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The End of Laissez-Faire
The British economist John Maynard Keynes (1883 – 1946), one of the most influential of all time, if not the most, condemned laissez-faire economic policy on several occasions. In this brief book, The End of Laissez-faire (1926), one of the most famous of his critiques, Keynes argues that the doctrines of laissez-faire are dependent to some extent on improper deductive reasoning and says the question of whether a market solution or state intervention is better must be determined on a case-by-case basis, not by a general rule a priori .
It was first published by the Hogarth Press in July 1926, based on the Sidney Ball Lecture given by Keynes at Oxford in November 1924 and on a lecture given by him at the University of Berlin in June 1926.
It was first published by the Hogarth Press in July 1926, based on the Sidney Ball Lecture given by Keynes at Oxford in November 1924 and on a lecture given by him at the University of Berlin in June 1926.
45 pages, Paperback
First published January 1, 1995
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About the author
John Maynard Keynes
412 books709 followersJohn 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.
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.
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Displaying 1 - 14 of 14 reviews
November 18, 2017
The "Economic Consequences", Keynes' polemic after Versailles, is quite well known, but the earlier essay included in this volume-- the on Laissez-Faire, is key to comprehending Keynes' understanding of the economic tradition which he inherited; as such, it is a historical essay, and traces the beginnings of "Laissez-faire" from the French thinkers of the Ancien Regime to the great Victorian Political Economists. But as always with Keynes, the essay has its principal merit in his own keen insights into the problems of a free-market and how such a market should be "subordinated" (I use Karl Polyani's phrase, but Keynes would agree with the context in which I use this word), to those aspects which make life worthwhile (both for Keynes and, to a great extent, for me also): art, literature, music etc.
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October 10, 2021It's an insightful and interesting book but the audio format wasn't one of my best ideas ever... A lot of numbers, statistics etc. But, hey, it's not a school, I don't have to memorize that stuff anyway :))
I was really good at history when I was at school, the XXth century was really important in the program and a big part of the exam was related with both World wars. I aced it, that means I learned the material. So, where I am heeding now? This book showed me the I World War (and the dawn of the II World War) very differently. Money, resources and human flaws make much more sense how we got to that mess. I kinda understand why Germany needed the II World War. The economic pressure and resources shortage for its industry (...and people that they would have basic commodities...) seem enormous. Damn, according to the author, they were in a desperate situation.
P.S. And a spoiler alert: those idealised politicians from our history books are petty, mean and revanchist men. And short-sighted. Keynes described them so well! I felt like reading a novel! :)
I was really good at history when I was at school, the XXth century was really important in the program and a big part of the exam was related with both World wars. I aced it, that means I learned the material. So, where I am heeding now? This book showed me the I World War (and the dawn of the II World War) very differently. Money, resources and human flaws make much more sense how we got to that mess. I kinda understand why Germany needed the II World War. The economic pressure and resources shortage for its industry (...and people that they would have basic commodities...) seem enormous. Damn, according to the author, they were in a desperate situation.
P.S. And a spoiler alert: those idealised politicians from our history books are petty, mean and revanchist men. And short-sighted. Keynes described them so well! I felt like reading a novel! :)
December 4, 2014
Keynes is so sassy in this book. Worth a read just for his descriptions of politicians.
November 18, 2017
The End of Laissez-Faire: The Economic Consequences of Peace by John Maynard Keynes is anachronistic, to the point of making some sections of it painful to read. I have no doubt that this was a truly instrumental work in the 1920s, deeply illuminating in the 1940s, and retained great utility in the 1960s. Now the most interesting and convincing part of this book has little to nothing to do with his major economic and social arguments. A full third of this book is either no longer relevant or wrong.
Another third of this book is rendered unnecessary because it was clearly written as a topical reference for the time in which the book was written, but like all zeitgeists, their inclusion ultimately becomes unnecessary or confusing the further one departs from the time of writing. Since it has been almost 100 years, a lot of that is now rather unhelpful.
This leaves the third of the book that is good. Keynes had first hand knowledge of the proceedings, and his account of the personalities and the processes involved were immeasurably illustrative. He discusses the French, British, and English leaders and their role in crafting the peace deal. It was odd to find someone who made the moral correctness of Woodrow Wilson into a character flaw, since recent history has not been kind to the 28th president of the United States. He also goes into detail to show how the war indemnities were calculated unjustly and you can readily see how the peace to end the first world war helped lay the foundation for the second.
His book is also good as a way to inhabit the mind of an economist of the distant past. His predictions were wrong, his reasoning and his tangents are anachronistic, but the reasoning is clearly conveyed and eminently reasonable. For that I can appreciate the book and give it some slack in a way that I could never for something to come out today. Had it been shorter though, and more concise in its subject matter, it would have been considerably more powerful.
Unless you're an economic historian, a huge fan of the first world war, or interested in Keynes - best pass on this one.
81/100 (B- )
Another third of this book is rendered unnecessary because it was clearly written as a topical reference for the time in which the book was written, but like all zeitgeists, their inclusion ultimately becomes unnecessary or confusing the further one departs from the time of writing. Since it has been almost 100 years, a lot of that is now rather unhelpful.
This leaves the third of the book that is good. Keynes had first hand knowledge of the proceedings, and his account of the personalities and the processes involved were immeasurably illustrative. He discusses the French, British, and English leaders and their role in crafting the peace deal. It was odd to find someone who made the moral correctness of Woodrow Wilson into a character flaw, since recent history has not been kind to the 28th president of the United States. He also goes into detail to show how the war indemnities were calculated unjustly and you can readily see how the peace to end the first world war helped lay the foundation for the second.
His book is also good as a way to inhabit the mind of an economist of the distant past. His predictions were wrong, his reasoning and his tangents are anachronistic, but the reasoning is clearly conveyed and eminently reasonable. For that I can appreciate the book and give it some slack in a way that I could never for something to come out today. Had it been shorter though, and more concise in its subject matter, it would have been considerably more powerful.
Unless you're an economic historian, a huge fan of the first world war, or interested in Keynes - best pass on this one.
81/100 (B- )
March 21, 2020
"La Agenda del Estado más importante no se refiere a aquellas actividades que los individuos privados ya están desarrollando, sino a aquellas funciones que caen fuera de la esfera del individuo, aquellas decisiones que nadie toma si el Estado no lo hace. Lo importante para el gobierno no es hacer cosas que ya están haciendo los individuos, y hacerlas un poco mejor o un poco peor, sino hacer aquellas cosas que en la actualidad no se hacen en absoluto."
June 8, 2020
Economics analysis that starts inquiry with analysis of ethical imperatives
Keynes unlike most of his predecessors doesn‘t try to put his theory in the guise of scientific objectivity and neutrality but rather argues that theories have to be understood in terms of their consequences and in my opinion this is his main critique of laissez-faire
Keynes unlike most of his predecessors doesn‘t try to put his theory in the guise of scientific objectivity and neutrality but rather argues that theories have to be understood in terms of their consequences and in my opinion this is his main critique of laissez-faire
August 16, 2019
Wow! Just, WOW! Keynes’s writing is good, but his prescience is absolutely remarkable! To think he wrote this in 1919 just after walking away from the Paris meetings is astounding.
December 12, 2024
Though I do not agree, this essay was a pleasure to read where keynes mixes economics, renaissance philosophy and his love for interest rates
March 18, 2025
Highly quotable, an eloquent description of the capitalist system and a convincing case for its regulation
March 6, 2015
Keynes was lucky enough to witness the Paris Peace Conference in 1919 and details a lot of what he saw in this book. Keynes wrote this attacking the thought processes of the entente’s leaders and the outcome of the conference. He spends the first few chapters criticizing the major players, and discusses the political situation going into the conference. He then moves on to the contents of the treaty, and carefully takes the reader through relevant articles while comparing them to Germany’s post-war reality. In the end, you’re left feeling that the treaty conditions were not only unfair, but impossible for Germany to fulfill, and inhumane. I’m tempted to say that reading through Keynes’s own predictions near the end of the book, it seems like the problems of the next three decades were inevitable thanks to this conference, but that probably isn’t the case. Still, the man was really ahead of his time.
There are three things that stuck out most for me. First, the attitudes of the Allies’ leaders going into the conference were so disgusting given the situation. It’s important to note that when Germany agreed to the armistice it wasn’t an unconditional surrender, and the allied powers agreed to treat Germany fairly but that there would be reparations. Clemenceau came off the most understandable; his country was harmed the most in terms of industry lost, farmland ruined, and lives lost. So of course he wanted to see Germany ruined. Wilson seemed like an idealist who had good intentions, but didn’t have any concrete ideas to contribute for post-war Germany. Lloyd George came off as inexcusable. He was facing social unrest in Britain and called an election before the conference even happened. His position changed from reparations for damage done as a direct result of the war to one more in line with Clemenceau. As a campaign promise, he promised not to “let the Hun off,” to go to the conference and “squeeze [Germany] until the pips squeak.”
Second, there was a large difference between what the treaty demanded from Germany and what Germany would actually be able to produce. The meat of the book was spent looking at this gap. Right away, at the conclusion of the armistice, Germany was required to give up its overseas possessions, its entire merchant marine, and a sizeable chunk of its continental territory (much of which was highly productive territory). Then, an enormous sum of about ~$12,000,000,000 was required as reparations. The Allies’ logic was that post-war Europe would return to the glory days of the pre-war, and soon exceed those conditions, so when they drew up the treaty they used statistics from 1913 Germany. Except, as Keynes notes, Germany has just lost two million able-bodied lives, its remaining population is close to starvation, it’s limited In its ability to import raw materials, and it’s lost large amounts of its industry and raw resources production. On top of all this, reparations payments must be made before Germany spends anything on domestic programs (like feeding its population or otherwise looking after its welfare). So, not only are the allies making ridiculous demands, they’re cutting off Germany’s ability to even produce the wealth they need to pay.
The last thing that stuck out to me was Keynes’ humanitarian argument. It was interesting to see something like this in a book on economics. Even if the Allies ignored the economic argument, you would think this would be persuasive:
“I cannot leave this subject as though its just treatment wholly depended either on our own pledges or on economic facts. The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable,--abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe. Some preach it in the name of Justice. In the great events of man’s history, in the unwinding of the complex fates of nations Justice is not so simple. And if it were, nations are not authorized, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.”
There are three things that stuck out most for me. First, the attitudes of the Allies’ leaders going into the conference were so disgusting given the situation. It’s important to note that when Germany agreed to the armistice it wasn’t an unconditional surrender, and the allied powers agreed to treat Germany fairly but that there would be reparations. Clemenceau came off the most understandable; his country was harmed the most in terms of industry lost, farmland ruined, and lives lost. So of course he wanted to see Germany ruined. Wilson seemed like an idealist who had good intentions, but didn’t have any concrete ideas to contribute for post-war Germany. Lloyd George came off as inexcusable. He was facing social unrest in Britain and called an election before the conference even happened. His position changed from reparations for damage done as a direct result of the war to one more in line with Clemenceau. As a campaign promise, he promised not to “let the Hun off,” to go to the conference and “squeeze [Germany] until the pips squeak.”
Second, there was a large difference between what the treaty demanded from Germany and what Germany would actually be able to produce. The meat of the book was spent looking at this gap. Right away, at the conclusion of the armistice, Germany was required to give up its overseas possessions, its entire merchant marine, and a sizeable chunk of its continental territory (much of which was highly productive territory). Then, an enormous sum of about ~$12,000,000,000 was required as reparations. The Allies’ logic was that post-war Europe would return to the glory days of the pre-war, and soon exceed those conditions, so when they drew up the treaty they used statistics from 1913 Germany. Except, as Keynes notes, Germany has just lost two million able-bodied lives, its remaining population is close to starvation, it’s limited In its ability to import raw materials, and it’s lost large amounts of its industry and raw resources production. On top of all this, reparations payments must be made before Germany spends anything on domestic programs (like feeding its population or otherwise looking after its welfare). So, not only are the allies making ridiculous demands, they’re cutting off Germany’s ability to even produce the wealth they need to pay.
The last thing that stuck out to me was Keynes’ humanitarian argument. It was interesting to see something like this in a book on economics. Even if the Allies ignored the economic argument, you would think this would be persuasive:
“I cannot leave this subject as though its just treatment wholly depended either on our own pledges or on economic facts. The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable,--abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe. Some preach it in the name of Justice. In the great events of man’s history, in the unwinding of the complex fates of nations Justice is not so simple. And if it were, nations are not authorized, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.”
January 8, 2025
We are all Keynesians Now
Keynes saw the private corporate enterprise as an intermediate social structure between the state and the individual. In this manner, he thought that corporations could represent both the interest of the state as well as the individual. In this sense, corporations are a mode of governance and are self-socializing economic actors. The self-socializing process occurs naturally as a function of the shareholders being dissociated from the management of a public company. There comes a point where long-term sustainability and stability outweigh pure profit maximization. Public reputation thus becomes the primary concern of management. I am not claiming that Keynes was a fascist, but this sounds very much like fascism with its emphasis on a partnership between great enterprises and the state. In such cases, the state will always be the senior partner because the corporation will never have the force of law or the power of the gun. These are monopolies preserved by the state and here of course is the great risk. All the same, to a great extent, Keynes was prescient in that the most successful modern economies are mixed economies with both, important private and public actors with which the modern economy, as we understand it, could not function. We now take much of this public-private cooperation and partnership for granted as most of it is as invisible to the individual as it is valuable to their well-being. Like it or not, we are all Keynesian now.
In the final analysis, Keynes thought that pure laissez-faire had to evolve toward greater social awareness and responsibility without losing those qualities that stimulate economic growth and the creation wealth such as individual initiative and with it, private property and profit. Keynes wanted the government to be effective without displacing the individual, thus he was not a committed socialist though he did deny that there was any such thing as a natural right to property and that private and social interest do not necessarily coincide. There is no invisible hand to be found. His hope was that civilization would evolve beyond the ethic of private gain and thought that an ethic of private advantage would only be necessary “…until the ambit of men’s altruism grows wider…” This is a noble goal and beneficial when achieved by evolution and disastrous when forced by revolution. Keynes was not a revolutionary but without a natural right to property, it is difficult to see how this essential element of economic well-being can be guaranteed while we wait for the evolution to take place. The caprice of the state is always a risk because the public-private cooperative partnership is one of dramatic asymmetry.
To quote Keynes, “In fact, we already have in these cases many of the faults as well as the advantages of State Socialism. Nevertheless we see here, I think, a natural line of evolution. The battle of Socialism against unlimited private profit is being won in detail hour by hour.” Though this sounds doctrinaire, Keynes condemned doctrinaire socialism but only because he thought it was an anachronism. He endorsed socialism to the extent that it sought to engage altruistic impulses in the service of society, because it departed from laissez-faire, because it took away the individual liberty to make a fortune and because it encouraged bold experimentation. Keynes saw both nineteenth-century state socialism and nineteenth-century individualism as highly flawed for the same reasons. Both were a belief in limitless freedom, from want or from limitation, respectively. The enforcement of “bold experimentation” is troubling and inconsistent with Keynes view that evolution toward greater social cooperation is superior to forced cooperation by revolution. Keynes calls for the wise management of capitalism which, given the nature of capitalism, might not be possible. Capitalism just is unmanageable, this is at once its greatest virtue and its greatest vice.
Keynes saw the private corporate enterprise as an intermediate social structure between the state and the individual. In this manner, he thought that corporations could represent both the interest of the state as well as the individual. In this sense, corporations are a mode of governance and are self-socializing economic actors. The self-socializing process occurs naturally as a function of the shareholders being dissociated from the management of a public company. There comes a point where long-term sustainability and stability outweigh pure profit maximization. Public reputation thus becomes the primary concern of management. I am not claiming that Keynes was a fascist, but this sounds very much like fascism with its emphasis on a partnership between great enterprises and the state. In such cases, the state will always be the senior partner because the corporation will never have the force of law or the power of the gun. These are monopolies preserved by the state and here of course is the great risk. All the same, to a great extent, Keynes was prescient in that the most successful modern economies are mixed economies with both, important private and public actors with which the modern economy, as we understand it, could not function. We now take much of this public-private cooperation and partnership for granted as most of it is as invisible to the individual as it is valuable to their well-being. Like it or not, we are all Keynesian now.
In the final analysis, Keynes thought that pure laissez-faire had to evolve toward greater social awareness and responsibility without losing those qualities that stimulate economic growth and the creation wealth such as individual initiative and with it, private property and profit. Keynes wanted the government to be effective without displacing the individual, thus he was not a committed socialist though he did deny that there was any such thing as a natural right to property and that private and social interest do not necessarily coincide. There is no invisible hand to be found. His hope was that civilization would evolve beyond the ethic of private gain and thought that an ethic of private advantage would only be necessary “…until the ambit of men’s altruism grows wider…” This is a noble goal and beneficial when achieved by evolution and disastrous when forced by revolution. Keynes was not a revolutionary but without a natural right to property, it is difficult to see how this essential element of economic well-being can be guaranteed while we wait for the evolution to take place. The caprice of the state is always a risk because the public-private cooperative partnership is one of dramatic asymmetry.
To quote Keynes, “In fact, we already have in these cases many of the faults as well as the advantages of State Socialism. Nevertheless we see here, I think, a natural line of evolution. The battle of Socialism against unlimited private profit is being won in detail hour by hour.” Though this sounds doctrinaire, Keynes condemned doctrinaire socialism but only because he thought it was an anachronism. He endorsed socialism to the extent that it sought to engage altruistic impulses in the service of society, because it departed from laissez-faire, because it took away the individual liberty to make a fortune and because it encouraged bold experimentation. Keynes saw both nineteenth-century state socialism and nineteenth-century individualism as highly flawed for the same reasons. Both were a belief in limitless freedom, from want or from limitation, respectively. The enforcement of “bold experimentation” is troubling and inconsistent with Keynes view that evolution toward greater social cooperation is superior to forced cooperation by revolution. Keynes calls for the wise management of capitalism which, given the nature of capitalism, might not be possible. Capitalism just is unmanageable, this is at once its greatest virtue and its greatest vice.
May 27, 2024
Later, as a British official at the Paris peace conference, Keynes
wrote of his great admiration of Lloyd George’s brutal anti-Semitic
attack on the French Finance Minister, Louis-Lucien Klotz, who
had tried to squeeze the defeated Germans for more gold in
exchange for relieving the Allied food blockade.
First, there was Keynes’s description of Klotz:
“A short, plump, heavy-moustached Jew, well groomed, well kept, but with an
unsteady, roving eye, and his shoulders a little bent with instinctive
deprecation.”
Keynes then described the dramatic moment:
"Lloyd George had always hated him and despised him; and
now saw in a twinkling that he could kill him. Women and
children were starving, he cried, and here was M. Klotz prating and prating of his “goold.” He leant forward and with a gesture of his hands indicated to everyone the image of a hideous
Jew clutching a money bag. His eyes flashed and the words
came out with a contempt so violent that he seemed almost to
be spitting at him. The anti-Semitism, not far below the surface in such an assemblage as that one, was up in the heart of
everyone. Everyone looked at Klotz with a momentary contempt and hatred; the poor man was bent over his seat, visibly cowering. We hardly knew what Lloyd George was saying,
but the words “goold” and Klotz were repeated, and each time
with exaggerated contempt.
At that point, Lloyd George came to the climax of his performance: turning to the French premier, Clemenceau, he warned that
unless the French ceased their obstructive tactics against feeding
the defeated Germans, three names would go down in history as
the architects of Bolshevism in Europe: Lenin and Trotsky and …"
as Keynes wrote, “The Prime Minister ceased. All around the room
you could see each one grinning and whispering to his neighbor,
‘Klotsky’” (Keynes 1949, p. 229; Skidelsky 1986, pp. 360, 362).
The point is that Keynes, who had never particularly liked Lloyd
George before, was won over by his display of George’s savage antiSemitic pyrotechnics. “He can be amazing when one agrees with
him,” declared Keynes. “Never have I more admired his extraordinary powers” (1949, p. 225).13
But the major reason for Keynes’s rejection of communism was
simply that he could scarcely identify with the grubby proletariat.
As Keynes wrote aft er his trip to Soviet Russia: “How can I adopt
such a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeoisie and the intelligentsia who
… are the quality in life and surely carry the seeds of all human
advancement?” (Hession 1984, p. 224).
wrote of his great admiration of Lloyd George’s brutal anti-Semitic
attack on the French Finance Minister, Louis-Lucien Klotz, who
had tried to squeeze the defeated Germans for more gold in
exchange for relieving the Allied food blockade.
First, there was Keynes’s description of Klotz:
“A short, plump, heavy-moustached Jew, well groomed, well kept, but with an
unsteady, roving eye, and his shoulders a little bent with instinctive
deprecation.”
Keynes then described the dramatic moment:
"Lloyd George had always hated him and despised him; and
now saw in a twinkling that he could kill him. Women and
children were starving, he cried, and here was M. Klotz prating and prating of his “goold.” He leant forward and with a gesture of his hands indicated to everyone the image of a hideous
Jew clutching a money bag. His eyes flashed and the words
came out with a contempt so violent that he seemed almost to
be spitting at him. The anti-Semitism, not far below the surface in such an assemblage as that one, was up in the heart of
everyone. Everyone looked at Klotz with a momentary contempt and hatred; the poor man was bent over his seat, visibly cowering. We hardly knew what Lloyd George was saying,
but the words “goold” and Klotz were repeated, and each time
with exaggerated contempt.
At that point, Lloyd George came to the climax of his performance: turning to the French premier, Clemenceau, he warned that
unless the French ceased their obstructive tactics against feeding
the defeated Germans, three names would go down in history as
the architects of Bolshevism in Europe: Lenin and Trotsky and …"
as Keynes wrote, “The Prime Minister ceased. All around the room
you could see each one grinning and whispering to his neighbor,
‘Klotsky’” (Keynes 1949, p. 229; Skidelsky 1986, pp. 360, 362).
The point is that Keynes, who had never particularly liked Lloyd
George before, was won over by his display of George’s savage antiSemitic pyrotechnics. “He can be amazing when one agrees with
him,” declared Keynes. “Never have I more admired his extraordinary powers” (1949, p. 225).13
But the major reason for Keynes’s rejection of communism was
simply that he could scarcely identify with the grubby proletariat.
As Keynes wrote aft er his trip to Soviet Russia: “How can I adopt
such a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeoisie and the intelligentsia who
… are the quality in life and surely carry the seeds of all human
advancement?” (Hession 1984, p. 224).
July 11, 2009
Read sections of this in college when studying Keynes. Seemed a good time to return to him given the economy.
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July 13, 2012End of Laissez Faire was great, somehow, the Economic Consequences of the Peace just lost me. Maybe I'll get back to it, maybe I won't.
Displaying 1 - 14 of 14 reviews