In an interview on Keynes

Let’s start with the Roy Harrod.

The Harrod is the first biography and, actually, the only official biography of Keynes. Harrod had the great advantage of having known him and was, of course, an admirer. The book was written six years after Keynes’s death but it still has its virtues. He has the virtue of intimacy and of knowing Keynes very well and knowing the time very well. The downsides of the book are its omissions. There are three big omissions. The first is that Harrod leaves out any references to Keynes’s conscientious objection to the First World War. Keynes basically disapproved of it, though he served it in the Treasury, but if he hadn’t he would have been a conscientious objector. The second omission is Keynes’s homosexuality. For most of his life Keynes had boyfriends, the main one being Duncan Grant, the painter. They remained friends though their sexual relationship ceased. But when Keynes was middle-aged, in fact he was 40, he met and fell in love with the ballerina Lydia Lopokova and they married. Any hint of his homosexuality is missing from the Harrod book. The third omission is Keynes’s quarrel with the United States over the reparations from Germany after the war, which Keynes felt had too many strings attached and compromised independence. Harrod essentially omits anything that might muddy Keynes’s reputation as the great saviour. The homosexuality he probably had to leave out since he was writing before the kiss-and-tell biography and people didn’t discuss that kind of thing much in those days. My own biography of Keynes has superseded this one, he says arrogantly, but not entirely. I didn’t know the character, of course.

So Harrod’s book is more of a hagiography, really?

It is a bit of a hagiography, yes, but he did the economics very well. I wouldn’t decry its virtues.

What, in a nutshell, are the economics?

Keynes attacked the classical economists who believed that economies are essentially fully employed such that government intervention is unnecessary. He said that economies are subject to slumps and crises and that if crises happen then we must pump air into the leaky balloon, much like the stimulus package now. His realisation was that economies are unstable, that they deflate and slide, that unemployment can go up and people suddenly don’t spend as much, that this is likely to happen from time to time and governments should prevent it from happening because the costs are so huge. For the past 30 years Keynes has been largely ignored because Reagan and Thatcher thought the markets were essentially stable and under control. People are realising now that this was a very one-sided view.