CHAPTER 25
Keynes and Friedman:
Pump Priming and Individual Choice
John Maynard Keynes (1883-1946)
John Maynard Keynes was bom in Cambridge, England in- His father was an economist and logician and the first
teacher of his son, who later attended Eaton College and Cam
bridge University. He worked for the British government’s India
Office and during World War I worked for the treasury depart
ment. He was part of the delegation which represented England
at the Paris Peace Conference of 1919, but resigned because he
opposed the terms of the Treaty of Versailles. He wrote The
Economic Consequences o f Peace, in which he predicted that the
massive reparations that were demanded of Germany would
result in economic nationalism and a return to militarism. He
taught at Cambridge University, made a fortune dealing in
international currencies, and generally succeeded in virtually
every activity he undertook. He was a member of the Bloomsbury
Group, an English intellectual elite, which exerted great influ
ence in artistic circles.
During World War II he he wrote How to Pay for the War, in
which he suggested that workers should have a part of their
salaries deducted automatically and invested in government
bonds. In 1936 he wrote The General Theory o f Employment,
Interest, and Money, which dealt with the problem of prolonged
depression. The General Theory is considered to be one of the
most important theoretical works of the twentieth century. In
1942 he was made a baron, and later headed the British delega
tion to the United Nations. He had a lifelong interest in the arts
and helped form the London Artists Association. This interest
carried over into his personal life and he married a famous
Russian ballerina, Lydia Lopokova. The influence of his ideas
on Franklin Roosevelt during the Great Depression was consid
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