Today’s inspiring hero is John Maynard Keynes, whose economic theories are dominating the solutions for the current recession. He was born in the same year that Karl Marx died, a fitting connection for the man who would kill Marxist theories of Capitalism Doomed and replace it with a theme of Capitalism Viable. Marx was also a bitter man, heavy and constantly disappointed; Keynes was a man alight, happily sailing through life, buoyant and consummately successful.
He showed economic genius from a young age, wheeling and dealing in preparatory school so that he had a “slave” who carried his books and formed a “commercial treaty” with a boy he disliked that he would get books for him from the library in exchange for the boy agreeing to never approach within fifteen yards of him. He bloomed in high school and was a phenom at university, winning awards by the armful and showing excellence in mathematics, classics, and history. Excellence as in he wrote textbooks in those subjects. He rubbed elbows with Max Planck, who told him that he decided to do theoretical physics because economics was too hard, and Bertrand Russell, who told him that he decided to write literature because economics was too easy.
He tried industry, saying “I want to manage a railway or organize a Trust or at least swindle the investing public. It is so easy and fascinating to master the principles of these things.” He tried civil service examinations and scored second of all examinees – his weakness had been in economics, to which he proclaimed that he knew more about the subject than the test writers. But he hated running an office, except for the fact that it allowed him to write treatises on probability and finance in India. He decided to go to Cambridge, where he was immediately selected to join a Royal commission to deal with an Indian currency crisis. Even then, he still had a myriad of interests – he ran the local theater troupe and joined an intellectual circle of friends that included names like Virginia Woolf and EM Forster.
During World War I, he operated on British overseas finances, where he broke the Spanish economy with currency manipulation and managed to buy an impressive collection of French art at happily depressed prices. He represented the British Treasury at the peace negotiations at Versailles, but resigned in despair at what he considered outrageous and impossible terms in the Treaty of Versailles. He became a household name with his work The Economic Consequences of the Peace, which was brilliant and crushing. Some excerpts:
-of French prime minister Georges Clemenceau: “He had only one illusion – France; and one disillusion – mankind, including his own colleagues”
-of American president Woodrow Wilson: “like Odysseus, he looked wiser when seated”
-of the negotiations: “The Council of Four paid no attention to these issues, being preoccupied with others – Clemenceau to crush the economic life of his enemy, Lloyd George to do a deal and bring home something that would pass muster for a week, the President to do nothing that was not just and right. It is an extraordinary fact that the fundamental problems of a Europe starving and disintegrating before their eyes, was the one question in which it was impossible to arouse the interest of the Four. Reparation was their main excursion into the economic field, and they settled it as a problem of theology, of politics, of electoral chicane, from every point of view except that of the economic future of the States whose destiny they were handling”
In the 1920s, he ventured into stocks and turned 30,000 pounds sterling into 380,000. His oracle was nothing more than a minute scrutiny of balance sheets, an encyclopedic knowledge of finance, an intuition into personalities, and a certain flair for trading. He would read financial papers in the morning when he woke up, phone in his orders, then move on to start his day with more important matters, like economic theory. He became bursar for his alma mater, managed an investment trust, and guided the finances of a life insurance company. Meanwhile, he was a frequent columnist at a newspaper, lectured at Cambridge, bought pictures, and read books voraciously.
He wrote his magnus opum (the General Theory of Employment, Interest, and Money) during the Great Depression and is widely regarded as one of the greatest economists in history. Quite a career.
