Life, academic introduction and works
British economists are famous for initiating the so-called Keynesian Revolution in economics. 1was born in Cambridge, England on June 5th, 883. 14 years old entered Eton College with a scholarship, majoring in mathematics, and won the Tomlin Prize. After graduation, he entered King's College of Cambridge University with scholarships in mathematics and classical literature. 1905, Master of Arts, Cambridge. After that, I stayed in Cambridge for a year, studied economics under Marshall and Pigou, and prepared to take the British civil service exam. 1906 passed the civil service examination with the second place, and was elected to the Ministry of Indian Affairs. During his tenure, he did a lot of research and preparation for his first economics book, Money and Finance in India (193 1). 1908 resigned from the Indian affairs department and returned to Cambridge as an economics lecturer until 19 15. In the meantime, 1909 was selected as an academician of King's College, Cambridge with a paper on probability theory, and another paper on index won the Adam Smith Prize. A little supplement, the paper on probability is published in 192 1, entitled "Probability Theory". Shortly after the outbreak of World War I, he was recruited into the British Treasury to take charge of foreign financial affairs such as foreign exchange control and American loans. 19 19 At the beginning of this year, he attended the Paris Peace Conference as the chief representative of the British Treasury. In June of the same year, he resigned as a representative of the Peace Conference and returned to teach at Cambridge University because he was indignant at the suggestion of the Compensation Committee on Germany's defeat compensation and its border. Soon, the book Economic Consequences (19 19) was published, which caused great controversy among people from all walks of life in Europe, Britain and the United States, and made him a central figure in European economic recovery. While teaching, he not only wrote a large number of general managers of economic colleges. During the period of 192 1~ 1938, during his tenure as the chairman of National Mutual Life Insurance Company, his annual report to shareholders has always been a must-read and the first news heard by the financial community. From 65438 to 0940, he served as an adviser to the Ministry of Finance and participated in the decision-making of various financial issues during wartime. At his initiative, the British government began to compile national income statistics, which provided the necessary tools for formulating national economic policies. 1In July, 944, he led a British government delegation to attend the Bretton Woods Conference and became a British director of the International Monetary Fund and the International Bank for Reconstruction and Development (World Bank). At the first meeting of these two organizations held in March 1946, he was elected as the first president of the World Bank. Shortly after returning to England, he died of a heart attack at his home in Sussex on April 2 1, 1946. Because of his profound academic attainments, he has served as editor-in-chief of the Journal of Economics and president of the Royal Economic Society for a long time. 1929 was elected as an academician of the British Academy of Sciences, 1942 became a Lord, and 1946 was awarded the Doctor of Science degree by Cambridge University.
Keynes was originally a book about free trade. Until the end of the 1920s, he still believed in the traditional theory of free trade and thought that protectionism was not desirable for domestic economic prosperity and employment growth. Even in 1929, when arguing with Swedish economist Olin about German reparations, he insisted that the balance of payments would automatically restore balance through changes in domestic and international price levels. When his representative work "General Theory of Employment, Interest and Money" was published in 1936, Keynes turned to emphasize the influence of trade balance on national income, thinking that if the protection policy can bring about a trade surplus, it will help to improve the investment level and expand employment, which will eventually lead to economic prosperity.
Keynes believed that the traditional trade theory was based on the premise that all factors of production, including labor, were fully employed, and advocated that trade according to the principle of comparative cost could not only be fully employed, but also enjoy the benefits brought by division of labor. However, this premise does not exist in real life, but there are often a lot of involuntary unemployment. If a country conducts free trade according to the traditional theory, although it can engage in specialized production in departments with comparative advantages and gain some benefits from the division of labor, it will be more serious if it abandons or narrows the peace of departments with little or incomparable comparative advantages. Therefore, Keynes protested that the traditional trade theory was not applicable to modern capitalism. He also criticized that the traditional theory only pays attention to the interests of division of labor, emphasizes the automatic adjustment process of external balance of payments, and completely ignores the impact of trade balance on national income and employment. As far as a country is concerned, the latter is more important than the former, because surplus can increase income, make capital inflow, lower interest rates, increase investment and expand employment; On the contrary, "if it is a deficit, it may soon produce a stubborn economic recession." Therefore, Keynes agreed with the trade surplus and praised mercantilism again, thinking that "mercantilism, in theory, contains the real elements of recognition." However, while affirming some viewpoints of mercantilism, he also admitted that "the benefits of implementing mercantilism are limited to one country and will not benefit the whole world".
In the General Theory, Keynes further expounded the relationship between the trade balance and the rise and fall of the national economy based on the principle of investment multiplier. He believes that the multiplier effect of investment is that the new investment in one department will not only increase the income of the department, but also cause the income of other relevant departments to increase through the chain reaction, and will cause other relevant departments to increase new investment through the chain reaction to obtain new income, thus leading to the growth of gross national income several times that of the initial investment. The total investment of a country includes both domestic investment (depending on the marginal efficiency and interest rate of domestic capital) and foreign investment (depending on the trade surplus). "Increasing the surplus is the only direct way for the government to increase foreign investment; At the same time, if the trade is in surplus, precious metals will flow in, so lowering domestic interest rates and increasing domestic investment incentives are the only indirect ways for the government. " In addition, Keynes also stressed that the trade surplus itself has the same effect on the national economy as investment. It is believed that export is the demand for domestic products, and like investment, it is an "injection" that can increase national income; On the other hand, import is an increase in the consumption of imported goods. Like savings, it is a kind of leakage, which will weaken the role of investment multiplier and reduce national income. Therefore, Keynes strongly advocated the trade surplus, proposed to expand exports as much as possible, and at the same time restricted imports by protecting tariffs and encouraging "buying British goods". The above Keynesian analysis of multiplier theory and trade surplus was later proved by British scholar Harold and American scholar Mahlop, and developed into foreign trade multiplier theory.
In addition to the General Theory, Keynes's other two important economic theory works are Currency Reform Theory 1923 and Currency Theory 1930. These two works are his representative works on monetary theory, but both of them can't escape the pattern of classical monetary quantity theory.
He founded the Political Economy Club in 1909, and won the Adam Smith Award for his original work "Index Compilation Method". 19111944 Editor-in-Chief of Economics Journal,1913-1965438 Member of the Royal Indian Monetary and Financial Committee and Secretary of the Royal Economic Society, 65438. 1929- 1933 presided over the work of the British Financial and Economic Advisory Committee, 1942 was made Lord, 1944 attended the Bretton Woods United Nations Monetary and Financial Conference and served as the director of the International Monetary Fund and the International Bank for Reconstruction and Development. 1946 April 2 1 died of a heart attack at the age of 63. Keynes made great contributions to economics all his life and was once known as the "savior" of capitalism and the "father of post-war prosperity". Keynes was born in the era when Usai's law was regarded as a deity, and agreed that capitalism could be maintained by full employment automatically with the help of market supply and demand forces, so he has been devoted to the study of monetary theory.
After the economic crisis broke out in 1929, he felt that the traditional economic theory was not in line with reality and must be broken through, so 1933' s General Theory of Employment, Interest and Money (hereinafter referred to as the General Theory) made a great breakthrough in economic theory. [FONT style = " FONT-SIZE: 10.5 pt； Font series: Song Ti; MSO-bidi-font-size: 12.0 pt； MSO-ascii-font-family:' Times New Roman '； MSO- Hans-font-family:' Times New Roman'; MSO-bidi-font-family:' Times New Roman '； MSO-font-kerning: 1.0 pt； MSO-ansi- language: en-us; MSO- Far East-Language: ZH-CN; Shortly after The General Theory was published, Keynes had a heart attack [/font].
First of all, it broke through the traditional employment equilibrium theory and established an economic equilibrium theory characterized by unemployment.
Traditional neoclassical economics put forward the hypothesis of full employment with Say's law as its core. It is believed that the full utilization of resources can be realized through price adjustment, thus excluding the macroeconomic problems of resource utilization from the scope of economic research. The General Theory criticizes Say's Law, acknowledges the existence of involuntary unemployment in capitalist society, and formally puts the macroeconomic issue of resource utilization on the agenda.
Second, regard national income as the central issue of macroeconomic research.
The center of Keynes's general theory is to study the decision of total employment, and then to study the reasons for unemployment. It is considered that total employment is closely related to total output, which are the characteristics of modern macroeconomics.
Third, analyze the decision of national income with the balance of total supply and total demand.
In Keynes's general theory, effective demand determines total output and total employment, and total supply and aggregate demand function are used to illustrate the decision of effective demand. On this basis, he explained how to use a set of equations to represent the equilibrium of the whole economy, and how to explain the static results by investigating the influence of the change of equation parameters on solving the equation. That is, he always uses the balanced relationship between total demand and total supply to explain the decision of national income and other macroeconomic problems.
Fourth, establish a macroeconomic system with total demand as the core.
Keynes adopted short-term analysis, that is, assuming production equipment, capital, technology, etc. Nothing changes, so the total supply remains the same. On this basis, it analyzes how the total demand determines the national income. The cause of unemployment is attributed to insufficient aggregate demand.
Fifth, analyze the monetary theory of real economy and money.
Traditional economists divide economy into two parts: real economy and monetary economy. Among them, economic theory analyzes the decision of actual variables, and monetary theory analyzes the decision of price. There is not much relationship between them. This is called dichotomy. Keynes combined economic theory with monetary theory by the method of gross analysis, and established a set of production currency theory. In this way, the relationship between money and interest rate and its influence on the whole macro-economy are analyzed, so that the two theories are combined to form a complete set of economic theories.
Sixth, he criticized Say's Law, opposed the laissez-faire economic policy, and clearly put forward the idea of direct state intervention in the economy.
Classical economists and neoclassical economists agree with laissez-faire economic policies, while Keynes opposes these and advocates direct state intervention in the economy. He demonstrated the necessity of direct state intervention in the economy and put forward more specific goals. His thought of paying attention to fiscal policy and monetary policy later became the core of macroeconomics, and even later macroeconomics was based on Keynes's general theory.
There is no doubt that Keynes was a great economist. He dared to break the shackles of old ideas, acknowledged the existence of involuntary unemployment, and put forward the idea of state intervention in the economy for the first time, which made great contributions to the whole macroeconomics.
Keynes was not only a genius in economic theory, but also a bold practitioner. Although it is easier said than done, he still made money despite the risks. After all, he is better than others, and he really has both fame and fortune.
One morning in London, a man woke up, but he was still lying in bed, disheveled. He is on the phone with his agent, making a decision about his huge speculative business, a university and a consortium.
This man is Baron john maynard keynes, a famous economist. He not only opened up the research position of macroeconomics (his two major works brought him great and lasting reputation), but also served as university treasurer, academic director of Cambridge University, government official and consultant. Baron Keynes was also a wealthy investor. Keynes's economic theory has influenced several generations, and still plays a decisive role in the current economic policy formulation, and will continue to influence economic thought in the next few years.
Economists always introduce Keynes in this way: he was smart since childhood and was a famous economist. He married a beautiful Russian ballet dancer and served as an adviser to the king and president. In his spare time, he made money for himself and for Cambridge University, speculating in commodities and achieved great success. But in fact, many of these contents are purely fabricated, which is far from the actual situation.
Keynes's ancestors were English aristocrats, and his parents taught at Cambridge University. Keynes was their first child. They paid a lot for him and had high expectations for little Keynes. Keynes lived up to his expectations. After graduating from Eton College, he won a scholarship for mathematics and classic works at King's College. 1905 graduated from Cambridge University, UK with a bachelor's degree in mathematics. 1906 Keynes passed the civil service examination and entered the Indian office of the Ministry of Foreign Affairs. Two years later, I applied for the position of mathematics researcher at King's College, but I didn't succeed.
Soon, Cambridge University offered him a researcher position to teach general economics, which remained until his death. Among many courses taught by Professor Keynes, one is a weekly course on Indian money and finance. Before long, Keynes specialized in money, credit and value. During this period, he also wrote some books, mainly probability theory. His first book on economics was Money and Finance in India.
19 14, World War I broke out. At that time, society was generally worried about the financial crisis. As an expert on monetary issues, Keynes went to work in the Ministry of Finance. His first effort was to persuade the Prime Minister Lloyd George to keep the gold reserve. By the end of the war, Keynes had established a solid position in the Ministry of Finance and was sent abroad to deal with a series of financial problems. When the Paris Peace Conference was held, Keynes participated in the peace talks on behalf of the British Treasury.
After the peace talks, Keynes resigned from the Ministry of Finance and wrote the book Economic Consequences of Peace. This book describes some famous figures at that time, including Lloyd George and other figures, and analyzes the society at that time.
Walter Leapman compiled Keynes's works into a series, which Keynes paid for and published by Macmillan Company. The book was printed in Edinburgh and then shipped to London. On the way, the ship was unfortunately wrecked, and 2000 copies of Economic Consequences of Peace were washed to Danish beaches by seawater. According to Danish law, books are auctioned locally. This book was finally translated into many languages and sold about 6.5438+0.4 million copies.
Keynes was the best person who could put theory into practice. While writing books, Keynes also engaged in currency trading. According to his experience in the Ministry of Finance and his post-war inspection in Germany, he began to be optimistic about the US dollar and bearish on European currencies, trading at a range of 65,438+00% and establishing a series of currency positions. Soon he made a lot of money, and he thought he could see the market trend better than ordinary people.
1in April, 920, Keynes predicted that there would be credit inflation in Germany, and shorted the mark on this ground. Mark has been falling before, but now he is starting to rebound. In April and May, Keynes himself lost 1.3 1.25, and his syndicate as a consultant also lost 8498. The brokerage company asked him to pay a deposit of 7,000 pounds, so he borrowed 5,000 pounds from an admirer and paid 65,438 pounds +0.500 pounds with his own advance. He admitted that he was bankrupt.
192 1 year, through writing, Keynes's economic situation improved and he began to speculate and trade commodities and stocks.
They are all traded with margin.
In 1924, Keynes invested 57,797 pounds, which increased by 506,450 pounds in 1937, thus establishing his reputation in the securities industry. During this period, the average compound interest rate of Keynes's investment was 17%. Although the profit is high, it is still not as good as the performance of conservative investor Warren Buffett.
Keynes's official biographer said that Keynes gave up speculation at 1937 because of his poor health. In fact, he was already well and in good health, so he can continue to influence economic and political development in the next nine years. However, biographies published in recent years point out that Keynes suffered heavy losses in the American stock market from 65438 to 0937. Considering that the second bankruptcy may damage his reputation as the most famous economist in the world, he withdrew from speculation in time.
In the book "General Theory of Employment, Interest and Money", Keynes talked about his investment philosophy, which we can appropriately call "beauty pageant theory". * * * There are 100 photos of beautiful candidates, from which the public chooses four people. However, people don't vote for the person he thinks is the most beautiful, but choose the person he thinks most people think is the most beautiful.
Like many great financiers, Keynes was very bold in major events and dared to use a lot of money to support an argument. But in small matters, he is very conservative.
Once, Keynes and a friend were on vacation in Algiers, Algeria. They let a group of local children shine their shoes. Keynes paid so little that the children were so angry that they threw stones at them. His friend advised him to give more money, and Keynes, the greatest economist in the world, replied, "I won't let the currency depreciate."
Marginal efficiency refers to the expected profit rate that can be obtained by increasing a unit investment. Keynes regarded the future income of capital assets as a series of expected annual income of this investment, and regarded the supply price of capital assets as the expected replacement cost of assets. Moreover, he believes that the marginal efficiency of capital is decreasing. Keynes devoted considerable space to attracting investment in his General Theory. The theory of attracting investment is the most important part of his general employment theory. According to Keynes's point of view, only when the expected return of capital assets exceeds the supply price and replacement cost of capital assets, will it be profitable to continue investing and induce capitalists to invest.
The epitaph of Keynes
Don't be sad for me, my friend, don't cry for me.
Because, I don't have to work hard anymore.
Heaven will resound with hymns and sweet music,
I don't even sing anymore.