University Of Cambridge Faculty

"I was lucky to hear the economist John Maynard Keynes, a few years before his death, give a lecture about the physicist Isaac Newton. Keynes was at that time himself a legendary figure, gravely ill and carrying a heavy responsibility as economic adviser to Winston Churchill. He had snatched a few hours from his official duties to pursue his hobby of studying Newton's unpublished manuscripts. Newton had kept his early writings hidden away until the end of his life in a big box, where they remained until quite recently. Keynes was speaking in the same old building where Newton had lived and worked 270 years earlier. In an ancient, dark, cold room, draped with wartime blackout curtains, a small audience crowded around the patch of light under which the exhausted figure of Keynes was huddled. He spoke with passionate intensity, made even more impressive by the pallor of his face and the gloom of the surroundings."

"I suddenly realized that Keynes and all the brilliant economic students in the room were interested in the behavior of commodities... while I was interested in the behavior of people."

"Keynes did not believe that political freedom and economic efficiency, for which he hoped, would suffice to bring about a better world. It was also necessary to guarantee social justice. The problem of articulating between these various ends is far from being satisfactorily resolved. In his tireless search for a solution to this challenge, Keynes figures among the great humanists and social thinkers whose work merit closer understanding and meditation. For Keynes, the problems of poverty, inequality, unemployment and economic crises are neither exogenous accidents nor punishments for excess, but rather the result of a poorly organized society and human error. It is these up to individuals united in the polis to attenuate or end them by carrying out major reforms. Are such reforms possible within the context of the capitalist economies known to us today? Keynes believed or at least hoped they were. The setting up of the Welfare State seemed to prove him right, but the tide has turned and his diagnosis of capitalism's state of health, put forward now more than half a century ago, is more relevant than ever. No one can claim to know what the future holds. It is up to us, however, to construct it. This is perhaps the main message of John Maynard Keynes."

"Keynes’s central concerns for his own time ring true today. He was worried about the fragility of our collective prosperity, and the grave tensions between nationalism and the rootless cosmopolitan attitudes underpinning a peaceful and flourishing global society. He focused on how to organize our activities and use our prosperity to create a world fit for the good life. He sought to expose the bankruptcy of ascendant ideological nostrums: laissez-faire, spontaneous order, collective cooperation, central planning. And he thought deeply about the technocratic problems of economic management – and about the social, moral, and political disasters that would follow from failing to address them."

"The belief that monetary instability--inflation and deflation--is the principal, or at least a principal, cause of other economic evils; the hope that sound monetary principles can be identified and, when identified, would greatly diminish uncertainty and risk; the focus on the job of the public sector being to provide the private economy with a stable measuring-rod and a stable environment--all these are core ideas of whatever we choose to call monetarism. Keynes believed these ideas very, very strongly in the mid-1920s. And his Tract on Monetary Reform is a review of economic theory and a look at the economic problems of post-WWI Europe through this set of monetarist spectacles."

"The great service of Keynes to recent history is that we now know, in the way that governments did not know in the 1930s, how full employment can be maintained."

"I can tell you — I was helping when Britain was trying to get a loan from the United States immediately after the war, and I was talking to one of Keynes's assistants. And Keynes came in the room and walked over to us and the man I was talking to us said, "This is Coase, who is helping us with the statistics. I don't think you know him." And Keynes said, "No, I don't." And walked off. And that's my life with Keynes."

"In a book which gained a vast publicity, particularly in the United States, he exposed and denounced "a Carthaginian Peace." He showed in successive chapters of unanswerable good sense the monstrous character of the financial and economic clauses. On all these matters his opinion is good. Carried away, however, by his natural indignation at the economic terms which were to be solemnly enacted, lie wrapped the whole structure of the Peace Treaties in one common condemnation. His qualifications to speak on the economic aspects were indisputable; but on the other and vastly more important side of the problem he could judge no better than many others."

"What do you think of J. M. Keynes's book? ... The condemnation of the work of the Conference as a whole is none too severe. I remember few cases in history where negotiators might have done so much good, and have done so much evil."

"After careful research along these lines, I came to the annoying conclusion that Keynes had been 100 percent right in the 1930s. Previously, I had thought the opposite. But facts were facts and there was no denying my conclusion. It didn’t affect the argument in my book, which was only about the rise and fall of ideas. The fact that Keynesian ideas were correct as well as popular simply made my thesis stronger."

"Without Keynes, government budgets would have become unbalanced, as they did before Keynes, during periods of depression and war. Without Keynes, governments would have varied the rate of money creation over time and place, with bad and good consequences. Without Keynes, World War II would have happened, and the economies of Western democracies would have been pulled out of the lingering stagnation of the 1930s. Without Keynes, substantially full employment and an accompanying inflationary threat would have described the postwar years. But these events of history would have been conceived and described differently, then and now, without the towering Keynesian presence. Without Keynes, the proclivities of ordinary politicians would have been held in check more adequately in the 1960s and 1970s. Without Keynes, modern budgets would not be quite so bloated, with the threat of more to come, and inflation would not be the clear and present danger to the free society that it has surely now become. The legacy or heritage of Lord Keynes is the putative intellectual legitimacy provided to the natural and predictable political biases toward deficit spending, inflation, and the growth of government."

"With all his beguiling power of expression and great, but disorderly force of intellect, Keynes will be best remembered as the man who made inflation respectable."

"Keynes was no revolutionary, but his ideas revolutionized 20th-century economics."

"I think it is pretty hard to explain most governments’ responses to the crisis and recession without a healthy dose of Keynes."

"In 1920, regrets and apprehensions about the treaty's alleged severity found expression in a book which was to exercise an immense and far-reaching influence; indeed eventually largely to determine the British governing classes' view of the treaty, and of the treatment of Germany under its provisions. The book, The Economic Consequences of the Peace, was written by J. M. Keynes, an economist of genius, but also very much a precious intellectual typical of the period...a nonconformist by upbringing, a conscientious objector during the war, a liberal, a man of spinsterish personality... The Economic Consequences of the Peace was, except when dealing specifically with economics, simply a moral tract, hot with emotion, which took no account of strategy or the balance of power. Its central argument that the Versailles Treaty was a Carthaginian peace was itself sentimental nonsense, for, in the first place, the treaty was, as the French feared at the time, not Carthaginian enough adequately to reduce German power; secondly, it was extremely lenient in comparison with the peace terms which Germany herself, when she was expecting to win the war, had had in mind to impose on the Allies; and thirdly it was hardly more than a tap on the wrist compared with the peace Germany did in fact impose on Russia at Brest-Litovsk in March 1918... However, it was in the very shortcomings of Keynes's book – its sentimentality, its moral indignation, its sense of guilt, its lack of strategic comprehension – that lay its particular appeal and guaranteed its immense, far-reaching and catastrophic success... For by the early 1930s the Keynesian view of the Versailles Treaty had become to seem the only one an educated, intelligent, liberal-minded man could possibly hold."

"Keynes was a man of prodigious intellectual gifts, who straddled the worlds of banking, politics, the City, journalism and the arts, playing a significant role in all of them. But that doesn't express the nub of his attitude to the world and to human behaviour. What I admire is his belief in the moral responsibility of society towards its members, an attitude he brought to bear on his economic theories."

"Following the financial crisis of September 2008 when the American investment bank Lehman Brothers collapsed, threatening to engulf the entire banking system, the British economist John Maynard Keynes returned to center stage. In the popular press and in the writings of many economists, Keynes featured prominently as governments around the world urgently sought ways to avoid economic collapse."

"His [Keynes's] own leisure was admirably as it was variously employed: in inspecting his pigs; in attending a sale of pictures; in perusing (unlike some bibliophiles) a minor Elizabethan poet, his latest acquisition; in listening to a piano recital, recumbent in a box of the theatre he had built; in gossip and good talk and a glass of wine. ‘My only regret’, he said at the close of a College feast, ‘is that I have not drunk more champagne in my life.’ And so it was that he knew what leisure could give and desired that all should share the gift."

"It is better to be roughly right than precisely wrong."

"We will not have any more crashes in our time."

"If farming were to be organised like the stock market, a farmer would sell his farm in the morning when it was raining, only to buy it back in the afternoon when the sun came out."

"My only regret is that I have not drunk more champagne in my life."

"Markets can remain irrational longer than you can remain solvent."

"Successful investing is anticipating the anticipations of others."

"You can't push on a string."

"When my information changes, I alter my conclusions. What do you do, sir?"

"I don't really start until I get my proofs back from the printers. Then I can begin my serious writing."

"Education is the inculcation of the incomprehensible into the ignorant by the incompetent."

"The avoidance of taxes is the only intellectual pursuit that still carries any reward."

"Ideas shape the course of history."

"Capitalism is “the astonishing belief that the nastiest motives of the nastiest men somehow or other work for the best results in the best of all possible worlds.”"

"The mechanism of reaching equilibrium by means of a rising cost of living, which is vainly pursued by a rising level of wages, will be described in the next chapter. But it is admitted on all hands that this is the worst possible solution."

"The appropriate time for the ultimate release of the deposits will have arrived at the onset of the first post-war slump."

"For the Trade Unions such a scheme as this offers great and evident advantages compared with progressive inflation or with a wages tax. In spite of the demands of war, the workers would have secured the enjoyment, sooner or later, of a consumption fully commensurate with their increased effort; whilst family allowances and the cheap ration would actually improve, even during the war, the economic position of the poorer families. We should have succeeded in making the war an opportunity for a positive social improvement. How great a benefit in comparison with a futile attempt to evade a reasonable share of the burden of a just war, ending in a progressive inflation!"

"For each individual it is a great advantage to retain the rights over the fruits of his labour even though he must put off the enjoyment of them. His personal wealth is thus increased. For that is what wealth is,—command of the right to postponed consumption."

"I have now reached a stage in the argument where I have to choose between being too definite or being too vague. If I set forth a concrete proposal in all its particulars, I expose myself to a hundred criticisms on points not essential to the principle of the plan. If I go further in the use of figures for illustration, I am involved more and more in guess-work; and I run the risk of getting the reader bogged in details which may be inaccurate and could certainly be amended without injury to the main fabric. Yet if I restrict myself to generalities, I do not give the reader enough to bite on; and am in fact shirking the issue, since the size, the order of magnitude, of the factors involved is not an irrelevant detail."

"The nature of unemployment today is totally different from what it was a year ago. It is no longer caused by a deficiency of demand. There is no longer a potential surplus supply of the things we want. The transition to full employment is hindered by two obstacles. The first is due to the difficulty of shifting labour to the points where it is wanted. The second— and, for the time being, the chief—-obstacle is caused by the difficulties, other than the shortage of labour, in the way of existing demand becoming effective."

"In order to calculate the size of the cake which will be left for civilian consumption, we have to estimate (1) the maximum current output that we are capable of organising from our resources of men and plant and materials, (2) how fast we can safely draw on our foreign reserves by importing more than we export, (3) how much of all this will be used up by our war effort."

"The general character of our solution must be, therefore, that it withdraws from expenditure a proportion of the increased earnings. This is the only way, apart from shortages of goods or higher prices, by which we can secure a balance between money to be spent and goods to be bought."

"In peace time, that is to say, the size of the cake depends on the amount of work done. But in war time the size of the cake is fixed. If we work harder, we can fight better. But we must not consume more."

"It is extraordinarily difficult to secure the right outcome for this resultant of many separate policies. It depends on weighing one advantage against another. There is hardly a conceivable decision within the range of the supply services which does not affect it."

"Nothing can be settled in isolation. Every use of our resources is at the expense of an alternative use."

"Courage will be forthcoming if tile leaders of opinion in all parties will summon out of tile fatigue and confusion of war enough lucidity of mind to understand for themselves and to explain to tile public what is required; and then propose a plan conceived in a spirit of social justice, a plan which uses a time of general sacrifice, not as an excuse for postponing desirable reforms, but as an opportunity for moving further than we have moved hitherto towards reducing in equalities."

"It is not easy for a free community to organise for war. We are not accustomed to listen to experts or prophets. Our strength lies in an ability to improvise. Yet an open mind to untried ideas is also necessary. No-one can say when the end will come. In the war services it is recognised that the best security for an early conclusion is a plan for long endurance."

"The book, as it stands, seems to me to be one of the most frightful muddles I have ever read, with scarcely a sound proposition in it beginning with page 45 [Hayek provided historical background up to page 45; after that came his theoretical model], and yet it remains a book of some interest, which is likely to leave its mark on the mind of the reader. It is an extraordinary example of how, starting with a mistake, a remorseless logician can end up in bedlam."

"There was an attraction at first that Mr Baldwin should not be clever. But when he forever sentimentalises about his own stupidity, the charm is broken."

"They offer me neither food nor drink — intellectual nor spiritual consolation... [Conservatism] leads nowhere; it satisfies no ideal; it conforms to no intellectual standard, it is not safe, or calculated to preserve from the spoilers that degree of civilisation which we have already attained."

"The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems — the problems of life and of human relations, of creation and behaviour and religion."

"The old saying holds. Owe your banker £1000 and you are at his mercy; owe him £1 million and the position is reversed."

"His peculiar gift was the power of holding continuously in his mind a purely mental problem until he had seen it through."