John Maynard Keynes was one of the most prominent economists of the 20th century whose works produced a profound impact on the development of economic science. Moreover, ideas developed by Keynes were and still are widely implemented by many states and economic theory created by Keynes is often viewed as very helpful. In such a situation, it is quite natural that many states use Keynes theory and ideas to develop their economic policy in order to prevent possible economic crisis, overcome current economic problems and create the basis for the sustainable development.
At the same time, J.M. Keynes’ ideas were quite innovative, though they were based on findings of other economists, but he managed to reevaluate findings of other specialists and develop his own theory. Even nowadays, his theory is relevant and, what is more, it is modified and adapted to the changing economic trends, known as neo-Keynesian theory. This is why it is extremely important to discuss in details the life and work of Keynes and his economic ideas that will help better understand the development of economic theory of the 20th century and the economic policy of many states.
Biography of John Maynard Keynes
John Maynard Keynes was born at 7 Melville Road, Cambridge, on June 5, 1883. His interest in economy and his successes in the development of economic science were partially determined by the fact that since his early childhood he grew in the environment where economic theory and economy at large played a very important role. His father was John Neville Keynes was an economic lecturer at Cambridge University and his mother was Florence Ada Brown who was a successful author and a social reformer. In such a way, the choice of the future occupation of John Maynard Keynes was, to a significant extent, determined by his parents.
At the same time, the social background of Keynes provided him with excellent opportunities to receive the education of the highest quality. In this respect, it should be said that his education is closely linked with two probably the most respectable and well-known educational institutions of the UK. To put it more precisely, Keynes enjoyed the early elite education at Eton, where he displayed talent in a wide range of subjects, especially mathematics, classics and history (Friedman, 87). Later, he continued his education at King’s College, Cambridge, where he focused on mathematics and, after that, he studied at Cambridge University, where he particularly succeeded in economics.
On receiving education, Keynes started his professional career and readily accepted the proposition of lectureship at Cambridge in economics and later he was appointed to the Royal Commission on Indian Finance and Currency. He paid a lot of attention to scientific work. Naturally, he concentrated his attention on economics and, among his most popular and prominent works, it is possible to name his “General Theory of Employment, Interest and Money”¯ published in 1936 (Carabelli, 311).
At the same time, he was not only a successful scientist but he also succeeded in business, though the Stock Market Crash of 1929 almost ruined his fortune, but he managed to recoup it and he remained a wealthy person. In such a way, he could work prolifically due to the stability of his material position and ample opportunities to conduct researches and analysis of basic economic trends and theories.
John Maynard Keynes died on April 21, 1946, of myocardial infraction.
Economic views of John Maynard Keynes
Obviously, John Maynard Keynes produced a profound impact on the development of economic science in the 20th century. Basically, he may be viewed as one of the major economists of his time, who suggested original view on the economic development, while his ideas had changed the traditional view on the economic development and, especially, on the role of state in the economic development of countries. It should be said that J.M. Keynes insisted on the great significance of macroeconomics and he clearly distinguished it from microeconomics, underlying the fact that these two concepts should be viewed as different essences.
At the same time, in his numerous works he laid emphasis on the fact that it is necessary to pay a lot of attention to macroeconomics. He stood on the ground that it is impossible to maintain the economic stability within a country without a stable and predictable macroeconomic policy on the level of the state.
On analyzing his theoretical developments, it should be pointed out that partially his ideas are based on findings of his predecessors. For instance, he used methods developed by Alfred Marshall which eventually led him to the foundation of the new branch of economic science, macroeconomics. Also, it should be said that the view of given prices and wages income that determines demand had already been developed prior to J.M. Keynes.
However, he did not only summarized the theoretical developments of other economists, but he also introduced substantial innovations, which made his scientific findings extremely important for the contemporary science and, to a significant extent, influenced the development of economic science as well as the economic policy of many states. For instance, he rejected one of the main postulates of Classical economists that the market ultimately settles at a state of full employment. In his works on employment, J.M. Keynes had challenged this view and, in contrast to the Classical theory, he argued that a full employment equilibrium position is not the ultimate state, but it is just a part of continuum equilibria. He underlined that the dynamic development of economy prevents the settlement of a state of full employment for a considerable period of time.
Furthermore, J.M. Keynes had a significant economic experience not only in the theoretical field but also in practical life. He witnessed very difficult times in the economy of the UK as well as of the entire world. His observations made during the World War I and the period of a profound economic crisis in the late 1920s enriched consistently his knowledge and enlarged his eyesight. Probably, such an experience helped him to develop his economic theory.
In this respect, it should be said that J.M. Keynes developed a very original theory and, unlike his predecessors and contemporaries, he was one of the first economists who started to pay a particular attention to the role of state in the regulation of economy and economic development. To put it more precisely, J.M. Keynes argued that the state should play an active role in the economic development because it has powerful tools to direct the economic development or contribute to the stable economic development. In this respect, the economist mainly focused on the macroeconomic factors and the possibility of a state to influence macroeconomic development of economy. He stood on the ground that the state should conduct a possibly more effective monetary policy and interfere into the economic development in order to maintain the stable development of economy and avoid possible economic crisis.
The latter, according to Keynes, were, to a significant extent, provoked by the lack of the regulation from the part of the state. This is why he insisted on the necessity to regulate the economic development of countries and the state should play an important role in this regard. For instance, he emphasized the necessity of the monetary regulation, the implementation of an effective fiscal system, the endorsement of the state control over monetary processes to control the inflation. Basically, Keynes viewed the state as the powerful player in the economic life of the country that should concentrate on the major macroeconomic factors, such as inflation, unemployment, etc. through the regulation of which the state could contribute to the stable economic development.
His ideas were widely implemented in practice and many states used a strictly regulated monetary policy to overcome economic crisis and improve the situation in national economies.
Thus, taking into account all above mentioned, it is possible to conclude that J.M. Keyns played an important role in the development of economic science as well as in the economic development of many countries. His ideas were very popular and even nowadays his theory has a lot of supporters who continue to develop Keynesian theory.