John Maynard Keynes ( 1883-1946) became the dominant economist in the West between the two world wars. While serving as a senior member of Britain's delegation to the Versailles Peace Conference in 1919, he rethought in more radical terms the ideas of his teacher at Cambridge, Alfred Marshall. Keynes resigned from the delegation and wrote Economic Consequences of the Peace ( 1920), in which he attacked the prevailing orthodoxy of political and economic thinking. "The Psychology of Modern Society" is from that book. In this selection, Keynes's radical spirit is evident in his implicit statement of purpose: to state the truth of what lay hidden in "the unconscious recess of [Capitalist Society's] being." The second selection, "The New Liberalism", appeared five years later when Keynes was obviously in a somewhat less gloomy frame of mind. He borrows a popular philosophy of history to make the point that the old, nineteenth-century idea of individual freedom can no longer be trusted. Economic and social theory must recommend state policies designed to control and direct the economy. This idea influenced Franklin Roosevelt's New Deal, as well as the leading social theorists of the time (most notably Talcott Parsons), and his radical philosophy thus became established doctrine following World War II. Keynes's most important technical study was The General Theory of Employment, Interest and Money ( 1936). His ideas are particularly lucid examples of the social theoretical sentiments that arose between the wars: Given the global economic and political crises, social theory had to rethink the individual's relation to society, and the state had to be an active player in the economic world.
John Maynard Keynes ( 1920)
Europe was so organized socially and economically as to secure the maximum accumulation of capital. While there was some continuous improvement in the daily conditions of life of the mass of the population, Society was so framed as to throw a great part of the increased income into the control of the class least likely to consume it. The new rich of the nineteenth century were not brought up to large expenditures, and preferred the power which investment gave them to the pleasures of immediate consumption. In fact, it was precisely the inequality of the distribution of wealth which made possible those vast accumulations of fixed wealth and of capital____________________