Universal Man: The Seven Lives of John Maynard Keynes

Copyright

William Collins

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First published in Great Britain by William Collins in 2015

Copyright © Richard Davenport-Hines 2015

Richard Davenport-Hines asserts the moral right

to be identified as the author of this work

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Cover photograph © Private Collection/Roger-Viollet, Paris/Bridgeman Images

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Dedication

For Selina Hastings and Jonno Keates and again to the gentle memory of Cosmo Davenport-Hines

Epigraph

Good work is not done by ‘humble’ men. It is one of the first duties of a professor, for example, in any subject, to exaggerate a little both the importance of his subject and his own importance in it. A man who is always asking ‘Is what I do worthwhile?’ and ‘Am I the right person to do it?’ will always be ineffective himself and a discouragement to others. He must shut his eyes a little, and think a little more of his subject and himself than they deserve.

G. H. Hardy

It is, I think, of the essential nature of economic exposition that it gives, not a complete statement, which, even if it were possible, would be prolix and complicated to the point of obscurity but a sample statement, so to speak, out of all the things which could be said, intended to suggest to the reader the whole bundle of associated ideas, so that, if he catches the bundle, he will not in the least be confused by the technical incompleteness of the mere words which the author has written down … This means, on the one hand, that an economic writer requires from his reader much goodwill and intelligence and a large measure of co-operation; and, on the other hand, that there are a thousand futile, yet verbally legitimate, objections which an objector can raise. In economics you cannot convict your opponent of error – you can only convince him of it.

Maynard Keynes

What do we do? What is the remedy? It would be most inappropriate for me to stand up here and tell you what Keynes would have thought. Goodness knows he would have thought of something much cleverer than I can think of.

Roy Harrod

Contents

Cover

Title Page

Copyright

Dedication

Epigraph

List of Illustrations

Chapter 1: Altruist

Chapter 2: Boy Prodigy

Chapter 3: Official

Chapter 4: Public Man

Chapter 5: Lover

Chapter 6: Connoisseur

Chapter 7: Envoy

Acknowledgements

Notes

Index

Also by Richard Davenport-Hines

About the Author

About the Publisher

List of Illustrations

1: Maynard Keynes as a figure of intellectual authority and cultural benevolence, surrounded by rare books in his Bloomsbury house. (Tim Gidal/Picture Post/Getty Images)

2: Keynes, aged about fourteen, shortly before starting at Eton, where he won most school prizes and learnt the rudiments of statecraft. (Archives Centre, King’s College, Cambridge; by kind permission of Susannah Burn)

3: ‘The peerless Maynard’ was by his mid-thirties chief of the Treasury department responsible for the London government’s external finances and inter-Allied finance. (Archives Centre, King’s College, Cambridge)

4: Keynes attended the Genoa Conference, which was charged with the conciliation of European capitalism with Russian communism, as special correspondent of the Manchester Guardian. (Private Collection/© Leemage/Bridgeman Images)

5: Duncan Grant with Keynes. In 1908 Keynes wrote to Grant: ‘I want to see you again dreadfully and find that even in the midst of a crowd I am continually sinking into a trance and thinking about you.’ (Private Collection/Bridgeman Images)

6: Bertrand Russell, Keynes and Lytton Strachey in 1915: three Apostles, members of Cambridge’s Immoral Front, conscientious objectors, skirmishers in Bloomsbury’s cultural vanguard. (© National Portrait Gallery, London)

7: Keynes addressing the Bretton Woods monetary and financial conference in 1944. He performed there, he said, the combined tasks of economist, financier, politician, propagandist, lawyer, prophet and soothsayer. (akg-images)

8: Lydia Lopokova and Keynes on their balcony overlooking Gordon Square in 1940. Her protective love and gaiety kept him alive, and enabled his greatest accomplishments. (© Hulton-Deutsch Collection/CORBIS)

Seven snapshots of a Universal Man:

An intellectual in his twenties in college rooms in Cambridge, hunched forward listening, lolling back in reflection, then standing on a hearth-rug speaking, eager, testing, provoking, always in passionate, lucid paragraphs, to the secretive discussion group called the Apostles, offering new intellectual or ethical systems, and later acting on his belief in the virtues of immorality, having energetic bouts of illegal, risky sex with men from all classes whom he picked up in museums, saunas, railway stations and streets.

A man of thirty-one perched in the side-car of a motorbike driven by his brother-in-law hurtling at top speed on the dusty hot roads from Cambridge to London on 3 August 1914. The young man is a Cambridge economist, and has been summoned to the Treasury to help with the crisis caused by the looming European war. This heretical outsider single-handedly dissuades the Chancellor of the Exchequer, Lloyd George, and the Treasury mandarins from taking a fatal step that the banks had convinced them was essential: the suspension of the Bank Charter Act. His advice is decisive in averting monetary panic and financial collapse in the first week of the war.

Less than four years later, during a critical phase of the world war, the Treasury official responsible for the government’s external finances persuading the hard-bitten and visually insensitive Chancellor of the Exchequer, Bonar Law, whose home is notorious for its drabness, to allot £20,000 of government money to buy paintings for the National Gallery at the auction of the contents of Degas’ studio; attending the auction in Paris, as the booms of advancing German artillery rattle the confidence of buyers; buying for himself works by Cézanne, Ingres, Delacroix and Degas; carrying the Cézanne back to England in his suitcase, and secreting it in the ditch of a Sussex farm-track, because it is too heavy for him to carry to the friends’ house which he is visiting.

A man in his forties, a member of the Bloomsbury group, art collector, bibliophile, magazine proprietor, balletomane and husband of a dancer in Diaghilev’s Ballets Russes named Lydia Lopokova, stumping round England on behalf of Liberal candidates during general elections, explaining taxation to Blackburn cotton operatives, slumps to Barrow shipyard workers, Russian loans to the shopkeepers of Cambridge, mobbed by railwaymen at Blackpool; becoming an international opinion-former as his articles in the Manchester Guardian are syndicated to newspapers in New York, Berlin, Paris, Milan, Vienna, Amsterdam and Stockholm.

As the Slump hits Britain, and the Great Depression looms over the United States, a Cambridge don leading an informal seminar, lasting several days, for members of a government committee on Finance and Industry, bewitching bankers, manufacturers, officials, trade unionists with piercing new insights (such as the difference between investment and saving) and radical proposals (public-works expenditure by the government to break the vicious cycle of underinvestment, cheap money through low interest rates, tariff barriers to protect home markets, and closing inefficient or surplus factories). ‘You are a complete dramatist,’ the committee chairman Lord Macmillan told him in admiration. His scrupulous, exact and judicious speeches captivate the committee into issuing the Macmillan Report of 1931 calling for a planned economy of a type that would later be known as Keynesian.1

A man in his fifties who knows the creativity of inconsistency, and defines someone of perfect consistency as ‘the man who has his umbrella up whether it rains or not’, revises his ideas, and publishes his General Theory of Employment, Interest and Money in 1936. This founding text (if not the absolutely original creator) of macroeconomics becomes the most important economics book of the twentieth century. It proves as important as Adam Smith’s Wealth of Nations in inaugurating an economic era. ‘We were pedestrian, perhaps a little complacent,’ said A. C. Pigou, a senior Cambridge economist who often resisted his ideas. ‘General Theory broke resoundingly that dogmatic slumber. Whether in agreement or in disagreement with him discussion and controversy sprang up and spread over the world. Economics and economists came alive. The period of tranquillity was ended. A period of … creative thought was born.’2

A dauntless man in his sixties, a weary titan with heart disease, fighting daily, at interminable, closely argued and exhausting conferences, to save impoverished, war-wrecked Britain from being driven into bankruptcy by the Americans calling in their war loans; knowing that he is sacrificing his life in the effort; and then, in mid-Atlantic, on the liner Queen Elizabeth, while his exhausted colleagues are asleep, padding down the corridor to the radio-room to collect messages reporting how his Anglo-American financial settlement is being decried in England, and retreating to his state-room to prepare the speech of his lifetime, which will send his attackers scuttling into retreat.

Each snapshot shows the same man in similar postures: a disciplined logician with a capacity for glee who persuaded people, seduced them, subverted old ideas, installed new ones; a man whose high brilliance did not give people vertigo, but clarified and lengthened their perspectives. The man was John Maynard Keynes (1883–1946).

Keynes was the chief intellectual influence on English public life in the twentieth century. He was England’s paramount example of the scholar as man of action. He conceived economic theories in the solitude of his study, and in the cut and thrust of discussion. Then he persuaded the politicians and financiers of two continents to implement them. Isaiah Berlin, who worked with him in wartime Washington, thought him the cleverest man he knew – ‘intellectually awe-inspiring’. Lord Beaverbrook, the newspaper magnate and master manipulator of opinion, called Keynes, in 1945, England’s ‘finest living propagandist’. Eric Hobsbawm put him in a list of political ‘movers and shapers of the twentieth century’ together with Lenin, Stalin, Roosevelt, Hitler, Churchill, Gandhi, Mao Tse-tung, Ho Chi Minh, de Gaulle, Mussolini and Franco. Before him, economic man lived by the fossil fragments of dinosaur systems. Phrases like ‘Keynesian economics’ and the ‘Keynesian Revolution’ testify to his influence on both economic theory and government policies. Indeed, ‘Keynesian economics’ was not as decisive to the world as the ‘Keynesian era’: that thirty-five-year period after the Second World War when versions of his economic ideas dominated the economic policies of Western governments, creating a boom that can now be seen as the most sustained period of rapid expansion in history. Keynesianism upheld regulated capitalism. It involved a commitment to full employment at any cost which, in England, dominated the economic policies of both Labour and Conservative governments from Attlee in 1945 to the onset of Thatcher in 1979.3

It is as an economist that Keynes is invoked, admired and deplored. His reputation rests on his writings and interventions in economic policy. Roy Harrod, who published the official biography of him in 1951, Robert Skidelsky, who wrote three masterly volumes at intervals from 1983, Donald Moggridge, who edited his papers in thirty volumes and then published his authoritative Maynard Keynes: An Economist’s Biography in 1992, understandably all made economics paramount. Skidelsky’s volumes amount to 1,758 pages: there are 990 pages in Moggridge. This approach is estimable; but it is not right for every reader. ‘The worst of economics is that it really is a technical and complicated subject,’ Keynes wrote in 1930. ‘One can make approximate statements in a common-sense sort of way which may appear superficially satisfactory. But if someone begins to ask one intelligent and penetrating questions it is only possible to deal with them by means of something much more complicated.’ This short book is notable for its technical omissions and for its selective emphasis in depicting Keynes.4

Leonard Woolf, who was a member of the same gifted esoteric clan in Cambridge and London, summarized Maynard Keynes: ‘a don, a civil servant, a speculator, a businessman, a journalist, a writer, a farmer, a picture-dealer, a statesman, a theatrical manager, a book collector, and half a dozen other things’. Keynes was confident equally in Whitehall, Washington, Cambridge, Covent Garden, the Bank of England and the Arts Council. In each of these domains, and in the dining-clubs and private discussion groups of which he was an inveterate habitué, Keynes conjoined different networks of expertise, influence and ambitions. Woolf did not use the word ‘economist’ to characterize him: nor does the word occur in any chapter title in this book. Keynes was of a type that was more common in the sixteenth, seventeenth and eighteenth centuries than in the twentieth, whose ardent curiosity, knowledge, imagination and activity were directed at almost every aspect of humanity. He pursued multifarious interests, which fashioned the sort of economist that he became. The climate of his life – what Louis MacNeice in his poem ‘Autumn Journal’ called ‘the frost that kills the germs of laissez-faire’ – is the concern of this book.5

In the England of Keynes’s generation, pleasures were seen as vices unless they had been deferred; instant gratification was immoral; joy-of-life was treated almost as a contraband luxury; and people tried to hide their emotions from indiscriminate gaze behind shutters which were fastened tight. Most accomplished and effective Englishmen of Keynes’s class compartmentalized their lives. It was inherent in their cultural assumptions to categorize and segregate emotions and people according to their worth, to manage their conflicting motives and experiences by keeping them apart, and to be discerning in their evaluation of ideas and institutions. Compartmentalization was implanted by family circumstances, instilled by boyhood training, and found in manhood to be indispensable for forming priorities and making choices. If people were to enjoy clear, orderly, civilized, productive lives, without blurs, smudges, mess, waste and overlap, it was essential for them not to mix their friends, aims, urges and trepidation in an undifferentiated hotchpotch. Maynard Keynes exemplified the truth that compartmentalization is a mark of intelligence as well as requisite to successful intentions. Accordingly the structure of this book is not a chronological narrative. It treats him in turn as an exemplary figure, as a youthful prodigy, as a powerful government official, as an influential public man, as a private sensualist, as a devotee of the arts and as an international statesman. By showing the disconnections as well as the continuities, the distances as well as the intimacies, it tries to remind readers that Keynes believed that one’s different traits and activities should be disposed with care like the freight separated and stowed in a ship’s bulkheads to stop capsize.

Keynes was a great persuader. ‘The misery of life was having to persuade people,’ he told the Cambridge don Arthur Benson three months before the outbreak of the First World War (adding that the trouble was that few people halted to think before talking). ‘Words ought to be a little wild,’ he said in Dublin in 1933, ‘for they are assaults of thoughts upon the unthinking.’ Keynes spent his life trying to prompt, convince and stimulate people into right thinking. He drew on his circumstances and surroundings as he resisted slogans, exposed lies, knocked aside people’s crutch-words, insisted upon what was actual, built a bridgehead into reality. No account of his persuasive powers can omit a description of his voice. Austin Robinson, who worked with him in Cambridge seminars, official meetings and international diplomatic negotiations, stressed the sound of Keynes. ‘That beautiful, musical, resonant voice, allied to an unparalleled power of lucid exposition and to a range of vocabulary and a joy in words comparable only to that of Winston Churchill in his generation, made him a pleasure to listen to, whether you agreed or disagreed, whether you knew all about what he was talking about, or nothing about it. He never bored. He never exhausted. He was never trite.’6

Keynes was a prolific contributor to daily newspapers, weekly magazines and learned journals. These articles were intended to have immediate influence on decisions, and to alter short-term opinion. There was immediacy, responsiveness and topicality in them: though his journalism was ephemeral, its persuasiveness was enduring. Keynes’s books, by contrast, were meant to be re-read. They defined first principles, characterized problems, posed questions, established models and raised implications of enduring purpose. Their eloquence was meant to be persuasive beyond time. The most famous of them, The Economic Consequences of the Peace, which was published over ninety years ago, still resonates. In it Keynes addressed what he called the ‘unusual, unstable, complicated, unreliable, temporary nature of [Europe’s] economic organization’. Western economies, he emphasized, depended on ‘the inequality of the distribution of wealth’. He identified the beginning of an aggressive, democratized new consumerism – ‘the war has disclosed the possibility of consumption to all, and the vanity of abstinence to many’ – and predicted that once ‘the bluff is discovered, the labouring classes may no longer be willing to forgo so largely’. In consequence, the middle classes’ conspicuous new consumption might provoke confiscatory tax regimes and political revenge.7

In the classical world – and classical training was instilled in Keynes by his education – the predominant question for thinking people was: ‘How may I lead the Good Life?’ After the religious wars of the seventeenth century had been fought to exhaustion, Europeans addressed the purpose of life with a different question: ‘What must I do to be saved?’ Keynes tried to answer these questions for Economic Man. In a review of The Economic Consequences of the Peace in 1920, Dennis Robertson, who knew Keynes well, wrote that he favoured ‘hope against despair – of taking, where the future is at best uncertain, the risks of generosity rather than the risks of meanness. Perhaps – perhaps Mr Keynes himself is a bit of an old theologian, after all; and not a bad thing to be, either.’8

‘It seems clearer every day’, Keynes wrote in 1925,

that the moral problem of our age is concerned with the love of money, with the habitual appeal to the money motive in nine-tenths of the activities of life, with the universal striving after individual economic security as the prime object of endeavour, with the social approbation of money as the measure of constructive success, and with the social appeal to the hoarding instinct as the necessary provision for the family and for the future. The decaying religions around us, which have less and less interest for most people unless it be an agreeable form of magical ceremonial or of social observance, have lost their moral significance … just because they do not touch in the least degree on these essential matters.

These attitudes to both money-making and religion set him at odds with many Americans in his lifetime and nowadays. Moreover, in both his private and official correspondence, he made sharp criticisms of American working methods and government organizations. However, he was not anti-American. There was no animosity in his remarks. His misgivings about the American way were expressed with the frankness with which he spoke of the misjudgements or inadequacies of the Bank of England, Eton College, the rump of Liberal party leaders after Asquith, the star columnists of the New Statesman, the Scottish members of the Arts Council of Great Britain. Hostility to the richest nation in the world would have seemed to him stupid, purblind, defeatist and regressive. The energy and optimism of the United States delighted him.9

Pessimism was an abomination to Keynes. He detested stupidity as a form of ugliness, and fought ignorance as the cause of pessimism, inhumanity, injustice and wastage. Humankind lived with some solid knowledge, an ungovernable welter of fragmentary information, a host of assumptions and many improvisational, day-to-day solutions. Keynes used both logic and instinct – adduced both neutral data and creative imagination – in order to make these cohere into clearer precepts for living. The motive force of his life was that, if only human stupidity could be overcome, and pessimism eradicated, most of the world’s evils were remediable.

Keynes was a man of joyous vitality. At times he was too optimistic – so ardent was his faith in the power of reason and persuasion (especially his own). Always he was the centre of vigorous, disciplined activity. He believed that all problems were soluble in principle by rational thought – though obtuseness could prevent the solution being enacted. His method was first to identify the intellectual solution; then to devise an administrative technique to apply that solution; and finally to persuade others of the sense of his recommendations. He was a gregarious intellectual, who relied on the stimulus of fast, incisive discussion with his friends and protégés, although his constructive planning was detailed, methodical and sure. T. S. Eliot and other contemporaries extolled the concision, lucidity, word-perfect vocabulary and irony of his prose.

Not everyone liked Keynes. He was the model for a shifty stockbroker called Joseph Barralty in John Buchan’s novel The Island of Sheep (1936): Buchan had ample chance to study Keynes, as they were fellow members of the Other Club, and dined together at the Savoy Hotel for a dozen years. ‘Tallish, lean, big-nose, high cheekbones,’ an official from Scotland Yard says of Barralty. ‘He has a moustache which has gone grey at the tips, and it gives him a queer look of innocence. That’s one aspect – the English country gentleman. In another light he is simply Don Quixote – the same unfinished face, the same mild sad eyes and the general air of being lost that one associates with the Don. That sounds rather attractive, doesn’t it? – half adventurer, half squire? But there’s a third light – for I have seen him look as ugly as sin. The pale eyes became mean and shallow and hard … and the brindled moustache with its white points looked like the tusks of an obscene boar.’ Worst still, ‘he’s a first-class, six-cylindered, copper-bottomed highbrow. A gentlemanly Communist. An intellectual who doesn’t forget to shave. The patron of every new fad in painting and sculpting and writing. Mighty condescending about all that ordinary chaps like you and me like, but liable to enthuse about monstrosities, provided that they’re brand new and for preference foreign.’ What made the Scotland Yard man long to finger Barralty’s collar was his condescension: ‘His line is not the fanatic, but the superior critic of human follies.’10