Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-cd9895bd7-jn8rn Total loading time: 0 Render date: 2024-12-26T04:34:36.923Z Has data issue: false hasContentIssue false

15 - Keynes’s Arc of Discovery

From The Economic Consequences to Bretton Woods

Published online by Cambridge University Press:  14 December 2023

By
David Vines
Edited by
Patricia Clavin ,
Giancarlo Corsetti ,
Maurice Obstfeld  and
Adam Tooze
Patricia Clavin
Affiliation:
University of Oxford
Giancarlo Corsetti
Affiliation:
University of Cambridge
Maurice Obstfeld
Affiliation:
Peterson Institute for International Economics, Washington DC
Adam Tooze
Affiliation:
Columbia University, New York
Get access

Summary

This chapter argues that Chapter Two of the Economic Consequences contains a much more important piece of economic analysis than is generally recognized, namely the Ramsey model of economic growth. It is well known that Keynes helped Ramsey to explain that model in the Economic Journal in 1928. But I show here that Keynes had himself given an exposition of the model, nearly a decade earlier, in this chapter. What is more, Keynes then generalizes this model in order to help him think about Europe’s growth process within the global economy, and why it was so fragile. I claim that the analysis in this chapter provides the underpinning for Keynes’s famous criticism of the reparations imposed on Germany. The chapter also makes clear that Keynes is starting to realize what he will need to do to get to the General Theory in 1936. And there are the beginnings of the ideas which would lead to the Bretton Woods conference in 1944 and to the rebuilding of the international monetary system after World War II. Understanding these connections helps us to visualize the arc of Keynes’s discovery, one which stretched all the way from 1919 until his death in 1946.

Keywords

KeynesRamsey modelGeneral TheoryBretton Woodseconomic growthVersailles Peace Conferencereparationstransfer problem
Type
Chapter
Information
Keynes's Economic Consequences of the Peace after 100 Years
Polemics and Policy
 , pp. 388 - 420
Publisher: Cambridge University Press
Print publication year: 2024

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acheson, D. (1969) Present at the Creation, New York: Norton.Google Scholar
Ackley, G. (1961) Macroeconomic Theory, New York: Macmillan.Google Scholar
Arndt (1943) The Economic Lessons of the Nineteen-Thirties, London: Chatham House.Google Scholar
Blanchard, O. (2011) Macroeconomics, Boston: Pearson.Google Scholar
Carlin, W. and Soskice, D. (2015) Macroeconomics: Institutions, Instability and the Financial System, Oxford: Oxford University Press.Google Scholar
Dasgupta, P. (2019) “Ramsey and Intergenerational Welfare Economics”, The Stanford Encyclopedia of Philosophy (Summer 2019 Edition), Edward N. Zalta, ed. https://plato.stanford.edu/archives/sum2019/entries/ramsey-economics/.Google Scholar
Harrod, R. (1948) “Keynes, the Economist” Chapter VIII in Harris (1960).Google Scholar
Harris, S. (1948) The New Economics; Keynes’ Influence on Theory and Public Policy, New York: Alfred A. Knopf.Google Scholar
Hicks, J. (1966) A Memoir by Sir John Hicks. Initial chapter in Robertson (1966).Google Scholar
IMF (2004) The Bretton Woods Institutions Turn 60, Washington: International Monetary Fund. Available at http://external.worldbankimflib.org/Bwf/60panel2.htmGoogle Scholar
Jones, C. (2020) Macroeconomics, New York: Norton.Google Scholar
Keynes, J. M. (1919) The Economic Consequences of the Peace. Collected Works of J. M. Keynes, vol. II.Google Scholar
Keynes, J. M. (1923) A Tract on Monetary Reform. Collected Works of J. M. Keynes, vol. III.Google Scholar
Keynes, J. M. (1929) “The German Transfer Problem”, The Economic Journal, 39(153), 1–7.Google Scholar
Keynes, J. M. (1930) A Treatise on Money, volumes 1 and 2. J. M. Keynes Collected Works, vols. V and VI.Google Scholar
Keynes, J. M. (1936) The General Theory of Employment, Interest and Money, J. M. Keynes Collected Works, vol. VII.Google Scholar
Keynes, J. M. (1940) How to Pay for the War, J. M. Keynes Collected Works, vol. VIII.Google Scholar
Keynes, J. M. (1944) Speech by Lord Keynes on the International Monetary Fund debate House of Lords Debates, May 16, 1944.Google Scholar
Keynes, J. M. (1946) “The Balance of Payments of the United States”, Economic Journal, 56(222), 172–187.Google Scholar
Keynes, J. M. (1975) Essays in Biography, J. M. Keynes Collected Works, vol. IX.Google Scholar
Keynes, J. M. (1980a) Activities 1940–1943: External War Finance, J. M. Keynes Collected Works, vol. XXIII.Google Scholar
Keynes, J. M. (1980b) Activities 1940–1944 Shaping the Post War World: The Clearing Union, J. M. Keynes Collected Works, vol. XXV.Google Scholar
Keynes, J. M. (1980c) Activities 1941–1946 Shaping the Post War World: Bretton Woods and Reparations, J. M. Keynes Collected Works, vol. XXVI.Google Scholar
Keynes, J. M. (1983) Economics Articles and Correspondence: Investment and Editorial, J. M. Keynes Collected Works, vol. XII.Google Scholar
Keynes, J. M. (1971) The Collected Works of John Maynard Keynes, London: Macmillan.Google Scholar
Lewis, W. A. (1954) “Economic Development with Unlimited Supplies of Labour”, The Manchester School, 22(2) 139–191.Google Scholar
Meade, J. E. (1951) The Theory of International Economic Policy, vol. 1: The Balance of Payments, Oxford: Oxford University Press.Google Scholar
Meade, J. E. (1990) The Collected Papers of James Meade, vol. IV (Howson, S. and Moggridge, D., eds.), London: Unwin Hyman.Google Scholar
Ohlin, B. (1929) “The Reparation Problem: A Discussion”, The Economic Journal, 39(154), 172–182.Google Scholar
Picketty, T. (2014) Capital in the Twenty-first Century, Boston, MA: Belknap Press.Google Scholar
Ramsey, F. (1928) “A Mathematical Theory of Saving”, The Economic Journal, 38(152), 543–559.Google Scholar
Robertson, D. (1966) Essays in Money and Interest, London: Collins.Google Scholar
Rosenstein-Rodan, Paul (1943) “Problems of Industrialization of Eastern and South Eastern Europe”, Economic Journal, 53(210), 202–211.Google Scholar
Schumpeter, J. A. (1946) “John Maynard Keynes, 1883–1946”, American Economic Review, 36(4), 495–518.Google Scholar
Skidelsky, R. (2000) John Maynard Keynes: Fighting for Britain, London: Macmillan.Google Scholar
Solow, R. M. (1956) “A Contribution to the Theory of Economic Growth”, The Quarterly Journal of Economics, 70(1), 65–94.Google Scholar
Steil, B. (2013) The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order, Princeton: Princeton University Press.Google Scholar
Swan, T. W. (1956) “Economic Growth and Capital Accumulation”, Economic Record, 32(2), 334–361.Google Scholar
Swan, T. (1963) “Longer Run Problems of the Balance of Payments”, Chapter 24 in the Australian Economy: A Volume of Readings, edited by Arndt, H.W. and Corden, W. M., Melbourne: F. W. Cheshire. Reprinted in A.E.A. Reading in International Economics, edited by Richard, E. Caves and Harry, G. Johnson, Homewood: Irwin & Co.Google Scholar
Temin, P., and Vines, D. (2013) The Leaderless Economy: Why the World Economic System Fell Apart and How to Fix It, Princeton: Princeton University Press.Google Scholar
Temin, P., and Vines, D. (2014) Keynes: Useful Economics for the World Economy, Cambridge, MA: MIT Press.Google Scholar
Van Dormael, A. (1978) Bretton Woods: Birth of a Monetary System, London: Macmillan Press.Google Scholar
Vines, D. (2003) “John Maynard Keynes 1937–1946: The Creation of International Macroeconomics”, Review of John Maynard Keynes 1937–1946: Fighting for Britain by Robert Skidelsky. Economic Journal 115, pp. F338–60.Google Scholar
Vines, D. (2008) “Meade, James Edward (1907–1995)”, The New Palgrave Dictionary of Economics, Springer, 4079–4097.Google Scholar
Vines, D. (2017) “John Maynard Keynes as a Global Economic Policymaker: First Do the Macro and then Do the Rest”, Annals of the Fondazione Luigi Einaudi, 51(1), 123–148.Google Scholar
Vines, D., and Wills, S. (2020) “The Rebuilding Macroeconomic Theory Project Part II: Multiple Equilibria, Toy Models, and Policy Models in a New Macroeconomic Paradigm”, Oxford Review of Economic Policy, 36(3), 427–497.CrossRefGoogle Scholar
Weber, M. (1930) The Protestant Ethic and the Spirit of Capitalism. (Reprinted in 1970), London: Routledge.Google Scholar

Save book to Kindle

To save this book to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×