Why you should care
Because this uninhibited thinker redefined how governments view markets, as well as artistic endeavor.
It might surprise you to learn that John Maynard Keynes — perhaps the world’s most recognized and influential economist — had a private life that would make a Pride Parade seem dull.
Many don’t realize that Keynes belonged to London’s infamous “Bloomsbury Group” at the turn of the last century. This collection of artists, writers and intellectuals — almost as famous for their social and sexual nonconformism as for their celebrated work — included such towering figures as Virginia Woolf and E.M. Forster.
Although he married a Russian ballerina, the young Keynes had a series of tangled sexual relationships with men, including a messy love triangle with fellow Bloomsbury members Lytton Strachey and Duncan Grant.
Colorful stuff — and more than a mere footnote because it turns out that Keynes’s work was heavily influenced by his radical, creative friends.
The economic establishment of the time was firmly utilitarian, but Keynes argued for the importance of artistic and aesthetic pursuits; much later in life he would play a key role in founding Britain’s Arts Council, which provided the inspiration for other arts-funding bodies around the world, including in the U.S.As with so many tales of the British elite, the story of Keynes and Bloomsbury begins at the University of Cambridge. The budding economist won a scholarship and studied mathematics but was drawn to philosophy and clubs. Along with Strachey, Clive Bell, Leonard Woolf and other future Bloomsbury notables, he learned to question established definitions of what comprises the good life, a perspective that would underpin much of his later work.
He also had a pronounced indifference to money, insisting it was simply a means for achieving a comfortable life, rather than an end in itself. Perhaps it was that freethinking attitude that equipped him to become a star investor in the stock market.
Keynes’s decision to devote himself to economics, despite his predilection for philosophy, can perhaps be attributed to Alfred Marshall. Author of The Principles of Economics, the dominant textbook of the time, Marshall was among the most influential living economists. Keynes later wrote an obituary for his former teacher, echoing Marshall’s lament that “economics has little to do with ideals.”
After Cambridge, Keynes and his university friends clustered around Bloomsbury, a fashionable area in central London. They were introduced to Vanessa and Virginia Stephen, sisters who would become the linchpins of the Bloomsbury circle. Vanessa went on to marry Clive Bell and Virginia, of course, tied the knot with Leonard Woolf.
In their writing, art and conversation, the group displayed a keen awareness that the certainties of Victorian England — empire, aristocracy, patriarchy — were beginning to crumble and that the structures and systems of the old world could not cope with the overwhelming and ever-shifting realities of the new.
Virginia Woolf, for example, abandoned the traditional narrative form of the 19th-century novel, replacing it with free-flowing studies of human emotion and consciousness.
Reducing Germany to servitude … and depriving a whole nation of happiness should be abhorrent and detestable.
Keynes, too, was in the business of rejecting old orthodoxies, exemplified by his rejection of the gold standard, which he saw as an inadequate foundation for the post-war economy. Although he was swimming against the tide of political opinion and the gold standard was reinstated, the move caused monetary collapse, just as he had predicted.
Similarly, in his 1919 polemic, The Economic Consequences of the Peace, Keynes angrily — and presciently — denounced the Treaty of Versailles, arguing that “reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable.”
By the 1930s, with the Great Depression looming, Keynes began work on his magnum opus, The General Theory of Employment, Interest and Money. In this tome, he took the immensely unpopular position that markets could not and would not correct themselves and that it was the duty of the state to invest heavily in infrastructure, education, health and other public services to stimulate growth, even if it required extensive borrowing.
Previous precepts of the market economy had been formulated by drawing macroeconomic conclusions from microeconomic observations. For example, unemployment was attributed to individual laziness or ineptitude, and the “invisible hand” that shaped local markets was extrapolated to the national economy. Keynes overthrew this concept by showing that employment levels were dictated by aggregate economic demand — and that the invisible hand sometimes dropped the ball.
His theory was attacked at the time, but proved its worth after World War II, when governments borrowed heavily — primarily from the U.S. under the Marshall Plan — to jump-start their battered economies. As Time magazine put it, “His radical idea that governments should spend money they don’t have may have saved capitalism.”
Despite decades of extraordinary post-war growth, Keynes fell out of favor once again in the free market heyday of Milton Friedman, Margaret Thatcher and Ronald Reagan. But in the aftermath of the 2008 financial crisis, Keynes’s theories saw a resurgence. Obama’s Keynesian policies helped initially but were counteracted by the contraction of local government spending. Critics say it’s because Keynesian spending doesn’t work; Keynesians say it’s because enough wasn’t spent.
In other words, Keynes remains controversial today. His outlier status never stopped him from communicating daring new theories — a boldness born of those wild weekends with the Bloomsbury set.