1883–1946. British economist, diplomat and intellectual; member of the Bloomsbury Group, adviser to the Treasury, lead negotiator at Bretton Woods — the most influential figure in twentieth-century macroeconomics.

With the General Theory of Employment, Interest and Money (1936) he refuted Say’s Law and established macroeconomics as an independent discipline: aggregate employment is determined not by supply but by effective demand — what firms actually expect to sell. An economy can remain indefinitely in an underemployment equilibrium; there is no automatic mechanism that returns it to full employment.

Central theoretical contributions:

  • Principle of effective demand: Investment determines saving, not the other way round. The classical direction of causation is reversed.
  • Paradox of thrift: Collective saving in a slump reduces aggregate income and therefore aggregate saving. What is rational for the individual household is destructive for the economy as a whole. Keynes arrived at this insight simultaneously with kalecki en and Wilhelm Lautenbach — independently of both.
  • Liquidity preference: The rate of interest is the price of sacrificing liquidity, not of waiting — which is why it does not automatically fall in a crisis to stimulate investment.
  • Fiscal multiplier: Public expenditure generates a multiple of its own volume in aggregate demand; the state must close demand gaps when private actors fail to do so.
  • Bancor plan (1944): International currency proposal placing symmetric adjustment pressure on both surplus and deficit countries — rejected at Bretton Woods in favour of the US-dominated IMF.

Keynes explicitly credited Bernard Mandeville (Fable of the Bees, 1714) as an unrecognised precursor of the paradox of thrift. kalecki en had developed the essentials of this theory earlier and independently — and added an account of why the correct theory is nonetheless not applied politically.

Main works: A Tract on Monetary Reform (1923), A Treatise on Money (1930), The General Theory of Employment, Interest and Money (1936).