attaining these and other aspects of the good life for himself and his friends (see Skidelsky, 1983, p. 250). His investment activities were also carried out for friends and for King's College, Cambridge (Skidelsky, 1994, pp. 524-525). Keynes was an extremely successful investor, though he experienced three major setbacks (Skidelsky, 1994, pp. 342,524). His net worth was over pound 500,000 in 1936, or more than pound 13 million at current values (p. 524). Keynes achieved similar success (and failures) for his friends and for King's. Skidelsky succeeds in bringing out the relationship between Keynes' pursuit of wealth and his pursuit for good life in a clear manner and in captivating detail.
Keynes' links to the business community were not limited to those he made through his "speculations." He served on the board of directors of a number of companies (see Skidelsky, 1994, pp. 25-27), advised firms and groups of firms, and had extensive contacts through the Royal Commissions he served on (pp. 258,345). The most interesting story that Skidelsky relates (pp. 260-263) is Keynes' recommendations and interaction with the British textile industry toward restructuring this declining industry. In 1926-27 Keynes recommended concentrating production in the more efficient units, eliminating older mills, fixing minimum prices, and assigning quotas. By 1929, the persistent undercutting of the cartel that had been formed destroyed any hope for an effective supply-side solution to the textile industry's problems.[10]
Skidelsky interestingly points out that Keynes had a rather low opinion of businessmen. This was characterized by his belief "in the three-generation cycle: the man of energy and imagination creates the business; the son coasts along; the grandson goes bankrupt" (p. 259). Keynes' view is that of a practical man and of a person who dealt with the elite of the business world in political, economic, and business contexts. Hence, his first-hand experience allowed him to reject the ivory tower glorification of businessmen and the entrepreneur, without rejecting the importance of their role--a view that those economists with business experience must surely share. This view would eventually find its way into Keynes' economic theory.
Politics and policy
Just as Keynes pursued the personal means of attaining the good life, he also pursued the process of building "civilization." Keynes' idea of civilization was one where the good life could be pursued by all. The path to attain this was the Middle Way between the extremes of laissez-hire capitalism and centralized communism. He rejected the "'anticommunist rubbish' of the right and the 'anti-capitalist' rubbish of the left" (Skidelsky, 1994, p. 263). The Middle Way gave priority to macroeconomic stabilization ahead of questions of equity and social justice, as well as doctrinaire adherence to laissez-faire policies; it raised the importance of the short-term goals, as opposed to the sacrificial thinking of classical economics; and it brought to the fore the role of the expert and the managerial state (Skidelsky, 1994, pp. 223-224). The world needed a new and practical approach to economics and society that neither of the extremes could present.
One major avenue through which Keynes' influence on politics and policy was exerted was his extensive journalistic writings (see Skidelsky, 1994, pp. 106-111). Keynes' journalistic writing ranged from letters to the editor, through a broad number of commissioned pieces, to reporting on major international conferences. The most impressive project was the series of supplements to the Manchester Guardian entitled Reconstruction in Europe that Keynes organized and edited, and appeared mostly in 1922 but ran through January 1923 (pp. 102106). These "ran to 810 large three-columned pages" (Harrod, 1951, p. 315) and had a large number of important international contributors (Skidelsky, 1994, pp. 102-104; Harrod, 1951, p. 315; Moggridge, 1992, pp. 375-376). Keynes became chairman of the board of director of the Nation, a Liberal weekly journal, until financial conditions caused it to merge with the New Statesman in 1931 (Skidelsky, 1994, pp. 134-139). This provided a regular platform for Keynes and involved him in defining post-World War I Liberalism.
While Keynes had major government positions during the two world wars, he had no official position during the years covered by Skidelsky's second volume. Nonetheless, Skidelsky (1994, pp. 18-24) makes it clear that Keynes was regularly sought for both official and unofficial advice. Appointments to Royal Commissions like the Macmillan Committee on Finance and Industry in 1929 were one major device for airing views on policy (Skidelsky, 1994, pp. 343-362). The committee was an effective mechanism for the exchange of ideas, for the presenting of arguments from the Treatise, and for raising weaknesses therein with respect to the power of monetary policy and the role of confidence that were later addressed in The General Theory (Skidelsky, 1994, p. 362). A more direct mechanism for creating policy was Keynes' membership on the Economic Advisory Council (pp. 363-378). He was also asked to use his contacts to help negotiate modifications to the reparations agreements of the Treaty of Versailles (pp. 116-129).
Skidelsky's second volume includes a small section titled "The Jews" that stands curiously alone (pp. 238-239). In it Skidelsky relates some of Keynes' anti-Semitic utterances, pointing out that such views were common in the Bloomsbury crowd, in his general circle of elite, and among his contemporary economists, and that Keynes' views were much more tempered than the norm. These opinions did not seem to carry over to personal relationships. While this "wart" is unremarkable in itself, it becomes important when one recognizes the controversy surrounding the German edition of The General Theory in which Keynes' preface contained some phrases that have been interpreted as implying support for German economic policies (Skidelsky, 1994, pp. 581-582). While Keynes recognized that Hitler's Germany carried out economic policies similar to those he advocated, Keynes was strongly opposed to the "barbarous" form these policies took (Skidelsky, 1994, pp. 485-486). Keynes (pp. 626-627) also argued in favor of rearmament in order to counter the Nazi threat, and did so against the pacifist elements among liberals and the left.
The Middle Way is not only a rejection of Conservative establishment and laissez-faire policies, but a rejection of the solutions of the communist left. Keynes was aiming to save the system, as opposed to replacing it. In this context, Skidelsky (pp. 514-523) deals with Keynes' reactions to Marx and Marxists more thoroughly than either Harrod (1951, p. 462) or Moggridge (1992, pp. 469-472). Cambridge in the 1930s had a large Marxist population among its students, including those who were Apostles. Skidelsky (1994, p. 517) sees Keynes' roots in G.E. Moore's philosophy as a buffer to Marxist philosophy. Keynes could also not see his way through Marxist economics, which had too many Ricardian elements.
Keynes is generally seen as associated with the Liberal Party and as a "leftish Liberal" (Skidelsky, 1994, p. 255). He acted as advisor to and campaigner for the Liberal party and participated in their summer schools. Skidelsky (pp. 232-234) also describes how Keynes not only pursued his Middle Way through his work with the Liberal Party, but also through his influence on and interaction with members of the Labour Party whom he eventually saw as more likely to implement his policies. Keynes voted Labour for the only time in his life in September 1935 (p. 536), as The General Theory was nearing completion.
The development of theory
The path of Keynes' constructive rebellion is initially marked by The Economic Consequences of the Peace published in 1919 and, after many years of revision from its form as Keynes' dissertation (Skidelsky, 1994, p. 56), A Treatise on Probability published in 1921. Skidelsky (1983, pp. 376-402) finished hi s first volume with a thorough discussion of the first of these books. Economic Consequences presented a definitive "inside-outsider's" (Skidelsky, 1994, p. xxxv) attack on the policies of a number of governments, established Keynes' international reputation, and "marked the start of Keynes's career as a radical economist" (Skidelsky, 1983, p. 401).
Probability is the first major work discussed in Skidelsky's second volume (pp. 56-89). Its origins in the philosophy of G.E. Moore and Bertrand Russell are discussed, as Probability is seen to argue about the nature of truth and the logic of beliefs and, hence, actions. Probabilistic knowledge is about logical knowledge, not about what actually happens. For Skidelsky (1994, p. 87) the link between Probability and The General Theory is obvious in that the "unknown probabilities" of the former become "irreducible uncertainty" in the latter and that the "weight of argument" translates into the "state of confidence." The issues of contention in the important current literature that Skidelsky surveys revolve around finer points about the exact use and the constancy of implications of the concepts.[11]
For Skidelsky (1994, pp. 153-154), Keynes' economics of the Middle Way and the development that culminates in the revolutionary analysis of The General Theory start with A Tract on Monetary Reform published in 1923.[12] By analyzing the role of the banking system in generating the supply of credit to firms in the economy, the argument was made that the control thereof could affect the aggregate levels of prices and of output so as to dampen fluctuations therein. For Skidelsky, this "is the start of macroeconomics" (1994, p. 153). A Tract also contains an attack on the general passiveness of classical economics as exemplified by the often quoted concept that the "long run is a misleading guide to current affairs. 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" (CWJMK, IV, p. 65). It should be realized that at this time Keynes had not yet moved to his shifting equilibrium analysis of The General Theory (CWJMK, VII, p. 293) which rejects the theoretical usefulness of the long run.
A Treatise on Money, published in 1930, comes across as an important process of learning for Keynes. He took more than six years to write it (Skidelsky, 1994, pp. 281-285) and felt dissatisfied with the product (p. 314). The Treatise moved beyond the Tract's arguments of monetary conditions causing short-term macroeconomic problems to include the possible divergence of saving and investment independent of the monetary conditions (p. 315). Problems can arise from shifting saving from industrial into financial circulation, that is, from investment to speculation. Skidelsky (pp. 315-316) argues that the Treatise also includes a story of a cumulative downward spiral told via Keynes' banana parable. The Treatise contains, of course, the monetary detail left out of The General Theory.
Almost as soon as he completed the Treatise, Keynes moved forward to deal systematically with the aggregate output and employment problems that were so inadequately addressed in the book (Skidelsky, 1994, pp. 441-444). A major logical step comes in 1932 when Keynes put his analysis within the context of a monetary production economy where money has a persistent nonneutral influence, as opposed to the real-ex-change economy of classical economics where money is neutral (Skidelsky, 1994, pp. 459-466). Keynes' thinking also moves ahead by considering unemployment problems as one of equilibrium, as opposed to disequilibrium. This required the creation of an equilibrium theory of output and employment with persistent unemployment as a possibility.
The Cambridge "Circus" tends to be given a prominent role in the development of The General Theory in that this group involved Richard Kahn, James Meade, Austin and Joan Robinson, and Piero Sraffa, who all became prominent expositors and developers of Keynes' theory (see Moggridge, 1992, pp. 531-533).[13] Skidelsky (1994, pp. 447-452), on the other hand, argues that the Circus played a relatively minor role in the creation of The General Theory. There is the discussion by the Circus of the fallacy of the widow's cruse from A Treatise on Money and Kahn's formulation of the multiplier. Skidelsky argues that the discussion by the Circus had a smaller and later impact on Keynes than is commonly believed. He also argues (pp. 451-452) that the multiplier and the consumption function content thereof come to both Keynes and Kahn from the Danish statistician Jens Warming, via a paper published in the Economic Journal of June 1932. Sraffa's attack on Hayek and development of the commodity (own) rates of interest concept is, however, given a more prominent role (Skidelsky, 1994, p. 458). Keynes' discussions with Hayek, Robertson, and Hawtrey are given more importance than the Circus in developing Keynes' ideas (Skidelsky, 1994, pp. 444-446, 452-459). Part of Skidelsky's view undoubtedly comes from the opinion that the origins of The General Theory date back to 1922-23 and Keynes' general goal of formulating the economics of the Middle Way.
The culminating sections of Skidelsky's book deal with the publication of The General Theory and the subsequent discussions on its meaning. In contrast to other biographers--especially Moggridge--Skidelsky has the courage to take a position on the contents of The General Theory, the subsequent discussions, and the ways in which the economics profession has interpreted it. The fundamental starting point for Keynes is the recognition of the existence of uncertainty, as for Marx it was the class straggle (Skidelsky, 1994, p. 539). Actions within this context would generally result in "demand-deficient unemployment" that needed action by the government and/or the central bank to alleviate. In this the theory of investment and of money play crucial roles in determining the underperformance of the economy. Hence, Skidelsky cites as key the chapters on expectations, investment, and money (see 1994, pp. 540-543). Chapter 17 is given a key role "as Keynes's central dramatic statement of the conflict between the Investor and the Hoarder" (Skidelsky, 1994, p. 566) that leads liquidity preference to generate a general lack of investment.
Skidelsky traces the discussions in the first years after The General Theory was published, as well as the (mis)interpretations that have persisted (1994, pp. 572-624). He points out that Hicks 's IS-LM interpretation is not of the same spirit as Keynes, nor does it capture certain essential components (Skidelsky, 1994, pp. 614-616). He also points out how the role of uncertainty quickly became neglected in the attempts to develop and interpret Keynes' work. Hugh Townshend and the Post Keynesian interpretation are held out as exceptions. On the orthodox interpretation that came to dominate, Skidelsky pessimistically concludes that "perhaps Joan Robinson was fight to call it 'bastard Keynesianism.' But only in that form could the Keynesian Revolution survive and grow" (1994, p. 621).
Skidelsky paints a fascinating portrait of a complex visionary--a visionary who wanted the good life for all and argued that the Middle Way between laissez-faire capitalism and centralized communism was the most effective economic, social, and political path to attaining that goal. Keynes' theoretical work during the period covered in this book, 192037, is presented as a continual refinement of this argument. The revolutionary nature of The General Theory finally allowed for a thorough argument of the economics of the Middle Way by rejecting the main tenets of classical economics. Yet, Keynes' work remains revolutionary because most standard interpretations have relinked it to certain classical elements. As Skidelsky points out in his acknowledgments (1994, p. xi), the interpretation he sides with is Post Keynesian. As illustrated above, the Keynes vision that Post Keynesians have been putting forth for a long time in opposition to the majority view is, in Skidelsky's superb biography, validated and supported. With this masterpiece, one can only hope that Skidelsky will help the majority of the economics profession rediscover the missing visionary of the Middle Way.
1 References are to the American editions of this book and the first volume. The British editions were published earlier.
2 A brief review of Moggridge's biography is contained in Deprez (1993).
3 Felix (1992) is an excellent review of Moggridge (1992) that makes this argument.
4 Harrod's biography was commissioned by Geoffrey Keynes--Maynard's younger brother (Hasrod, 1951, p. vii; Skidelsky, 1983, p. xx). Part of the difficulties Harrod faced included dealing with the desires of the family and trying to obtain pertinent documents from them (see Skidelsky, 1983, pp. xxv-xxvi).
5 Harrod's biography is "Victorian" in that it tries to paint Keynes as conforming to the conventional expectations of what public figures should be and in that facts play a secondary role to the work's inspirational goals (Skidelsky, 1983, pp. xxi-xxviii).
6 The relationship with Sebastian Sprott was the most important of these during that time period (Skidelsky, 1994, p. 35).
7 The development of Keynes' heterosexual interests predates this episode. This includes Keynes' flirtation with Barbara Hiles, later Banegal, who, according to Skidelsky (1994, p. 36), "In Charleston mythology . . . is the wife Keynes should have had."
8 Skidelsky (1983, p. 207) briefly mentions Labordere in his first volume.
9 Keynes visited the USSR on a number of occasions (Skidelsky, 1994, pp. 208-209, 235- 236, 626) and published three articles in the Nation on "Soviet Russia" in October 1925.
10 Harrod (1951, pp. 379-386) and Moggridge (1992, pp. 449-452) discuss the same issue.
11 Moggridge (1992, pp. 143-165) also recognizes the importance of Probability, its link to the philosophy of G.E. Moore, and its influence on Keynes' later economics. The link to the central emphasis on uncertainty in Keynes' General Theory is not as clearly brought out.
12 Skidelsky (1994, p. xxvi) argues that Keynes "fired the first shot in what was to become the Keynesian Revolution in December 1922" when he argued against wage reduction and in favor of increases in prices as the way to increase employment.
13 The notion of the Circus already exists in Harrod's biography (1951, pp. 433434).
Deprez, Johan. "Review of D.E. Moggridge, Maynard Keynes: An Economist's Biography." Journal of Economic Issues, September 1993, 27, 991-993.
Felix, David. "Review of D.E. Moggridge, Maynard Keynes: An Economist's Biography." Challenge, November-December 1992, 62-63.
Harrod, Roy. The Life of John Maynard Keynes. New York: W.W. Norton, 1951.
Keynes, John Maynard. The Collected Writings of John Maynard Keynes, ed. by Donald Moggridge. London: Macmillan and Cambridge: Cambridge University Press, 1971-1989. Volumes are referred to as CWJMK, followed by the volume number in roman numerals.
Moggridge, D.E. Maynard Keynes: An Economist's Biography. London: Routledge, 1992.
Skidelsky, Robert. John Maynard Keynes, vol. 1, Hopes Betrayed 1883-1920. New York: Elisabeth Sifton Books, Viking, 1986.
(unberbar). John Maynard Keynes, vol. 2, The Economist as Savior 1920-1937. New York: Alien Lane, Penguin Press, 1994.

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