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15 - Keynes’s Arc of Discovery

From The Economic Consequences to Bretton Woods

Published online by Cambridge University Press:  14 December 2023

By
David Vines
Edited by
Patricia Clavin ,
Giancarlo Corsetti ,
Maurice Obstfeld  and
Adam Tooze
Patricia Clavin
Affiliation:
University of Oxford
Giancarlo Corsetti
Affiliation:
University of Cambridge
Maurice Obstfeld
Affiliation:
Peterson Institute for International Economics, Washington DC
Adam Tooze
Affiliation:
Columbia University, New York
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Summary

This chapter argues that Chapter Two of the Economic Consequences contains a much more important piece of economic analysis than is generally recognized, namely the Ramsey model of economic growth. It is well known that Keynes helped Ramsey to explain that model in the Economic Journal in 1928. But I show here that Keynes had himself given an exposition of the model, nearly a decade earlier, in this chapter. What is more, Keynes then generalizes this model in order to help him think about Europe’s growth process within the global economy, and why it was so fragile. I claim that the analysis in this chapter provides the underpinning for Keynes’s famous criticism of the reparations imposed on Germany. The chapter also makes clear that Keynes is starting to realize what he will need to do to get to the General Theory in 1936. And there are the beginnings of the ideas which would lead to the Bretton Woods conference in 1944 and to the rebuilding of the international monetary system after World War II. Understanding these connections helps us to visualize the arc of Keynes’s discovery, one which stretched all the way from 1919 until his death in 1946.

Keywords

KeynesRamsey modelGeneral TheoryBretton Woodseconomic growthVersailles Peace Conferencereparationstransfer problem
Type
Chapter
Information
Keynes's Economic Consequences of the Peace after 100 Years
Polemics and Policy
 , pp. 388 - 420
Publisher: Cambridge University Press
Print publication year: 2024

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