Keynes: The Return of the Master

What sort of economist was John Maynard Keynes? In his obituary essay on his teacher Alfred Marshall, he wrote:

The master-economist must possess a rare combination of gifts …. He must be mathematician, historian, statesman, philosopher — in some degree. He must understand symbols and speak in words. He must contemplate the particular, in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must be entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood, as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.

This bore little resemblance to Marshall, but a striking resemblance to one John Maynard Keynes.

He had a universal curiosity, and could not touch any topic without weaving a theory about it, however fanciful. He called the 17th-century scientist Isaac Newton "the last of the magicians," and not the first of the rationalists. In late middle age he used to complain that young economists were not "properly educated," by which he meant they were not able to draw on a wide culture to interpret economic facts.

He was formidably intelligent. Bertrand Russell, one of the cleverest men of his day, wrote that "Keynes’s intellect was the sharpest and clearest that I have ever known. When I argued with him, I felt that I took my life in my hands, and I seldom emerged without feeling something of a fool." Others, like the art historian Kenneth Clark, felt he used his brilliance too unsparingly: "He never dimmed his headlights."

His mind was mercurial, which meant that he quickly changed his opinion. He liked to play with ideas in a reckless way, but, in this manner, as his friend Oswald Falk remarked, "in spite of false scents, he caught up with the march of events more rapidly than did others." Keynes was the most intuitive of economists, with an extraordinary insight into the gestalt of particular situations. He possessed in marked degree the scientific imagination he ascribed to Freud, "which can body forth an abundance of innovating ideas, shattering possibilities, working hypotheses, which have sufficient foundation in intuition and common experience," though unprovable. He claimed for the economist Thomas Malthus "a profound economic intuition," and quoted De Morgan’s verdict on Newton, "so happy in his conjectures as to seem to know more than he could possibly have any means of proving." Keynes also felt sure of his unprovable conjectures.

Keynes ascribed to Malthus "an unusual combination of keeping an open mind to the shifting picture of experience and of constantly applying to its interpretation the principles of formal thought." This expressed his own economic philosophy in a nutshell. Economics, he told Roy Harrod in 1938, is a "science of thinking in terms of models joined to the art of choosing models that are relevant to the contemporary world … Good economists are scarce because the gift of using ‘vigilant observation’ to choose good models … appears to be a very rare one." Keynes paid close attention to economic facts, usually in statistical form. He used to say that his best ideas came to him from "messing about with figures and seeing what they must mean." He could be as excited as any economist at discovering correlations in the data. Yet he was famously skeptical about econometrics — the use of statistical methods for forecasting the future. He championed the cause of better statistics not to provide material for the regression coefficient, but for the intuition of the economist to play on. He believed that statistical information in the hands of the philosophically untrained was a dangerous and misleading toy.