Was Keynes a Keynesian?
In theory.

What does it mean to be Keynesian? It was the British economist John Maynard Keynes who declared that when, like today, economic growth grinds to a standstill and businesses fail to provide enough jobs, governments have the ability — and the duty — to fill the gap.

But later, when business cycles and electoral cycles fell out of step, presidents disregarded Keynes's warnings and kept their foot on the gas too long, reducing taxes, boosting spending and offering cheap credit to ensure reelection. The result was stagflation — a toxic mix of low growth and high prices.

Today, in the often deliberately misleading language of our bifurcated politics, "Keynesian" has become an insult — shorthand for spendthrift, wasteful, debt-ridden, elitist, socialist. In this sense, was Keynes a Keynesian? Was he deep in debt, a big-government socialist, a lifelong bureaucrat who profited from his handiwork? Hardly.

Keynes was briefly a government employee, but for most of his life he offered advice to prime ministers for free. As an academic he was paid little, but he understood market forces better than most Wall Street traders and created not one but two fortunes. Each morning, he lingered in bed telephoning his stockbroker with instructions. By the end of 1927, he had amassed $3.4 million in today's money; by 1936, he was worth $44 million. His market advice was much in demand, not only from governments but from the National Mutual and Provincial insurance companies, which put him on their boards.

Keynes made not only himself rich, but his friends and his alma mater, King's College, Cambridge, too. A member of the Bloomsbury Group, a circle of artists and intellectuals, he multiplied their modest trust funds, leaving them free to be creative. Had it not been for him, we may not have the novels of E.M. Forster and Virginia Woolf, nor the artworks of Vanessa Bell, Roger Fry and Duncan Grant.

Keynes also had an eye for a bargain. Seeing a collection of impressionist paintings for sale in Paris, he persuaded British officials to take them in lieu of French war debts. They now hang in London's National Gallery.

Keynes was a lifelong member of Britain's centrist Liberal Party. He wanted to save capitalism, not replace it. It is a mark of his ingenuity that his policies were adopted not only by those on the left but also by conservatives from Winston Churchill and Harold Macmillan to Dwight D. Eisenhower and Richard Nixon.

Would he still be a Keynesian today? It is an odd truth that we owe our understanding of how an economy works to him, even if many of his remedies have lost popularity. Surely the ever-ingenious Keynes would have found a way to adapt his theories to fit our current predicament.


Nicholas Wapshott is the author of "Keynes Hayek: The Clash That Defined Modern Economics," forthcoming in October.