Chapter 27 : THE KEYNESIAN REVOLUTION

Introduction

• John Maynard Keynes (1883-1946) was one of the greatest and most controversial economists of the twentieth century.
• His book, "The General Theory of Employment, Interest and Money", marks a turning point in the history of economic thought, bringing fundamental changes to economic theory and policy.
• The term "Keynesian Revolution" or "New Economics" is applied to describe his ideas. (A small minority of critics argue there is nothing new in it).
• “New political economy concerns itself with the problems of the economy as a whole, rather than with those of the individual consumer.”

Key Terms

📌 Exam Tidbits

• John Maynard Keynes (1883-1946): Authored "The General Theory of Employment, Interest and Money".
• Quote: "New political economy concerns itself with the problems of the economy as a whole, rather than with those of the individual consumer."

Life and Works

• Born in 1883 into a family of intellectual eminence.
• Father: John Neville Keynes (a noted economist).
• Mother: Mayor of Cambridge as lately as 1932.
• Studied economics at Cambridge under Marshall and Pigou.
• Entered civil service in 1906. Ironically, he got his worst marks in Economics.
• Keynes's comment: "The examiners presumably knew less then I did"
• Worked in the India Office, then returned to Cambridge University to teach economics (lectured on money).
• Served as a member of the Royal Commission of Indian Currency and Finance (1913-1914).
• Served in the Treasury from 1915-1919.
• Acted as the principal representative of the Treasury at the Paris peace conference after World War I.
• Resigned his official position in 1919 because he opposed the way the peace settlement was forced upon Germany → wrote "The Economic Consequences of Peace."
• Returned to teaching and became bursar at King's College.
• Rejoined the Treasury in 1940 to guide his country in war finance.
• Post-war, played an important role in organizing the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD).
• Became Lord…