In the spring of 1918, John Maynard Keynes could distinctly hear the sounds of gunfire from the advancing German forces as his train traveled through northern France. The signs of conflict on the western front were apparent, yet Keynes, who was serving as a Treasury official at the time, was not on a mission related to the war; rather, he was en route to acquire art.
Keynes took a bold step to participate in an auction for the estate of the late Edgar Degas, who had passed away the year prior. This future titan of 20th-century economics returned to London with valuable impressionist pieces intended for the National Gallery, having successfully convinced the chancellor of the exchequer to authorize a £20,000 expenditure for the auction.
This narrative illustrates several facets of Keynes’s character. It highlights his adeptness at securing funding from the government during a time of significant military expenditure. It also showcases his passion for art, which played a significant role in his involvement in the establishment of the Arts Council. Furthermore, it reflects his belief that the pursuit of economic growth should not overshadow the appreciation of life’s finer aspects.
This context makes the title of James Graham’s latest play about Keynes, “The Standard of Living,” particularly fitting. While Keynes analyzed statistics, he was much more than just a data analyst. He held strong opinions regarding the economic failures of the 1920s and 1930s, yet he also enjoyed delving into philosophical discussions with figures like Bertrand Russell and Ludwig Wittgenstein. He advocated for an economy that would enhance leisure time rather than merely facilitate the accumulation of wealth. Keynes transformed economic thought without being revolutionary in his approach.
Coming from a privileged academic background, Keynes attended Eton before pursuing mathematics at Cambridge. His post-university social circle included the Bloomsbury Group, a collective of artists and writers, among them Virginia Woolf, as well as two of his romantic partners, Lytton Strachey and Duncan Grant. This group valued nonconformity and rejected traditional norms.
The Bloomsbury Group not only fulfilled Keynes’s artistic inclinations but also influenced his economic philosophies. He did not view economic growth as a goal in itself but rather as a means to achieve a fulfilling life, akin to living like “the lilies in the field.” In his work “Economic Possibilities for Our Grandchildren,” he predicted a future where economic challenges would be resolved, leading to a significantly reduced working week and a diminished emphasis on wealth accumulation.
Keynes’s willingness to defy conventional wisdom was evident in his early publication, “The Economic Consequences of the Peace,” which accurately forecasted that the harsh conditions imposed on Germany by the Treaty of Versailles in 1919 would foster resentment and a desire for revenge.
A key theme of the play revolves around the intellectual clash between Keynes and Austrian economist Friedrich Hayek. Hayek argued that free markets, if left unregulated, would yield the best economic results and that crises would self-correct over time without government intervention.
In contrast, Keynes maintained the opposite stance, encapsulated in his well-known remark: “In the long run we are all dead.” He believed that economists oversimplified their task if they merely indicated that the economy would stabilize post-crisis. He argued that without government intervention to stimulate demand, high unemployment could persist indefinitely. This perspective was central to his seminal work, “The General Theory of Employment, Interest and Money,” which challenged traditional economic thought and significantly influenced policymakers in the years following World War II, when it became accepted that governments had a role in managing demand to achieve full employment.
Though Keynes recognized the shortcomings of capitalism, he was not a Marxist. As an unabashed elitist, he aimed to rescue capitalism from its inherent flaws, believing it to be the most effective means of preserving civilized values. Social reformer Beatrice Webb noted, “He is contemptuous of common men, especially when gathered together in herds,” indicating his lack of desire to rally the masses to his cause.
Consequently, Keynes’s theories have often been met with skepticism from the far left. His biographer, Robert Skidelsky, remarked that “Marxists have long argued that Keynes’s ideas were embraced because they served the interests of the bourgeoisie in the 1930s and were abandoned when they threatened capitalist profits in the 1970s.”
Indeed, by the mid-1970s, Keynesian ideas fell out of favor, coinciding with an era of rising inflation and stagnant economic growth—termed “stagflation.” Economists who followed Keynes were perplexed by the simultaneous rise in inflation and unemployment, while a new political movement, led by Margaret Thatcher and Ronald Reagan, emerged, advocating for a dismantling of the post-war economic framework built upon principles of full employment, state ownership, robust trade unions, and extensive welfare provisions.
The 2008 global financial crisis marked a significant turning point for the neoliberal economic model. The conviction that markets were infallible led to the neglect of the perils of speculation, ultimately pushing the global banking system to the brink of disaster. For the first time since the 1930s, there was a renewed interest in Keynesian principles as nations sought to address the shortcomings of unregulated markets.
