Created 2/221/1996
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John Maynard Keynes deserves a webpage of his own

Under Construction


George Bernard Shaw (left) and John Maynard Keynes (right),
at the Fitzwilliam Museum, Cambridge, U.K., 1936

Short Pieces

A brief essay on Keynes's Tract on Monetary Reform --perhaps his single best book.

Reflections by Alec Cairncross on Keynes, from The Economist.

The Atlantic has an electronic copy of an article by Keynes on "The World Economic Outlook" that it published in 1932 at:

Bon Mots

Longer Quotations

Keynes argued very strongly during the Great Depression against "Liquidationism"--the idea that, in the words of American Treasury Secretary Andrew Mellon:

[T]he government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: "Liquidate labor, liquidate stocks, liquidate the farmes, liquidate real estate." He insisted that, when the people get an inflation brainstorm, the only way to get it out of their blood is to let it collapse. He held that even a panic was not altogether a bad thing. He said: "It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people"...

At great length, Mr. Mellon recounted... his recollection of the great depression of the [eighteen] seventies that had followed the Civil War.... He told of the tens of thousands of farms that had been foreclosed; of railroads that had almost wholly gone into the hands of the [bankruptcy] receivers; of the few banks that had come through unscathed; of many men who were jobless and mobs that roamed the streets. He told me that his father had gone to England during that time and had cut short his visit when he received word that the orders for steel were pouring toward the closed furnaces; by the time he got back, confidence was growing on every hand; suddenly the panic had ended, and in twelve months the whole system was again working at fall speed.

"Liquidationism" was a very powerful current of thought arguing against any government action to alleviate the Great Depression in the early 1930s.

Keynes's Assessment of "Liquidationist" Explanations of the Great Depression

It seems an extraordinary imbecility that this wonderful outburst of productive energy [over 1924-1929] should be the prelude to impoverishment and depression. Some austere and puritanical souls regard it both as an inevitable and a desirable nemesis on so much overexpansion, as they call it; a nemesis on man's speculative spirit. It would, they feel, be a victory for the mammon of unrighteousness if so much prosperity was not subsequently balanced by universal bankruptcy. We need, they say, what they politely call a 'prolonged liquidation' to put us right. The liquidation, they tell us, is not yet complete. But in time it will be. And when sufficient time has elapsed for the completion of the liquidation, all will be well with us again.

I do not take this view. I find the explanation of the current business losses, of the reduction in output, and of the unemployment which necessarily ensues on this not in the high level of investment which was proceeding up to the spring of 1929, but in the subsequent cessation of this investment. I see no hope of a recovery except in a revival of the high level of investment. And I do not understand how universal bankruptcy can do any good or bring us nearer to prosperity... [p. 349].

While some part of the investment which was going on in the world at large was doubtless ill judged and unfruitful, there can, I think, be no doubt that the world was enormously enriched by the constructions of the quinquennium from 1925 to 1929; its wealth increased in these five years by as much as in any other ten or twenty years of its history... [p. 347].

Doubtless, as was inevitable in a period of such rapid changes, the rate of growth of some individual commodities [over 1924-1929] could not always be in just the appropriate relation to that of others. But, on the whole, I see little sign of any serious want of balance such as is alleged by some authorities. The rates of growth [of different sectors]seem to me, looking back, to have been in as good a balance as one could have expected them to be. A few more quinquennia of equal activity might, indeed, have brought us near to the economic Eldorado where all our reasonable economic needs would be satisfied... [pp. 347-48].

John Maynard Keynes, The General Theory and After: Part I, Preparation; Collected Writings of John Maynard Keynes, vol. 13, pt. 1, Donald Moggridge, ed., (Cambridge, U.K.: Cambridge University Press).

John Maynard Keynes, "An Economic Analysis of Unemployment" (University of Chicago: 1931 Harris Foundation lectures).


Created 2/221/1996
Go to
Brad De Long's Home Page

Associate Professor of Economics Brad De Long, 601 Evans
University of California at Berkeley; Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax