In the autumn of 1930, John Maynard Keynes sat down and wrote an essay that began with what appeared to be an outrageous prediction. The world was in the grip of the Great Depression; unemployment was rising across Europe and America; banks were failing; and the economic orthodoxy of the day prescribed exactly the kind of fiscal austerity that Keynes believed was making everything worse. Into this atmosphere of crisis and conventional thinking, he published "Economic Possibilities for our Grandchildren," in which he argued that within a hundred years, the standard of living in the advanced economies would be between four and eight times higher than it was at that moment, that the economic problem, the struggle for subsistence that had preoccupied humanity since its beginning, would essentially be solved, and that the great challenge facing future generations would not be scarcity but leisure, not how to produce enough but how to live well with abundance. His contemporaries, surrounded by breadlines and bank runs, found the essay either visionary or delusional. Keynes was entirely serious, and by most measures, he was right.
John Maynard Keynes (1883–1946) was an influential British economist whose ideas on government intervention in the economy were considered both revolutionary and controversial, and whose impact on how the modern world understands the relationship between markets, governments, and human welfare has been so pervasive that it is difficult to imagine economic policy without him. His central insight, that in times of economic contraction governments should spend rather than cut, that demand could be managed through fiscal policy, and that the economy left to itself would not necessarily find its way back to full employment, overturned a century of orthodoxy and provided the intellectual framework for the post-war settlements that shaped the prosperity of the mid-twentieth century. When that framework began to crack in the 1970s, his critics declared him finished. When the financial crisis of 2008 arrived, governments around the world instinctively turned to his prescriptions, and the debate over whether he was ahead of his time began again.
Few writers have told the story of Keynes and his ideas with more clarity or more narrative drive than Nicholas Wapshott, author of Keynes Hayek: The Clash That Defined Modern Economics. Wapshott brings to his subject both a journalist's instinct for the human drama at the heart of intellectual conflict and a genuine grasp of the economic arguments at stake, tracing the rivalry between Keynes and Friedrich Hayek that defined the terms of the most consequential economic debate of the modern era.
In the conversation that follows, Wapshott reflects on why Keynes was ahead of his time, what his ideas got right, and where they have been misapplied, and why a British economist who died in 1946 continues to provoke arguments in the corridors of power that show no sign of being resolved.
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