Maynard Keynes: An Economist's Biography

A Review Article

By PIERO V. MINI*

AnsTRAcr. D. E. Moggridge's perhaps too exhaustive biography is examined

and some questions are raised relative to Keynes' views on theory and their
source, and his views on German reparations and whether Britain should have
accepted the original provisions of the agreement providing for establishment
of the World Bank and the International Monetary Fund.

OF AI.I. FORMS OF WRrriNG, a biography is, on the surface, the least demanding
since one deals with facts which naturally arrange themselves chronologically.
But a moment's reflection shows that biography has its problems. The writer
must be selective in the choice of facts. What principle will he follow? Should
the historical background be given a role and, if so, how much of a role? Does
the historical background include the intellectual too? Should one peer into
the psychology of the subject, perhaps to throw light on his intellectual creations?
In the preface of his biography of Keynes, Professor Moggridge is cognizant
of these problems; he stoutly rejects, for instance, the Stigler-Walker view that
the biography of an economist must be solely concerned with his economic
theorizing, with the arduous climb from error to truth. Indeed, Moggridge in-
troduces his preface with a quotation from Virginia Woolf to the effect that a
biography should give us "the creative fact; the fertile fact; the fact that suggests
and engenders." Moggridge agrees: "facts do not speak for themselves . . .
Selection and arrangement do m a t t e r . . . "
Alas, anyone tackling J. M. Keynes' biography has his work cut out. By his
own admission, Keynes was a compulsive writer (see My Early Beliefs) and a
hoarder of paper. One suspects that when he took the train or went to the
theater, he saved the ticket to enable future biographers to follow his footsteps.
This Moggridge does with unrelenting thoroughness. Via appointment calendars,
diaries, letters and carbon copies of letters, aides de memoir, financial records,
tabulations of "sexual activities" and of "partners" (see Plates 9 and 10), and
memoirs and records of conversations, he gives a thorough account of his sub-
ject's life. He examined the Charleston Papers, the Keynes Papers, the Joan

• [Piero V. Mini, PhD., i.s a.ssoclale professor of economics at Bryant College, Smithfiekl, Rl
02917.1 This is an invited review article.
AniLTiKin Journal of Economics and Sociolo(!y. Vol. 55,"No. i Uuly. t996).
© 1996 Amcric;iii Journal of Economics anti Sociology, Inc.
328 American fournal of Economics and Sociology

Robinson Papers, the Richard Keynes Papers, the Polly Hill Collection, plus the
official public record of background events, and, of course, Keynes' own profes-
sional writings, most of whose thirty volumes Moggridge himself edited. Mogg-
ridge's diligent work on Keynes has stretched over two decades and, not sur-
prisingly, has resulted in this most complete biography.
There are so many facts demanding attention that sometimes the language
creeks under the strain; "Maynard spent a further two to five days there [in
Florence] before he went off to to [sic] London via Germany to collect his brother
who had been spending a term in the Black Forest improving his German before
going up to Pembroke College, Cambridge, to read natural sciences,'"
The problem, of course, is the pace of Keynes' life; dinner parties, outings,
weekends in the country, working lunches, trips abroad, addresses to various
groups, sicknesses, arguments with Bloomberries, meetings with politicians,
economists, friends; gambling excursions to the South of France , , , all demand
attention and they get it.
At the beginning of Augu.st [1919] he settled down to Charle.ston with the book [the writing
of The Economic Consequences of the Peace] after a whirlwind ten days in London, during
which he opened a discussion at the Tuesday Club on the Peace terms; gave evidence to the
Official Committee on Indian Exchange and Currency, which was picking up where the
Chamberlain Committee had left off in the Spring of 1914 as well as exaniining the appropriate
post-war exchange rate for the rupee; addressed the Fight the Famine Council; went to the
Diaghilev ballet season at the Alhambra twice (including the premiere of The Three Cornered
Hat), and, with Clive Bell, threw an end-of-season ballet dinner party for thirty-three including
a selection of Bloomsbury, members of the cast plus Derain, the Picas.sos, Massine and Ernst
Ansermet, He remained there, except for two overnight visits to London, until the beginning
of October,^

(A footnote adds the information that Lydia Lopokova was not at the dinner,
having "disappeared," much to Keynes' regret), Keynes must have known ev-
erybody who counted in the first half of the century; a dramatispersonae ai the
end of the book lists nearly 600 "characters," The thoroughness of this biography
is not in doubt.
There are, however, a few points with which this reviewer would like to take
issue. One of them pertains to Keynes' responsibility for the demands made by
the revenchist Hughes Committee (1918) that Germany be made to pay for the
full cost of the war. The committee, says Moggridge, arrived at the absurd figure
of L24,000 million "after one day" of discussion and Keynes had nothing to do
with it,' The story is not so simple,
Vol, XVI of the Collected Writings contains a memorandum by Keynes,'' briefly
quoted by Moggridge, In this memo, undoubtedly, Keynes takes a conciliatory
view of reparations, arguing that the Allies should ask reparations only for the
direct damage caused by the Germans on civilian assets and life, and also basing
 Maynard Keynes 329

his argument on Germany's capacity to pay, which he judged to be no more

than L2000 million. But, in this same memorandum, Keynes has a few paragraphs
in which he estimates the full cost ofthe war to the Allies, including pensions,
military budgets, destruction of military installations, payment of interest on
war bonds, etc. The figure now becomes "L24,350 million; or in round figures
L25,000 million."' Keynes' memorandum is not dated, but we do know that it
was completed by December, for on the 26th of that month it was commented
on by an associate. The meetings of the Hughes Committee—which Keynes
attended—took place in late November and early December.' It is thus easy to
conclude that Keynes himself was the source of the estimated bill for L24,000
million. The question is not whether Keynes believed in charging Germany the
full cost ofthe war; of course he did not. In the memo he wrote: if we can prove
that Germany cannot pay in excess of L2000 million then "the question of an
indemnity to meet the general costs ofthe war, namely, L25,000 million, need
not arise."^ But proof that Germany could not afford more than L2,000 million
did not convince Hughes and his committee. A bit of psychology throws light
on Keynes' acdons. Keynes (on whose "dualism" more later) in the memo is
partly accountant, partly humane philosopher; partly civil servant, partly policy
maker. As an accountant and civil servant, he saw it as his duty to be thorough
and to provide an estimate for the full bill. As a humane person, he advanced
the principles of ability to pay and common sense. The politicians picked what
they wanted, and what they thought the people wanted, namely a refund for
the cost of the war.
This interpretation opens up interesting fields of speculation. Keynes' feelings
in 1919, that he had been "an accomplice in all this wickedness and folly" (as
he wrote to his mother) may be more than literary exaggeration. It may be a
confession of guilt. It may also be that his portrait of Woodrow Wilson—duped
by Lloyd George and Clemenceau—was based on self-knowledge. He, too, had
been duped by the politicians! Indeed, it appears that since Keynes, along with
John F. Dulles, authored the "war guilt" clause to the Treaty—whose importance,
as Moggridge recognizes, Keynes totally missed*—what we have here is the
picture of a politically naive man, or, perhaps, of a man who trusted the rea-
sonableness of human nature too much (see My Early Beliefs). His recognition
of guilt and naivete may also explain Keynes' virulent reaction to the Treaty in
The Economic Consequences ofthe Peace.
The chronological presentation of facts in a biography presents a problem.
Any activity that stretches over many years is presented on the installment plan,
so to speak, a few pages here and a few paragraphs there. This is the case, for
instance, with Moggridge's survey of Keynes' activities as an investor, which he
examines over five different segments scattered throughout the book. With this
330 American Journal of Economics and Sociology

kind of treatment, gaps are likely to appear and create problems for readers
including this reviewer. Moggridge, for instance, recognizes that Keynes spec-
ulated before 1914 (an advance over Roy Harrod who wrote that Keynes' spec-
ulations began after the war) but then he picks up the story with July 1919. But
Vol. XII, chapter 1 of the Collected Writings, prepared by Moggridge himself,
shows Keynes' security holdings to have increased during the First World War
from 3,819 to 14,453 pounds.' Was this the result of further speculation while
he was at the Treasury? Also, a more thorough treatment of Keynes' investment
experience might even help in the understanding of The General Theory.
While Moggridge does call attention to his change in investment philosophy
from the credit cycle to buying "for keeps," he ignores Keynes' frequent mis-
givings about investing as such. In the Collected Writings, there is a remarkable
speech to the members of the estate Committee at King's: "The management
of stock exchange investments is a kind of low pursuit, having little social value
. . . " lower than tending sheep and raising crops.'" Repeatedly, Keynes notes
that speculation develops "too unsettled and speculative a state of mind"; that
it requires more "nerves, patience and fortitude" than any other activity; that it
makes one lose his "sense of proportions." Speculation against the pound may
be "against the national interest." Trying to exit from a falling market (demanding
liquidity) is "anti-social," "fantastic," "destructive of the whole system." The
(ignored) General reeory proposal to make investment "permanent and indis-
soluble, like marriage," is consistent with these feelings.
The attitude of a biographer toward his subject, in my opinion, should be that
of sympathetic friend, so to speak. A critical attitude may preclude the possibility
of understanding important aspects of the subject's ideas and psychology. This,
I think, is the case with Moggridge's comments on Keynes' preface to the German
eclition of The General Theory. In that preface Keynes wrote that his theory "is
more easily adapted to the conditions of a totalitarian state"—with its stronger
political leadership—than to a laissezfaire poWicdX system. Moggridge alleges
that these lines show "remarkable insensitivity, indeed indifference, to a regime
that put its political opponents into concentration camp and passed the anti-
Semitic Nuremburg laws."'^But ifwe «ccep/Keynes' statement, we may be put
on the right track to understand a peculiarity of his personality: he had a re-
markable ability to separate intellect from feelings. The passionate Keynes was
as repelled as anybody else by Nazi "barbarism" (his word, in a letter quoted
by Moggridge). But there was also the cold, intellectual Keynes who recognized
that Hitler's Germany was the only country that conquered the depression, by
a program of raising demand through public works and rearmament. Keynes
probably saw that, cleansed of its authoritarian and aggressive spirit, the Nazi
 Maynard Keynes 331

experience was instructive and that strong political leadership makes the solution
of economic problems easier.
On various occasions, Moggridge does, indeed, call attention to Keynes' dual
nature: the epigraph of chapter 2 quotes Keynes as saying "One seems to have
, , , two entirely different lives: one at home and the other at school, and when
you are living one of them, the other doesn't seem more than a dream, , ,"
And again (epigraph to chapter 3): "I don't think one realizes how very discrete
(in the mathematical sense) one's existence is. My doings at school don't seem
to have the remotest connection with my doings up here: nor my life one term
with my life in any other," Then there is Lytton Strachey's remark (also quoted
by Moggridge as the epigraph to chapter 6) to the effect that posterity will have
to distinguish between two Keyneses: the author of Probability (intellect) and
the author of The Economic Consequences (passion). Now, these insights into
Keynes' dual nature are not exploited by Moggridge, while they could be the
key to understanding many attitudes of his and even The General Theory, where
reason ("we calculate where we can") and passion ("animal spirits") battle
each other.
As editor of the Economic Journal, Moggridge says, Keynes made "errors of
judgement": he refused a paper by Bertil Ohlin ("This amounts to nothing , , , ")
which contained nothing less than the historical factor proportions theorem of
international trade. He rejected a paper by Roy Harrod (his invention of the
marginal revenue curve), as well as an important theoretical paper by Wicksell,"
Now, much as we may regret it, these judgements are fully in harmony with
Keynes' observations about Tinbergen's work ("all hocus", "a mess of unintel-
ligible figuring", "black magic", "alchemy", "charlatanism", "a nightmare'"''),
and about Joan Robinson's Economics ofImperfect Competition ("esoteric abra-
cadabra"),'' Keynes' attitude toward economic theorizing was consistent
throughout his life—and is, to this day, hardly appreciated: he disliked deductive,
"real" theorizing that proceeded from heaven to earth rather than vice versa.
Some of the best chapters in the book are those dealing with Keynes' doings
and thinking against the background of the depression. They bring out his
"struggles of escape" from the representatives of "sound principles:" Montague
Norman of the Bank of England, Sir Richard Hopkins of the Treasury, and Lionel
Robbins, Pigou and Hubert Henderson, The latter economists blamed the
depression, respectively, on inflexible wages, unemployment insurance and the
budget deficits, Moggridge shows how they conspired to make Keynes' efforts
futile: the reports of the Macmillan Committee and of the Committee of Econ-
omists splintered into many "minority reports" and were, in any case, overtaken
by events like the collapse of the Europeanfinancialsystem and Britain's aban-
donment of the gold standard in 1931,
332 American fournal of Economics and Sociology

These chapters lead naturally into Moggridge's one on The General Theory
where he is concerned with the dating of the major theoretical pieces of the
Keynesian model. He mainly agrees with Keynes' own assessment that the ger-
mination of his ideas goes back to the period after 1930, Actually, reflection
about Keynes' life and work should bring out the fact that the roots of some of
the distinctive theories, at least subconsciously, go back much further than Keynes
himself realized. The importance of aggregate demand was brought home to
him by the experience of the First World War, In The Economic Consequences,
he remarked that the war taught that the Victorian era did not take full advantage
of its economic opportunities: it took the artificial stimulus of government
spending in 1914-18 to show what the system could do. His theory of the rate
of interest as related to liquidity and uncertainty rather than "waiting" must
have come from his own investment experience. He borrowed on margin in
good times and withdrew into liquidity when he anticipated a market decline.
The notion that spending is income to the recipient, who is then likely to respend
most of it (hence the multiplier) is common sense, even to somebody brought
up under the classical system. Probably the hardest theoretical piece to come
by was the marginal efficiency of capital—given Keynes' ignorance of the pro-
duction aspect of capitalism.
Strangely enough, Moggridge makes no mention of what many recent scholars
see as the major insight of The General Theory, the "discovery" that uncertainty
pervades many business decisions and that, therefore, the system is vulnerable
to sudden breakdowns of confidence. There is also no recognition of the sub-
jectivity of judging prospective yields and of the role of "animal spirits,"
The chapter on The General Theory is introduced by an epigraph quoting
Keynes to the effect that a thinker is often intuitively aware of the "destination"
before he can supply a proof. In other words, Keynes confessed that he knew
what he wanted to prove before he turned his vision into a model. Now, here
is an insight of some importance. It is tantamount to admitting that desires,
dislikes, ideology and prejudices come first, and they guide the mind through
the maze of "facts" towards a predetermined vision. The oft-quoted story of
Keynes about Newton intuiting a certain physical truth before he had a proof
for it is actually misleading: a material fact eventually provided a check to
Newton's intuitions.
But in social thinking facts are more malleable. Witness the fact that mone-
tarists, for instance, claim to explain the same things that the Keynesians explain.
Pursuing Keynes' musings about the sources of intuition (which he suggests
are psychological), one is led to other aspects of his work and personality ad-
dressed in other sections of the book: to Moore, to Bloomsbury values, to the
essays of the 1920s, to Probability, and, psychologically, to the "unsurpassed
 Maynard Keynes 333

individualism" of his youth, to his remarkable sensitivity to the winds of change,

to his absence of loyalties, to his dislike of humbug and hypocrisy—the Victorian
values embodied in the "golden calf," in "purposiveness," in "the economic
criterion" as a standard of judgment and evaluation, Moggridge quotes a fasci-
nating remark by Keynes to the effect that he saw himself as improving the
efficiency of the economic engine so as to make inefficiency respectable in the
future. Young Marx had the same vision: in The Economic and Philosophic
Manuscripts of 1844, he expressed the belief that capitalism may one day become
so productive as to enable a man to go to work or to go fishing as the mood
hits him, Keynes' Economic Possibilitiesfor our Grandchildren echoes the same
belief.
Also of great value are Moggridge's chapters dealing with Keynes' work for
his government during the Second World War, leading to the new post-war
financial structure and to the American loan to Britain, To one who has already
read Volumes XXIII-XXVII of the Collected Writings, these chapters of Mogg-
ridge bring out some of the problems Keynes struggled with: Article VII on
"considerations;" the annoyance of seeing his Currency Union blueprint elbowed
out by the Americans' less enlightened Stabilization Fund; the eleventh hour
realization that at Bretton Woods, he had put his signature on something he
misunderstood that committed his country to providing convertibility at all costs.
One already acquainted with Keynes' letters and memos can see that, throughout,
Keynes struggled with the same issue: he knew that the Americans were more
dedicated to laissezfaire ("the clutch of the dead, or at least moribund, hand"'*)
than was good for Britain and the world, so he tried to insulate his country's
economy from the American philosophy.
The average reader would have been helped, I think, if Moggridge had fol-
lowed his own blueprint of the Collected Writings, vol, XXV, This volume,
which contains the various drafts of the Currency Union proposal, begins with
Keynes' remarkable reply to the German Minister of Economic Affairs, Walther
Funk, After the fall of France, the German propaganda office offered a vision of
the "New Order" awaiting a unified Europe, It centered around a gold-less mark
of stable commodity value, and aimed at full employment and social and eco-
nomic stability. Asked to prepare a reply to Funk, Keynes, far from ridiculing
his ideas (as the British propaganda office expected him to do), actually confessed
to be "in agreement with three fourths" of them! In the 193O's, he says, laissez
faire in exchange rates led to chaos. Funk and Schacht evolved "something
better": a system of negotiated exchange rates which have nothing to do with
a country's command of gold,'' Indeed, in the same piece Keynes clearly reveals
his preference for a "pound bloc" that would include the Commonwealth coun-
tries, the Middle East, Argentina, etc. Even the United States would be included
334 American Journal of Economics and Sociology

in it, provided that it give up its "lunatic" ideas about gold and refrained from
maintaining an "unbalanced creditor position.""*
In the biography, Moggridge hardly mentions this memo. This is unfortunate
because then Moggridge misses the fact that Keynes, throughout the negotiations
of 1942-46, had more than a doubt about falling in with United States leadership.
He tried to circumscribe and neutralize the ideas of the Americans but could
not suppress their spirit, which is that creditors have the power to "crack the
whip" (Keynes' phrase), to tell debtors what to do. (In the Currency Union
creditors had to revalue their currency thereby ceasing to remain creditors).
Keynes wanted an international financial system that did not discourage a country
from making experiments of a socialistic nature. He meant the (near) euthanasia
of the international rentier.
These final chapters of Moggridge are drama. The one entitled "The Loan"
is great drama as Keynes in 1945 had to rapidly adjust his ideas to those of the
Americans who had started to crack the whip. Suddenly, the "enemy" became
not Washington but London, whose unrealistic ideas about U.S. assistance had
been caused by "the other" Keynes, the one who believed Britain to be a great
and powerful nation, the one who flirted with bilateralism, the one attached to
Imperial Preference, the one who felt that Britain had already paid a great price
when, "alone for nearly two years", she defended everybody's freedom (in-
cluding America's) against Nazism.
At the end of his life Keynes, once again, displayed that remarkable adaptability
of mind—possiblyoneof the sources of his "intuition", certainly the by-product
of his sensitive nature—the ability to jettison his previous beliefs and attitudes
and to fall in with the new conditions. But past feelings are not so easily sup-
pressed: they live underneath and sometimes they explode. In Keynes' case,
the explosion occurred, it seems, during his trip home from Savannah, in March
1946 when, in the 1972 recallection of Sir George Bolton, Keynes spent his
time on the Queen Mary
writing an article for publication condemning American policy with extraordinary ferocity
and passionately recommending H. M. government to refuse to ratify the [International Mon-
etary) Fund and [World] Bank agreements . . . Ernest Rowe-Dutton [of the British Treasury]
and I spent most of the voyage trying to dissuade Keynes from pursuing these proposals.
Eventually he agreed to destroy the paper."
Moggridge doubts Bolton's recollections, alleging, among other things, that
Keynes was sick during part of the voyage and that he aiso wrote an eighteen
page document advising the government to accept the IMF and World Bank
agreements. But how could Bolton's memory mislead him? He was in the pres-
ence of a historical event, with witnesses, in a unique setting. Writing a dozen
pages on matters that Keynes had anguished over, and felt passionately about,
for years would have taken him no more than a few hours.
 Maynard Keynes 335

The Queen Mary episode is very much in line with Keynes' temperament
and with the self doubts and tribulations of the previous years. Savannah was
the last straw, as the Americans—as he put it—had "enough stooges" to railroad
major decisions of political and financial patronage. Five weeks later Keynes
was dead.
Any reader can only have admiration for Moggridge's biography: no one has
worked more tirelessly to unearth so many facts about one of the greatest En-
glishmen of the century. At the same time one suspects that Moggridge's biog-
raphy reflects the decade in which it was written: the eighties were years of
Laissez-faire Triumphant and, I think, Moggridge endeavors to sanitize his sub-
ject's more heretical political, economic and methodological views. The well-
known problem of historiography, rising above the values of one's time, is not
easily surmountable.

Notes
1, D, E, Moggridge, Maynard Keynes: An Economist's Biography, London and New York:
Routledge, 1992, 104,
2, ,320-1,
3, , 290 and 295,
4, J, M, Keynes, The Collected Writings of John Maynard Keynes (henceforth, CVi) XVi, 344-
83,
5, , 358,
6, Moggridge, Keynes, 295,
7, Keynes, C\rxvi 359,
8, Moggridge, Keynes, 346,
9, Keynes, CW\l\. Table 2, 4,
10, , 109,
11, , 1, 35, 38-9, 84-93, 106, 109 and passim.
12, Moggridge, Arej'Hes, 610-11,
13, ,210,
14, Keynes, CITXIV, 309, 311, 320 and passim.
15, , CH/XII,831,
i6, , cwxxm, \n-s.
17, , CWXXV, 7-10,
18, , 19,
19, Moggridge, Keynes, 834,

Reachingfor Words
INTERESTING PHILOSOPHY is rarely an examination of the pros and cons of a thesis.
Usually it is, implicitly or explicitly, a contest between an entrenched vocabulary
which has become a nuisance and a half-formed new vocabulary which vaguely
promises great things,
RICHARD RORTY