John Maynard Keynes (1883-1946). Week 6. Artists & writers including Virginia Wolff, Lytton Strachey, Duncan Grant. Movie link: Carrington (1995). Bloomsbury Group. Keynes on Marx.
Movie link: Carrington (1995)Bloomsbury Group
"How can I accept the [Communist] doctrine, which sets up as its bible, above and beyond criticism, an obsolete textbook which I know not only to be scientifically erroneous but without interest or application to the modern world? How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeoisie and the intelligentsia, who with all their faults, are the quality of life and surely carry the seeds of all human achievement? Even if we need a religion, how can we find it in the turbid rubbish of the red bookshop? It is hard for an educated, decent, intelligent son of Western Europe to find his ideals here, unless he has first suffered some strange and horrid process of conversion which has changed all his values."
A “Carthaginian Peace”The Economic Consequences of the Peace (1919)
Keynes expressed it as the law that supply creates its own demand.
It implies that general gluts are impossible.
It based on the assumption that the economy will reach a general equilibrium.
The classical theory assumes savings all flow into investment so that the economy naturally runs at full-employment.
What mechanism keeps the balance?
Monetary policy can become ineffective when the interest rate gets too low.
"In my opinion it is a grand book...Morally and philosophically I find myself in agreement with virtually the whole of it: and not only in agreement with it, but in deeply moved agreement ....
"What we need therefore, in my opinion, is not a change in our economic programmes, which would only lead in practice to disillusion with the results of your philosophy; but perhaps even the contrary, namely, an enlargement of them. Your greatest danger is the probable practical failure of the application of your philosophy in the United States."