Jonn Maynard Keynes, born on June 5, 1883, was a British economist whose ideas were so influential that they have affected modern day macroeconomics as well as the economic policies of certain governments. Due to his developments in the field of macroeconomics, Keynes has been commonly called one of the founders of modern macroeconomics. Ultimately, his ideas were also the basis to Keynesian economics- which later became the foundation for the New Deal and other such movements.

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Who was Keynes
John Maynard Keynes was a British Economist who was born on June 5, 1833 in Cambridge, England. He was born into a rather “academic” family- his father taught political economics at the University of Cambridge and his mother was an extremely successful author who also was a great pioneer in social reform. At the age of 7, Keynes began his academic career at Perse School Kindergarten- however, Keynes continued to learn more through lessons given at home rather than at his kindergarten. As time progressed, Keynes exceptional academic talents soon were noticed and by his high school graduation he was named valedictorian. He also received an award in mathematics.
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Following this, Keynes passed the Eton Entrance Exam and was one of the twenty people who were accepted into the school that year. He also scored the highest out of anyone on the math section. These exceptional math skills were not his only skills- Keynes also was extremely successful in other aspects of his education including English and History. In 1902, Keynes won a scholarship to Kings College where he began an intense study of economics. In August 1906 he took the Civil Service examinations and was placed second of the ten who were accepted that year. However, when Keynes received his scores he was utterly mortified because his lowest scores were in the mathematics and economics sections of the test. Keynes commented on his results by saying that he knew more about economics than his examiners. Chances are, he was probably right. Because Keynes placed second on his examination, he got second choice as to which department he would work in. He chose the India Office- which was not to his liking. During his time there, he worked very hard- whether it was while he was on the job or off of it. During his spare time, Keynes studied the theory of probability extensively. He ended up writing a dissertation on it, which was assessed by two people. Sadly for Keynes, this dissertation did not win a fellowship. Keynes, as a result, worked very hard to improve it and resubmitted it later on. This time around, it was praised by Whitehead (one of the assessors) who stated:

his axioms are good; they are simple and few and by the aid of the symbolism he deduces the whole subject from them by rigid reasoning. The very certainty and ease by which he is enabled to solve difficult questions and to detect ambiguities and errors in the work of his predecessors exemplifies and at the same time almost conceals the advance which he has made.”

Later on, Keynes published a book which was also praised by many people. For example, Russell stated:

The mathematical calculus is astonishingly powerful, considering the very restricted premises which form its foundation... The book as a whole is one which it is impossible to praise too highly and it is hoped that it will stimulate further work on a most important subject which philosophers and logicians have unduly neglected.

After having published his book, Keynes began to teach at Cambridge and wrote many essays on the topic of statistics. Keynes also wrote on economics related to India and published “Indian Currency and Finance” in 1913. This book was widely praised and from here, Keynes soon became appointed secretary of commission to examine Indian finance and currency.

In August 1914 however, Keynes life changed in a dramatic way. The start of WWI brought a lot of change for him- Keynes became an even more prominent economic figure and continued to write several excellent books regarding economics and even began working at the treasury in 1915. However, his position in the treasury meant he could no longer publish. Keynes continued to work there and served as an influential economic figure. Ultimately, from here, Keynes power as an economic figure began to deteriorate- but his legacy was just beginning. In 1921, Keynes finally published his “treatise on probability.” Soon after, in 1930, Keynes published a “Treatise on Money”- which essentially included the basis to his economic views which would essentially become what is now known as Keynesian economics. By 1937, Keynes health began to deteriorate to the point where he would no longer be able to write any major novels again. Finally, Keynes died on April 21, 1946 in East Sussex, England.

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Keynesian Economics
Keynes obviously lived a very influential life- not only did he become a prominent economic figure, but he also wrote several novels that would form the basis of what is now known as Keynesian Economics. Essentially, Keynesian economics is the view that in the short run, especially during recessions, economic output is strongly influenced by aggregate demand (total spending in the economy). To put this in laymen’s terms I will give an example. Let’s say that America has fallen into a recession. Now that we are in this dreadful recession, many people are being very conservative with their money- that is, they are spending as little as possible. Because of this, companies are having fewer customers. With fewer customers (and less income as a result), companies are unable to hire new employees. Without hiring new employees, people can’t have jobs to make money. Without making money they can’t spend money and the recession continues because there is no way out. Keynesian economics does not fall into the same trap- a government that uses Keynesian economics intervenes and puts money into the economy- thus allowing for stimulation. This stimulation allows for companies to hire people (thus creating jobs). By creating these jobs people have money and the money begins to circulate again. Essentially, Keynesian economics encourages government to spend money (even if it is already in debt), because otherwise the country will just slowly fail due to its long term recessive state. As you can see from the picture below- Keynes clearly detested inflation (as a result of a recessive economy) because it is essentially stealing wealth from its citizens (by devaluing what they already have).

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Legacy of Keynesian Economics
Ultimately, Keynesian economics has played a critical role in American economics- specifically in recessions and depressions. For example, as you are well aware, the stock market crashed on black Tuesday- October 29, 1929. Franklin Delano Roosevelt, who was in office from March 4, 1933 – April 12, 1945 did his best to take care of this problem using the New Deal. The New Deal implemented several ideas from Keynesian Economics. As I stated above, Keynesian economics is all about putting money into the economy to stimulate it and to create jobs. The New Deal did just that. It created several administrations including the WPA, the PWA and the CCC. Each of these corporations helped to create jobs through the government’s intervention. By doing this, Roosevelt helped to stimulate the economy, create jobs, and ultimately get America ready to escape from the Great Depression by the time of WWII.

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Keynesian economics doesn’t just stop at the New Deal however. It is still playing a role in our economy today. Many modern economists are relating Keynesian economics to Barack Obama and his policies. President Obama has spent the most out of any president and in some cases his expenditures are paying off. Our country is slowly but surely moving out of the recession and America is getting back on its feet. In fact, during his 4 years as president, Obama has created 4 million jobs, which shows how effective Keynesian economics has truly been for America. Ultimately, it is easy to see that Keynesian economics has proven to be beneficial to this country and, chances are, it will continue to do so because of the strong faith Americans have put behind it.

As you can see, Keynesian economics have been very beneficial for America. Time after time, America has put money into a recessive or depressed economy and somehow America just gets back on its feet and begins to thrive again. This can only be attributed to Keynesian economics.