The Garden of Learning

Arts & Letters

Which economist wrote The General Theory of Employment, Interest and Money?

  • John Maynard Keynes
  • Friedrich Hayek
  • Milton Friedman

The answer is John Maynard Keynes. Keynes, in 1936.

Keynes, in 1936, arguing against the prevailing view that markets self-correct - that in a depression, wages and prices would fall until employment recovered. His case was that they do not fall fast enough and that an economy can settle at high unemployment indefinitely, so the state should spend to make up the missing demand.

His line about the long run is the most misquoted in economics. In the long run we are all dead is not a rejection of the future; the full passage says economists set themselves too easy a task if all they can tell us is that when the storm is long past the ocean will be flat again. It is an attack on the uselessness of an answer that arrives after the crisis.

He had also written the furious book after Versailles in 1919, resigning from the British delegation and predicting that a settlement designed to impoverish Germany would destabilise Europe. At Bretton Woods in 1944 he lost the argument for a global clearing union to the American plan, and the institutions built there - the IMF and the World Bank - are compromises he was unhappy with. He also made and lost several fortunes speculating, and built up the endowment of his Cambridge college doing it.