SURVEYING the bleak spectacle of the modern world's worst economic depression in 1933, the British economist John Maynard Keynes declared, ``If I had the power today, I would surely set out to endow our capital cities with all the appurtenances of art and civilization on the highest standards ... convinced that what I could create I could afford - and believing that money thus spent would not only be better than any dole, but would make unnecessary any dole.''
Can a nation spend its way out of a depression? What kinds of intervention, if any, are needed to get a free market operating at its optimum? How does a society decide what it can afford? Questions still being debated in the 1990s bear more than a passing resemblance to the issues first raised by John Maynard Keynes (1883-1946) contemplating the breakdown of unregulated capitalism in the 1930s. In the second volume of a projected three-volume biography of the man often credited - or blamed - for inventing deficit spending, Professor Robert Skidelsky focuses on the years in which the great economist produced some of his most influential works, culminating in his ``General Theory of Employment, Interest, and Money'' in 1936.
These were also the years in which Keynes, as Skidelsky puts it, ``emerged from his homosexual cocoon to marry the Russian ballerina Lydia Lopokova,'' no mere marriage of convenience, according to Skidelsky, but a genuine love match. And in addition to his enchantment with the lady herself, Keynes's union with Lopokova strengthened his lifelong commitment to the arts, part of the ``good life'' that he believed a society should seek to provide for its people.
Three distinct spheres converged in Keynes's complex character: Cambridge, Whitehall, and Bloomsbury, an artistic and literary group. Keynes was an academically trained theoretician and teacher with lifelong ties to his alma mater.
He was also a frequent presence in the corridors of power. And he was a central figure in that intense, unorthodox, informal group of painters, writers, critics, friends, and lovers that included Virginia Wolf, Clive and Vanessa Bell, Lytton Strachey, Roger Fry, E. M. Forster, and Duncan Grant. Covering the many aspects of such a life is exhausting, if fascinating, business, and Skidelsky has managed to bring together an enormous amount of material and shape it into a vibrant, unflaggingly intelligent, if occasionally opinionated, narrative.
Skidelsky himself does not seem to be a ``Keynesian,'' or at least not an orthodox one. He considers the Keynesian system ``an invitation to thought rather than ... a machine for solving crises,'' and perceives the Keynesian legacy not in terms of specific economic fixes, but as a continuing quest for fresh and creative solutions for a world in continual flux.
Yet, Keynes's famous ``liquidity'' - his ability to perceive and react to change - was dedicated to the goal of providing the skittish modern age with a measure of the stability enjoyed in ages past. The economic hardships of the 1920s and 1930s - Germany's inflation, Britain's depression, world-wide unemployment, the 1929 stock market crash - led people to lose faith in the free market and in liberal political values, turning, instead to systems like communism and fascism. ``Keynes,'' Skidelsky remarks, ``was the first economist to argue that economic prosperity was the only secure guarantee of a liberal political system.''
While many of Bloomsbury's younger generation embraced Marxism in the 1930s, Keynes roundly attacked it, not only as a threat to individual freedom, but as ``unscientific'' economics. Although his own proposals for government to take a larger role than ever before in regulating, stimulating, and otherwise fine-tuning the economy horrified old-fashioned followers of the doctrine of laissez faire, Keynes's commitment to making the market system work richly entitled him to be viewed as the ``savior'' of capitalism.
Keynes's ``demand-side'' approach alarmed the traditionalists. `` Whenever you save five shillings, you put a man out of work for a day..., '' he warned British listeners in a radio broadcast of 1931, ``whenever you buy goods you increase employment - though they must be British, home-produced goods if you are to increase employment in this country.... Therefore, O patriotic housewives, sally out tomorrow early into the streets and go to the wonderful sales which are everywhere advertised. You will do yourselves good - for never were things so cheap.... Lay in a stock of household linen, of sheets and blankets to satisfy all your needs. And have the added joy that you are increasing employment, adding to the wealth of the country....''
On the state level, Keynes advocated public works projects to give jobs to the unemployed and to enhance the beauty and comfort of urban life. Despite his previous strain of anti-Americanism (he resented America's growing power), he was highly impressed by the steps taken under Franklin Roosevelt's New Deal.
As Skidelsky points out, Keynes's attitude toward capitalism was ambivalent: He thought it had proved itself the system best capable of generating wealth, yet he also felt that, once ample wealth was created, a good society should go beyond the motives of acquisition and love of money in order to put its wealth to use in the noblest ways.
Growing up as part of a generation that had blithely discarded and mocked Victorian values, Keynes later expressed concern and dismay at what he saw as a serious decline in moral standards. Irreligious himself, he could understand why someone like T.S. Eliot chose to return to orthodox Christian belief.