The Essential Keynes by John Maynard Keynes

by John Maynard Keynes

Edited with an introduction by ROBERT SKIDELSKY


'Many of the greatest economic evils of our time are the fruits of risk, uncertainty, and ignorance'

John Maynard Keynes was the most influential economist, and one of the most influential thinkers, of the twentieth century. He overturned the orthodoxy that markets were optimally self-regulating, and instead argued for state intervention to ensure full employment and economic stability. This new selection is the first comprehensive single-volume edition of Keynes's writings on economics, philosophy, social theory and policy, including several pieces never before published. Full of irony and wit, they offer a dazzling introduction to a figure whose ideas still have urgent relevance today.

John Maynard Keynes (1883-1946) is widely considered to have been the most influential economist of the 20th century. His key books include The Economic Consequences of the Peace (1919); A Treatise on Probability (1921); A Tract on Monetary Reform (1923); A Treatise on Money (1930); and his magnum opus, the General Theory of Employment, Interest, and Money (1936).

Robert Skidelsky is Emeritus Professor of Political Economy at Warwick. His three-volume biography of Keynes received numerous awards, including the Lionel Gelber Prize and the Council on Foreign Relations Prize.

Genres: Economics, Philosophy, Politics, Nonfiction, History, Classics, Collections

Unknown Binding

First published January 5, 2016

About the author

John Maynard Keynes, 1st Baron Keynes (CB, FBA), was an English economist particularly known for his influence in the theory and practice of modern macroeconomics.

Keynes married Russian ballerina Lydia Lopokova in 1925.

NB: Not to be confused with his father who also was an economist. See John Neville Keynes.

Reviews

[E. G. · Rating 4 out of 5]

Preface
List of Abbreviations
Introduction
Bibliography
Keynes's World, Main Characters

The Philosopher

--'Ethics in Relation to Conduct' (1904)
--'The Political Doctrines of Edmund Burke' (1904)
--The Adding-Up Problem (1904)
--'The Principles of Probability' (1908)
--A Treatise on Probability (1921)
--'My Early Beliefs' (1938)

The Social Philosopher

--The Economic Consequences of the Peace (1919)
--A Tract on Monetary Reform (1923)
--'The End of Laissez-faire' (1926)
--'Am I a Liberal?' (1925)
--'A Short View of Russia' (1925)
--'Economic Possibilities for Our Grandchildren' (1930)
--'National Self-Sufficiency' (1933)
--'The Arts Council of Great Britain: Its Policy and Hopes' (1945)

The Economist

--The Economic Consequences of the Peace (1919)
--A Tract on Monetary Reform (1923)
--A Treatise on Money (1930)

--The Great Depression
--A Treatise on Money (1930)
--'"The Great Slump" of 1930' (1930)
--'An Economic Analysis of Unemployment' (1931)
--'The Consequences to the Banks of the Collapse of Money Values' (1932)

--'A Monetary Theory of Production' (1933)
--The General Theory of Employment, Interest and Money (1936)
--'The General Theory of Employment' (1937)
--'Alternative Theories of the Rate of Interest' (1937)
--Methodological Issues: Tinbergen, Harrod (1938)

The Policy-maker

--The Economic Consequences of the Peace (1919)
--'A Plan for a Russian Settlement' (1922)
--A Tract on Monetary Reform (1923)
--'The Economic Consequences of Mr Churchill' (1925)
--'Can Lloyd George Do It?' (1929)

--Policies for the Slump
--'Proposals for a Revenue Tariff' (1931)
--'The Economy Report' (1931)
--'On the Eve of Gold Suspension' (1931)
--'The Economy Bill' (1931)
--'The End of the Gold Standard' (1931)

--'The Means to Prosperity' (1933)

--The New Deal
--'Dear Mr President' (1933)
--'Agenda for the President' (1934)
--'Can America Spend Its Way into Recovery?' (1934)
--'Letter to the President' (1938)

--'British Foreign Policy' (1937)
--'How to Avoid a Slump' (1937)
--'Paying for the War' (1939)

--Full Employment Policy
--Keynes to Sir Richard Hopkins (1942)
--Keynes to J. E. Meade (1943)
--The Long-Term Problem of Full Employment (1943)
--Letter to T. S. Eliot (1945)

--'The Clearing Union' (1941)
--'Overseas Financial Policy in Stage III' (1945)
--'The Balance of Payments of the United States' (1946)

The Essayist

--'The Council of Four, Paris' (1919), 'Lloyd George: A Fragment' (1933)
--'Dr Melchior: A Defeated Enemy' (1920)
--'Alfred Marshall' (1924)
--'Thomas Robert Malthus' (1933)
--'Newton the Man' (1946)

Quotable Quotes
Notes

[Leah · Rating 5 out of 5]

The book is divided up by Keynes' different roles; philosopher, economist, social theorist etc. I enjoyed the early sections, but they were difficult for this lay reader to follow. I found it worthwhile to read this book if only for the section of his essays for a popular audience at the end. They were extrodinary.

[Paul O'Leary · Rating 4 out of 5]

So, you've read the General Theory of Employment, Interest & Money, yet you still want more? Hard to imagine(kidding), but if so, you're in luck. Penguin has released this anthology of Keynes' works making available a wide selection for a moderate price. The usual goods and evils apply to this anthology as typically come attached to any. The selection in general is ably made and covers the distance of Keynes' career from student days to the posthumous. Some sections of Keynes works get very little treatment or none, however. His trailblazing work, A Treatise on Probability, is represented by a couple of scant pages. This is completely understandable as the book is a work of logic which is difficult to sample from, yet this still leaves a portion of Keynes' importance dimmed. Keynes attacked assumptions based on past experience when such assumptions should not be applied blindly to the present or future. Including predictions of this sort turned probability into a fallacy, often leading to monstrous logical errors, according to Keynes. The editor, Robert Skidelsky author of a three volume biography on Keynes, attempts to fill in gaps with running commentary. This is adequately done, though I prefer Keynes to speak for himself. A large sampling comes from the books Essays in Persuasion & Essays in Biography. My complaint is that the essay on the historian Mcaulay wasn't included from Biography. However, "My Early Beliefs" from Biography is included; a positively delightful & enlightening reminiscence and description of the Bloomsbury Group of Keynes' youth. "The Council of Four, Paris" gives an iconic interpretative account of the meetings between the allied powers and Wilson after WW1. To a disturbing extent, Keynes prejudices and admonishments concerning the events of those "negotiations" have grown into almost all the future renderings of those events by our ablest historians. The division of the book is by general subject matter so material can be found broken up and sampled at different ends. Understandable, but gives Keynes a far messier feel than he would ever deserve. The real jewels in this anthology are essays not included in his other Essay books but buried in random Collected Works volumes, so not easily accessible. Keynes' article, "The General Theory of Employment"(1937) has a very modern ring to it, despite implicitly espousing an eighteenth century Scottish, Humean, influence as to the dangers of predicting any economic future. Judgements of convention resulting from lack of scientific facts for the purpose of constructing a false sense of security reminds me of a Krugman column criticizing today's modern money managers. "Can America Spend its Way Into Recovery" addressed the age-old question: does a country need to be as fiscally responsible as the average Joe Citizen? Should it be?? The answer according to Keynes is Of course not. Though Keynes insists on government spending as a solution, Keynes notably attacks the waste of the dole. Tossing money out to consumers takes a distance second to getting value for your(government's) money by sponsoring public works projects, usually focused on necessary infrastructure upgrades. From there Keynes' multiplier set to work, sluicing cash about an economy that had gone stagnant either through the onset of high interest rates produced by a boom or the more nettlesome and long lasting psychological reticence of borrowers/lenders in general which produce the slump. Jump starting the market through government cash infusions is Keynes' monumental message to the 20th century. Pumping government money into the economy and getting no value other than bottom layer consumerism is something Keynes considered profligate in its abject waste, even if it worked. Keynes is generally accessible to the average reader and his style is a delight. If you've made it through the General Theory then reward yourself with this fine collection as a follow up.

[Andreas · Rating 5 out of 5]

I’m very glad I finally took the decision to read works by Keynes himself instead of books about Keynes. Of course this selection of bits and pieces by Robert Skidelsky may distort the actual experience of reading Keynes’ work, but I am of the opinion that he writes very clearly. His style should definitely not prevent people from reading his work. After reading the whole book I am left with the same feeling as when I had finished Zachary Carter’s book about Keynes: how did we unlearn so much of what he taught the world almost a century ago?

[Bernard English · Rating 3 out of 5]

The book is divided into five parts and I suppose most readers will naturally assume that Part Three, The Economist, would be the most interesting. Unfortunately, Keynes, who was a successful investor, has managed to make his economic writings read like a speculator's manual. That's just the impression I got. It is not scientific in any axiomatic sense (think Rothbard or von Mises). And I recall that he only use the phrase "relative prices" once in these selections so that often when he was referring  prices I wasn't sure whether the reader is supposed to assume he meant relative prices or not.

In Part II, The Social Philosopher, he shows he was not one of the intellectuals who was completely taken in by the Soviet system as well as displaying his non-economic concerns: "On the economic side I cannot perceive that Russian Communism has made any contribution to our economic problems of intellectual interest or scientific value." However, he does acknowledge the value of the "religious" side of communism and comments that "If there is no moral objective in economic progress, then it follows that we must not sacrifice, even for a day, moral to material advantage - in other words that we may no longer keep business and religion in separate compartments of the soul." These quotes are from "A Short View of Russia." In the same vein, in Part 4, he writes that "the natural evolution should be towards a decent level of consumption for every one; and, when that is high enough, towards the occupation of our energies in the non-economic interests of our lives." Also in Part II there is the interesting essay "Economic Possibilities for Our Grandchildren"  in which he optimistically predicts continued economic progress with standards of living 4 to 8 times higher in the following 100 years in more advanced countries at which economic problems will be solved! But he is worried that then "mankind will be deprived of its traditional purpose." This will be a particular problem for the "ordinary person, with no special talents, to occupy himself, especially if he no longer has roots in the soil or in custom or in the beloved conventions of traditional society." What's most surprising is Keynes' many critical remarks about money making. For example, that in the 19th century the "whole conduct of life was made into a sort of parody of an accountant's nightmare." Or again, "as against Robbins, economics is essentially a moral science and not a natural science. That is to say, it employs introspection and judgements of value." One can appreciate these concerns of his but I don't think he makes the case for his approach, and again, at least as presented in the selections, his economic theory is not something we would normally call a science in English.

Part 4 is on Keynes as a policy-maker.  Regardless of whether Keynes' policies  proposals were good or not, he is quite sensitive to "social justice" and the plight of the workingman--at least in his writings. Common sense is valuable, but  frequently invoking it to buttress his proposals are again, not convincing. In the essay 'Can Lloyd George Do It?," Keynes writes of the bogy of inflation. But history has proven inflation to be more than a specter and it is of course the working class which is hurt by inflation the most. In the same essay he writes of the "safe expansion of credit" which would be possible with "home investment" available to absorb the increased credit. This is all very "ticklish" [a word he uses several times] to pull off and I'm not sure it ever works in favor of the proverbial little guy. In discussing the relative merits for an expansionist or contractionist cure for low profit margins, he generally prefers the expansionist route while acknowledging the risks and considers ways of neutralizing them. In some sense he may be right, but Keynes gives no reasons why in the real world effective policies, at the right time, will be correctly implemented and stuck to long enough to be effective. In "Agenda for the President" Keynes proposes lowering the maximum interest rate banks can charge to 1 per cent in order to boost economic activity.  His thinking is that the "effects of government expenditure are precisely the same as the effects of individuals' expenditure, and it increases the income of the public which provides  the source of the extra government expenditure." It seems to me (I'm not sure) this contradicts his own theory of the "fallacy of composition" (found in Part I, The Philosopher) in which what is good for the individual is not necessarily good when applied to society at large.  The difficulty of applying his methods to the real world can be seen in his assertion that the "boom, not the slump, is the right time for austerity at the Treasury." Yes, but which industry's boom? Whose slump? Industrys'? Consumers'? A swing state in a presidential election? It's more of a political decision than anything else. In what I think can only be called bizarre, in "The Long-Term Problem of Full Employment," Keynes seems to suggest that individual savings will no longer be needed in the future: "The object will be slowly to change social practices and habits so as to reduce the indicated level of saving. Eventually depreciation funds should be almost sufficient to provide all the gross investment that is required." 

Maybe Keynes had an inkling the U.K. was being played by the U.S. for despite it's far greater sacrifices during the war, he worried that the U.K. was "being left a heavier overseas financial burden than Germany, a burden which we shall owe to our allies." According to the Skidelsky, Keynes was unable to get a better deal from the U.S. after the war than to have the U.K. owe "$3.75 billion, repayable over fifty years at 2 per cent interest." In the last part of the book, a few of Keynes' biographical essays are printed; all of them fascinating. I'll mention that he prints a few letters between Thomas Malthus and his dear friend, the economist Ricardo. Keynes thought that Malthus' approach to economics was "more likely to lead to right conclusions than the alternative approach of Ricardo." Keynes writes that he considered Thomas Malthus as the first Cambridge economist. The final essay is a great tribute to Newton, not overlooking his non-scientific side.

[Darran Mclaughlin]

Not finished yet. I'm about 30% of the way through but I was struggling with the dense economic bits so I'm taking a break. Finally read Economic Possibilities for our Grandchildren. Interestingly Keynes whole premise is partly reliant upon an assumption that the population would not greatly increase because it seemed to be slowing down at the time. It was about 2 Billion when he wrote this essay and it's now over 7 Billion so he was wildly incorrect. I have never seen this part of his argument brought up in any reference. And this is why you have to read the original source rather than relying upon secondary references.

[Timothy Dymond · Rating 4 out of 5]

‘… the master-economist must possess a rare combination of gifts. He must reach a high standard in several different directions and must combine talents not often found together. He must be mathematician, historian, statesman, philosopher-in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man's nature or his institutions must lie entirely outside his regard.’
- JM Keynes on Alfred Marshall (1924)

'The Essential Keynes’ is shorter version of the collected works of John Maynard Keynes, compiled by his biographer Robert Skidelsky. It includes a useful biographical sketch, and organises the material thematically rather than chronologically. It starts with 'The Philosopher' and 'The Social Philosopher’, then, 'The Economist' and 'The Policy-Maker', and finishes with 'The Essayist’.

While many of the sections on economics and policy are heavy going - the reader will definitely emerge with a solid sense of the breadth of Keynes’ writing and interests, and the underpinnings of his thought. This is particularly needed for Keynes, because there are so many misconceptions about his beliefs. He is often accused of not worrying about inflation, when it was actually one of his major policy preoccupations (e.g. he recommended unions defer pay increases to avoid war spending fuelled inflation); he is often cast as favouring economic planning, but he was an advocate of decentralisation, and believed traditional economics took insufficient account of uncertainty; he was an early harsh critic of Marx and Soviet Communism - calling it

‘a creed which does not care how much it destroys the liberty and security of daily life, which uses deliberately the weapons of persecution, destruction, and international strife.’

but his advocacy of capitalism incorporated an attack on ‘laissez-faire’, of which he said:

‘It is not intelligent, it is not beautiful, it is not just, it is not virtuous — and it doesn’t deliver the goods.’

What stood out for me about Keynes' approach to economics is that he wanted it to be useful to policy makers - that is, he wanted economics to provide paths forward for the actual world in which we live. This may seem obvious given the field is apparently full of policy prescriptions, however Keynes argued that the classical view of economics (that markets adjust themselves to an ideal equilibrium of supply and demand) (a) took no account of actual conditions such as sticky prices and wages, and (b) ignored the issue that equilibrium could be ‘achieved’ with high levels of unemployment. These objections go to the purpose of economics as a field. If it merely assumes self adjusting demand and supply where there is none, or aims for an abstract equilibrium state that leaves large numbers of people worse off than they otherwise would be, what is economics for? This is the basis Keynes’ famous criticism of ‘the long run’, which is quoted in full in this book:

‘… this 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 will be flat again.’

Far from calling for present hedonism in economic policy (spend now, worry about consequences later), Keynes advocated that economics be useful for human life and flourishing. Classical economics started with a supposedly scientific view about how the world ought to function, with output, investment, supply, and demand automatically adjusting to one another. This conclusion was more moralistic than practical, and in the end could only propose putting up with the present human miseries caused by unemployment until the ideal equilibrium was achieved sometime in the future - because acting now was improvident! But for Keynes economics ‘deals with motives, expectations, psychological uncertainties’ - and economists should avoid the ‘pseudo-analogy with the physical sciences [which] leads directly counter to the habit of mind which is most important for an economist proper to acquire.’ There have been many Keynesianisms over the years (‘hydraulic’, 'neo-’, ‘post-'), but the ultimate lesson from Keynes’ thought is that economics should have something to say about the actual situation of the world, and arising from that, propose things that could make it better.

[John · Rating 4 out of 5]

Wow! This was a bit of work, but the book did a wonderful job of unearthing and bringing to light the true person in Keynes.

CAVEAT: This is NOT for a novice reader. If you cannot recognize the names of Adam Smith, Malthus, Ricardo, Mill, Hayek, or Marshall, this may be a bit confusing as his writings frequently mention these men and their works.

That being said, the ‘author’/editor, Robert Skidelsky, does a fantastic job of arranging Keyes writings into five sections: Philosopher, Social Philosopher, Economist, Policy Maker, and finally Essayist. Within these sections, he arranges passages chronologically (mostly) and gives his own historical context in italics either prior to or after each passage.

From this perspective, you begin to see how Keynes’s theories started and then began to shift. In the beginning, you get a feel of his brilliance in excerpts from ‘Economic Consequences of the Peace’, and begin to see a shift into the 1930s and the Great Depression. It is at this time he begins to exert his force toward policy making and general macro-economics. Toward the end, he becomes certainly an interventionist on the side of governmental controls.

I read prior readings of Keynes and felt it unjust that he has recently been treated as a pariah. I wanted to have a better understanding, from his point of view, what made him tick. After reading, I still don’t think of him as a pure radical; a bit extreme, but not radical. Given his propensity for changing his mind, evolving, I think if he had lived another twenty years, his legacy would be different, as he most likely would have further defined his ideas as the world moved into the post-WWII 1950s & 1960s.

It is a very interesting read and I think you should give it a shot, if so inclined.

[Silverprince · Rating 5 out of 5]

Amazing! Keynes' style of writing is very eccentric and full of energy. This book is not a book to breeze through as the language itself (at least for me) is quite "academically fancy". The topics discussed in the book are not for those who simply want to learn about economics but are for those who are willing to deep dive and take their sombre time reading, re-reading and looking up the definitions of words or meanings of studies or person Keynes references to as analogies time to time.

Even I, a person with an economics academic background, found the teachings in the book to be complex time-to-time but once persistent in reading the same paragraphs over and over again to understand his theory, it is actually quite simple.

I do not recommend this book to those who are not serious about pursuing the knowledge of economics, political economy, philosophy or English (with a fair share of European) socioeconomic history.

[MADHUKAR DAYAL · Rating 4 out of 5]

It maybe a little difficult for the average Joe to read and understand this book. Keynes critique of Government policies (when he was not in it) brought out in this book is extremely revealing of his clear and deep thinking. He points out that Economics is an inexact science (to which some critiques have pointed out "you can either be inexact...or science"). Funnily, the same action by Government in one country may reveal a different outcome than in another country (but Governments are slow or incapable of realising this!). Across the World, Government corruption, excessive and continuously increasing tax collection, and immense wastage of tax dollars, is reported. The common citizens have nearly no recourse to taking a Government to task, whatever little provision exists is just an eyewash. Some lovely quotes by Keynes are provided in the last chapter. Overall, this book is an engaging and eye opening treat for someone relatively new to Economics.

[Tim Prindall · Rating 5 out of 5]

This book represents a collective group of work by Keynes’ that both highlights his overall political and economic philosophy, while also demonstrating how that changed during his impactful life. Not designed to be read front to back, (not that this stopped me), this book is best suited for those interested in better understanding specific aspects of the philosophy that inspired Keynesian Economics.

Easily one of the most inclusive and overreaching collection of Keynes’ work I have had the pleasure of reviewing. While reading comprehension is a must, I recommend this for anyone doing work in Economic History, or anyone that has a general interest in learning more about Keynes’ influence on modern life.

[Jorge Padilla · Rating 5 out of 5]

A very complete compendium of the writings of John Maynard Keynes, accompanied by concise and easy-to-understand comments by one of Keynes’s most knowledgeable specialists. The Essential Keynes will be particularly useful to non-experts who are interested in a brief overview of the great British economist’s work, and will more likely than not entice the reader to explore more in depth the original and revolutionary theories of JMK, which have been subject to renewed interest from scholars and policy makers since the Great Recession of 2007-2009.

[Robert Putka · Rating 4 out of 5]

A crash-course in Macroeconomic theory as it develops headlong into that form; I think Skidelsky mostly does a great job charting, with lucidity, Keynes' progression toward refining his revolutionary principles. However, I'm not an economist and, given the intended nature of "reader anthologies" such as this to appeal to those part of the great uneducated mass, perhaps even more explanation from Skidelsky is welcome.

[Kurishin · Rating 3 out of 5]

I'm not sure this is the best way to consume Keynes. I suspect it is in the regular course of a study in economics, particularly macro.

John Maynard Keynes: 1883-1946: Economist, Philosopher, Statesman is probably the best place to learn about Keynes the person.

[Diego · Rating 5 out of 5]

Una gran forma de introducirse a algunos de los textos menos conocidos de Keynes y al desarrollo de su pensamiento como economista teórico, pensador de políticas públicas, filosofo y ensayista. Una muy buena lectura para los que disfrutan de la historia del pensamiento económico.

[Clay · Rating 5 out of 5]

its about money

[MasterSal]

So I've read all of these essays before but I do want to come back to this at some point - maybe... if I stop getting new books!