How to pay for the war: a radical plan for the chancellor of the exchequer

by John Maynard Keynes

Foundation of Keysian economics, excellent condition, pages yellow from age.

Genres: Economics, Politics, History, Nonfiction

Hardcover

First published January 1, 1940

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

[Sergey Steblyov · Rating 4 out of 5]

This is the stuff from which GDP has come to rule us. Keynes proposes a plan for increasing government war expenditure. For this he needs a measure of current UK output – as he wants to have a guess at how much *bigger* it may become if more people are brought into the workforce. The suitable concept for the size of the output does not really exist at the time. Building on the "General Theory", he proposes his own (also already in the article in Econ Journal in 1939): National Output. The crucial thing is that he includes there the cost of "government services" as well, which is in contrast to the existing "gross national income" concept by Colin Clark (see dissertation by Mitra-Kahn). What government produces must be counted, he says, otherwise we do not know the size of our *real resources*. This, essentially, is how "G" became a component in the GDP formula. Once he has his estimate, he can have a guess at the expanded, war-time output. The next step is to take the increased purchasing power, which increased workforce working for increased working time will earn, away from the private persons (civilian population) and give it to the government. This he proposes to do by compulsory savings, which will become National Debt, to be paid back to civilians after the war out of the post-war capital levy.

The really interesting thing here is that Keynes needed his concept in order to battle the predominant one. As Mitra-Kahn argues, Keynes literally needed to argue against those who would reply to him "what you propose is bad for the economy". So he needed to start counting things differently. And, in the process, to define that "economy" differently, too. It is a (somewhat) powerful example for us today, too.

[Raja · Rating 3 out of 5]

One of Keynes' last works, which he wrote as a mix of a policy brief for the British government and a pamphlet to further the public's understanding of war time economics, emphasizes pursuing full employment and reducing consumption (increasing savings). He makes the political justification for this by comparing it to traffic laws: war time economic rules prevent spenders from getting in each other's way, just as traffic laws prevent drivers from getting in each other's way. To reach these aims he evaluates a menu of policy options including deferred pay, a "capital levy" (which seems to what modern readers would refer to as a capital gains tax), rationing, and price control. Further, he suggests that policymakers should choose from the menu of options based on "public psychology, social justice, and administrative convenience".

I found this book from this tweet, https://bit.ly/2ERSbtj, and thought reading it would help me understand green new deal/climate policy better. This book was ill suited for my purpose because of a mixture of dated language, British language, a lack of graphs, and a focus on the particulars of transitioning to a war economy. The general idea of figuring out how much money is necessary for public welfare and essentially putting the rest towards the war seems like the type of planning we need to address climate change at the scale the IPCC recommended in their most recent report. I wouldn't recommend this to anyone other than people interested in a technical economic work.