John Maynard Keynes is considered one of the leading lights of liberal economics. Challenged by a critic who said that in the long run, Keynesian economics would lead to national bankruptcy, Keynes memorably responded with a witticism: “In the long run, we’re all dead.”
Lord Keynes—has was ennobled for his service to the Liberal Party and the Asquith Government before and during and during World War I. Keynes attended the Paris Peace Conference in 1919 and left, disgusted, at what he saw as the vengeful attitude of the victors. His book, The Economic Consequences of the Peace, was widely read and helped contribute to the general view among the upper classes of Britain, Canada, and the U.S. that the allies’ Treaty of Versailles had been too harsh toward defeated Germany and would lead to depression. Recent historians, including Margaret MacMillan, granddaughter of David Lloyd George, have pointed out that the Versailles Treaty of 1919 was certainly not as harsh as the Treaty of Brest-Litovsk, which the triumphant Germans had imposed on a prostrate Russia in 1918. Lloyd George had won a landslide election promising to squeeze defeated Germany “until the pips squeak.”
But the Keynes view helped to de-legitimize the Versailles Treaty in the eyes of the chattering classes. It doubtless helped undergird the British desire to “appease” the Germans in the inter-war period of 1919-1939. Britain was far more willing to appease Germany than France had been.
When the Great Depression of 1929 crashed in on the world, Keynes was viewed as a prophet. Terms like “priming the pump” were a way in which liberal politicians like Franklin D. Roosevelt could explain Keynes’ very complex and subtle theories of government-backed manipulation of the economy. Roosevelt’s New Deal was essentially an exercise in using the federal government to spend our way out of the Depression. In fact, by 1936, unemployment in the U.S. had gone down, from 25% to 16%.