Keynes wrote this book in 1919, after having served as a delegate at the Versailles conference The pre war situationA major theme of the book is the stability in Europe being in fact threatened by the final settlement Contrasting the political climate of Europe with the one in England, Keynes says But perhaps it is only in England and America that it is possible to be so unconscious In continental Europe the earth heaves and no one but is aware of the rumblings.
He then goes on to describe the instability of the pre war situation He splits his analysis into a few topics 1 Population Germany, Austria Hungary, and Russia all saw incredible periods of growth in the decades preceding the war The disruptive powers of excessive national fecundity may have played a greater part in bursting the bonds of convention than either the power of ideas or the errors of autocracy 2 Organization The borders of Europe were mostly open and the tarrif barriers low Each country was dependent on the rest of the continent Over this great area there was an almost absolute security of property and of person The author mentions that round Germany as a central support the rest of the European economic system grouped itself A hundred years later, the same could easily be said of today s economy.
3 The psychology of society Keynes mentions an implicit agreement between classes where the poorer classes would stoically accept their fate while the richer classes would save most of their gains away and thus invest back in the economy Keynes states that the principle of accumulation based on inequality was a vital part of the pre war order of Society and of progress as we then understood it But he warns that the laboring classes may no longer be willing to forego so largely, and the capitalist classes, no longer confident of the future, may seek to enjoy fully their liberties of consumption so long as they last, and thus precipitate the hour of their confiscation 4 The relation of the old world to the new Europe had a surplus of manufactured goods that various countries could export to the New World However, the Old World was for the most part dependent on the New for its food supplies The conferenceKeynes then goes on to describe the conference, starting with the French Foreign Minister, Clemenceau The author underlines Clemenceau s point of view in the eyes of one who took the view that European civil war is to be regarded as normal, or at least a recurrent, state of affairs for the future, and that the sort of conflicts between organized great powers which have occupied the past hundred years will also engage the next According to this vision of the future, European history is to be a perpetual prize fight, of which France has won this round, but of which this round is certainly not the last.
Keynes admonishes Clemeanceau severely for that line of thinking, calling this policy the one of an old man Keynes writes the war has bitten into his consciousness somewhat differently from ours, and he neither expects nor hopes that we are at the threshold of a new age Moving on from the French Foreign Minister, Keynes describes Woodrow Wilson, often refered to as The President The expectations of Europeans were great from what they had seen and heard in the President s Fourteen Points But these expectations were quickly dispelled Keynes compares the President to a preacher, than a statesman The President s slow wit and his lack of understanding of the European situation pushed the other foreign delegates to draft sophisms in the august language of freedom and international equality , which Wilson then accepted as right The ultimate treaty then had the seal of the President, but little of the substance of the inspiring Fourteen Points.
Quoting from a diplomatic note, Keynes writes that the Allied governments declare their willingness to make peace with the Government of Germany on the terms of peace laid down in the President s Address to Congress of January 8, 1918 That the ultimate treaty was not loyal to the substance of the Fourteen Points can then be seen as a breach of the pre existing understanding This Germany claimed but no Allied power was willing to admit fault ReparationKeynes then goes on to discuss the impossible reparation clauses contained in the treaty.
He mentions the general election that Lloyd George called while the negotiations were occurring Lloyd George kept his seat but campaign promises radicalized the British position.
Keynes summarizes thus I believe that the campaign for securing out of Germany the general costs of the war was one of the most serious acts of political unwisdom for which our statesmen have ever been responsible To what a different future Europe might have looked forward if either Mr Lloyd George or Mr Wilson had apprehended that the most serious of the problems which claimed their attention were not political or territorial but financial and economic, and that the perils of the future lay not in frontiers or sovereignties but in food, coal, and transport Neither of them paid adequate attention to these problems at any stage of the Conference Europe after the treatyAs for remedies to the ills brought by the treaty of Versailles, Keynes makes a few suggestions The revision of the treatyKeynes spends some time looking at the covenant of the League of Nations and emphasizes that the usefulness of the League is far from certain.
He also proposes to limit the reparation fees to 10 billions dollars, to dismiss the Reparation commission, and to let Germany pay the debt as she sees fit Any complaints on the part of the Allies concerning payments could be lodged at the League of Nations.
Keynes also recommends the establishment of a free trade zone for Germany, Austria, and the former states within Austria Hungary The settlement of inter ally debtKeynes proposes that the reparation payments be made first to Belgium and France, and that Great Britain could go so far as to waive claims on cash payments.
Keynes also proposes to completely and mutually cancel the debt that occurred during the war among all Allies An international loan and currency reformsIn the post war situation, Keynes write that Europe has immediate needs that can only be tended to with an international loan coming from the United States.
He also speaks vaguely of a general reorganization of the currency The relationship between Central Europe and RussiaHere, Keynes lauds the non intervention that Germany has pledged towards Russia and its territories He writes Let us then in our Russian policy not only applaud and imitate the policy of non intervention which the government of Germany has announced, but, desisting from a blockade which is injurious to our own permanent interests, as well as illegal, let us encourage and assist Germany to take up again her place in Europe as a creator and organizer of wealth for her Eastern and Southern neighbors.
This Is A Pre Historical Reproduction That Was Curated For Quality Quality Assurance Was Conducted On Each Of These books In An Attempt To Remove books With Imperfections Introduced By The Digitization Process Though We Have Made Best Efforts The books May Have Occasional Errors That Do Not Impede The Reading Experience We Believe This Work Is Culturally Important And Have Elected To Bring The Book Back Into Print As Part Of Our Continuing Commitment To The Preservation Of Printed Works Worldwide Before I started reading the General Theory, I thought it useful to get acquainted with Keynes style of writing with this book, the readability of which was assured to me in Ahamed s Lords of Finance.
Keynes writes in a somewhat archaic fashion, which shouldn t surprise you might want to check out a Youtube film in which he applauds the abandoning of the Gold Standard, Keynes could feature in any Downton Abbey episode But the book is no difficult read, especially if you are a little familiar with the Versailles Treaty Still, as a historian I was somewhat embarrassed how little I really knew about it Keynes mainly reports the facts in the Treaty, but he also helpfully paints the circumstances of the signing president Wilson is a slightly autistic reverend, who is characterised by cognitive dissonance, Clemenceau a relentless avenging angel and Lloyd George an opportunistic politician on the verge of an election Some details of the Treaty shocked me A Carthaginian peace which I had to look up is no exaggeration Even all property owned by private German citizens abroad was declared forfeited Germany lost most of its coal and iron ore mines in territory, and was under the obligation of exporting the proceeds of what it it still owned abroad It really is no mystery why Germans felt humiliated The true value of the book for Europe s current woes is in the later chapters Keynes explicitly advocates a debt jubilee between the Allied nations It is because France and Italy are so indebted towards the USA, that they were almost forced to demand absurd retribution from Germany the alternative was declaring bankruptcy To start investing in the rebuilding of Europe, governments needed a clean slate of debt incurred in the war.
Of course, Europe s current debt levels, i.
e Italy s 130% GDP is no result of a war but of bad policy, but the results are the same high levels of both private and public debt stifle innovation and investment I don t see how growth can be spurred in Europe without some measure of debt forgiveness.
John Maynard Keynes is nowadays recognised as one of the greatest economists in history But, his greatest assessment, that of the consequences of the peace settlement imposed in Europe and in particular upon the defeated nations, primarily Germany, at the conclusion of the First World War was, at the time, largely ignored.
The Peace of Paris was an attempt by the victorious nations, led by France, to extract reparation from the defeated nations, mainly Germany, for the total cost of the war There had never before been a war even remotely like WWI and so there was no way of judging or estimating either the actual cost nor of the likelihood that the defeated nations would ever be likely to even be capable of meeting that cost, whatever it might be.
Various national leaders attended the negotiations but the primary ones were Britain s Lloyd George, France s Clemenceau and America s Pres Woodrow Wilson All came to the conference with very different objectives.
History has cast Clemenceau in the role of arch villain for the consequences of the peace terms imposed on Germany but Keynes saw it in a different light and cast the blame in a very different direction Clemenceau, he concludes, did only what any prudent negotiator would do ask for the Earth in expectation of getting half of it It wasn t, Keynes concludes, his fault that not only did he obtain the Earth but besides.
Lloyd George had only the objective of achieving election as Prime Minister in the General Election that was to be held shortly after the conference, and only wanted to do as much as was necessary to cast himself in as good a light as possible with the British Electorate.
But, it was for Woodrow Wilson that Keynes reserved his venom He characterises the American President as having such modest intellect and leadership ability that it would take America nearly one hundred years to once again elect a President of comparable incompetence no guessing who that was Not only was Woodrow Wilson not fit for purpose but, so certain was he in his own ability notice a trend here that he refused to accept advice even from his appointed advisers.
The consequence was that the negotiated peace treaty was so unfair that there never was any hope that it terms could be fulfilled by those nations upon whom it was imposed, not within even two generations The inevitable outcome, he concludes will be the descent of Europe into turmoil, conflict and further war How right he was.
Keynes book is surprisingly readable Yes, it does contain a lot of data but mostly it is an understandable and well reasoned work that anyone, that even someone without an economics background would find it easy to grasp his arguments.
So, next time someone asks you why Hitler came to power you can reply with confidence, Because no one listened to John Maynard Keynes.
Distilling sound judgement from the tempting grip of emotion is the province of great minds Mr Keynes authored one such work with his Economic Consequences of the Peace It s quite depressing to me that even with presentation of the soundest logic, emotion still prevailed, much to our collective misery and harm Revenge is indeed a powerful tonic.
Mr Keynes presented a comprehensive review of the economic histories of the involved states and the reasons why the reparations forced upon Germany were so obviously unwise Therefore, what was to unfold through the coming decades could be of no surprise to anyone who listened to Keynes warnings He wrote The policy of 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, abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe Some preach it in the name of Justice In the great events of man s history, in the unwinding of the complex fates of nations Justice is not so simple And if it were, nations are not authorized, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.
He warned If we aim deliberately at the impoverishment of Central Europe, vengeance, I dare predict, will not limp Nothing can then delay for very long that final civil war between the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the late German war will fade into nothing, and which will destroy, whoever is victor, the civilization and the progress of our generation Even though the result disappoint us, must we not base our actions on better expectations, and believe that the prosperity and happiness of one country promotes that of others, that the solidarity of man is not a fiction, and that nations can still afford to treat other nations as fellow creatures He went on the say In one way only can we influence these hidden currents, by setting in motion those forces of instruction and imagination which change opinion The assertion of truth, the unveiling of illusion, the dissipation of hate, the enlargement and instruction of men s hearts and minds, must be the means.
He finished with a selection from Shelley s Prometheus Unbound In each human heart terror survivesThe ruin it has gorged the loftiest fearAll that they would disdain to think were true Hypocrisy and custom make their mindsThe fanes of many a worship, now outworn.
They dare not devise good for man s estate,And yet they know not that they do not dare.
The good want power but to weep barren tears.
The powerful goodness want worse need for them.
The wise want love and those who love want wisdom And all best things are thus confused to ill.
Many are strong and rich, and would be just,But live among their suffering fellow menAs if none felt they know not what they do.
Do we not remain in need of Keynes voice, even today, despite all that since transpired, for we seem to have learned so little While Keynes is generally recognized as one of the greatest economists, this book from 1920 shows just how perceptive his observation and thinking were The book tells us than we might want to know about the destructive and vindictive peace that was forced on Germany at the end of the Great War, going into detail about why Germany would have just cause for wanting to go to war with France less than twenty years later.
I especially liked Keynes candid observations of Wilson as not so bright, of a pedant than a president As history this is excellent and readable, despite the details on coal production and railway cars.
An eloquent book toof not only Economics, but compassion The aftermath of world war one led the victorious countries to demand of Germany Reparations which were not only impossible to fulfill but ultimately would prevent the Global economy from recovering any time soon Keynes proposed a realistic and compassionate solution to the aftermath of world war one which would have fed the global economies, and ultimately allowed Germany to recover sufficiently to pay a significant amount to the victors Had his plans been implemented I think there could be a strong case that world war II could have been avoided This was a great read and highly recommended I can t speak to the merits of Keynes economic analysis or his evaluation of the post world war international situation, even to compare it to subsequent historical events That said, he returns again and again to the principle that states with industrialized economies are interconnected and fragile, and that wealth is contingent on the ability of each to exchange goods efficiently with each this is surely right at the levels discussed here, and a powerful lament about the waste of total war The chapter describing the negotiation sessions between Clemenceau, Lloyd George, the Presbyterian minister Woodrow Wilson, and that forgettable Italian head of state are worth reading on literary merits alone His psychological profiles reflect some poetic license but he still makes the long days of diplomacy in that fireside chamber enthralling The oddest parts about this, in some ways, are the passages playing up the long years of suffering endured by Europe and the bleak expected future of tired populations too hungry to rebel against ineffectual governments He felt as many probably did that he might be writing at the end of the world The writing is so blue as to approach purple, but it s not unjustified They did in many ways see the end of their world.