SIR JOHN MAYNARD KEYNES

By: Felipe Argote

Son of tiger striped leaves. But sometimes the born with many more lines than the father. This is the case with John Maynard Keynes. The son of John Nevile Keynes, a Cambridge economist follower of the ideas of Alfred Marshall the founder of the economy known cone the Cambridge school. He is also considered to Marshall the founder of the welfare state because, according to his own statement believes that the ultimate goal of economics is not simply the solution of social problems.

Keynes was born in 1883 in Cambridge, England where his father was a follower of the Cambridge school lead by Marshall. After studying mathematics, John Maynard decided to specialize in economics following the path of the influence of Marshall who was a friend of his father. At the age of 23 years he went to work to India for two years. He published "The Indian Currency and Finance". Later returns and stands as a professor at Cambridge University where he remains for seven years. In 1918 He married Lydia Lopokova Russian ballet dancer. In 1919 he was one of the representatives of Great Britain in establishing the so-called Treaty of Versailles which applies a harsh regime of reparations on Germany after its surrender in Worl War I. Keynes resigned the same year for being against the levels of punishment against the German grounds that they were unaffordable and would severely damage the German economy with negative consequences for the rest of the world. He published "The Economic Consequences of Peace. In 1926 he presented to Oxford where he gave a lecture "The End of Laissez Faire" in criticizing the current liberal individualists who nevertheless served in the late eighteenth century to change the concept of divine right of kings by the concept of social contract and individual freedom, and to replace the concept of divine right of the church for tolerance and the concept that the church is a group of people walking together by choice and not imposed in the style of Torquemada.

This critique of laissez faire liberalism and the concept of the invisible hand and that selfishness are desirable for society develops. It was three years before the Great Depression of October 1929. The recession lasted until the mid-thirties because of the stubbornness of liberal economists who insisted that there should be no intervention to resolve the crisis. Franklin Delano Roosevelt took the ideas clearly when inaugurated the so-called Keynesian New Deal, the committed state and guarantor of health, education and the work of members of society.

Without doubt the greatest contribution of Keynes is contained in the book "General Theory of Employment, Interest and Money" in which he analyzes the major recession which began with the fall of the stock exchange in New York. It is Keynes who manages to enter as a key element to explain the reduction in consumption in the so-called marginal propensity to save. This is that higher income people tend to reduce the percentage of their income they spend on consumption and instead increase the percentage dedicated to saving. This is because the consumption capacity of an individual has a limit. So if someone who earns minimum wage raises the wages he is very likely that nearly all the difference to spend to buy more food, clothes and so on. However if someone who has high level of income you receive a substantial increase in income is likely that much of their additional income as a fixed-term deposits.

Also consider that in periods of recession the state must, at the expense of a deficit, boost growth in demand through public works schemes that reduce the depression of wages. These measures, according to Keynes rising demand, which makes investors will decide to create companies that meet this demand which in turn raises economic growth as a spiral.

Keynes represented England in the Bretton Woods Conference. He proposed creating the International Clearing Union; an exchange institution would issue an international currency that would be exchanged for the currencies of the countries of the United Nations a fixed exchange rate. His plan was defeated by the one presented by the United States through its representative Harry D. White. The United States was in possession of 80% of all the gold in the world and was a creditor of his allies who had sold arms and made loans that did not participate in exploiting the war until 1942 and that the theater of the conflagration did not touch the mainland United States. So set a gold dollar standard with a value of $ 35.00 an ounce as a fixed price. Also this conference created the World Bank and International Monetary Fund. In 1973, when the price of gold was no longer appropriate for the United States and France and England requesting that they change their surplus dollars as agreed at Bretton Woods, Richard Nixon, then President of North America unilaterally eliminated the pattern and devalued the dollar to take advantage in exports.

The Keynesian model was strong throughout the postwar period and for most economists was responsible for the booming world economy after the Second World War. But neo-liberal economists of the Austrian school consider that this is not true.

The economic model developed by Keynes is the framework of so-called import substitution model which essentially promotes the substitution of imported products through incentive policies of the domestic industry. This model encourages the direct involvement of state in the economy in some cases competing with private enterprise, but by encouraging the creation of domestic industries while setting all sorts of obstacles to imports of products competing with those produced by domestic industry . Everything that we can produce we will not import it. If there are enough shoe factories to meet the domestic market, we must not allow importation of shoes. This flow of Keynesianism in Panama is what in the seventies let the government to own "The Power and Light" an American multinational company which nationalized and became the IRHE and Intel, the creation of Bayano state enterprises such as cement, Air Panama, Chiriqui citrus, sugar mills, among others.

We can never know whether the author himself for this model is the kind of state intervention that generates referred to as aggregate demand, or is a degeneration of the concept, as Lord John Maynard Keynes who was created Baron by King George VI of England in 1942, during the Second World War and therefore was part of the House of Lords, died of natural causes in 1946, soon after the end of World War II.