Working Paper: CEPR ID: DP16610
Authors: Patricia Clavin; Giancarlo Corsetti; Maurice Obstfeld; Adam Tooze
Abstract: Just over a century old, John Maynard Keynes’s The Economic Consequences of the Peace (1919) remains a seminal document of the twentieth century. At the time, the book was a prescient analysis of political events to come. In the decades that followed, this still controversial text became an essential ingredient in the unfolding of history. In this essay, we review the arc of experience since 1919 from the perspective of Keynes’s influence and his changing understanding of economics, politics, and geopolitics. We identify how he, his ideas, and this text became key reference points during times of turbulence as actors sought to manage a range of shocks. Near the end of his life, Keynes would play a central role in planning the world economy’s reconstruction after World War II. We argue that the “global order” that evolved since then, marked by increasingly polarized societies, leaves the community of nations ill prepared to provide key global public goods or to counter critical collective threats.
Keywords: Keynes; World War I; Versailles; Interwar period; League of Nations; World War II; Bretton Woods; Cold War; Multilateralism; Global order
JEL Codes: B3; E1; E3; F3; F4; N1; N2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Keynes's critiques of the Treaty of Versailles (E65) | long-lasting effects on international relations and economic policies (F50) |
| Keynes's analysis (E12) | economic fragmentation and political tensions in Europe post-World War I (N93) |
| Keynes's perspective on reparations and economic rehabilitation (E65) | shaping the discourse of his time (B24) |
| Keynes's ideas (E12) | development of international economic governance (F02) |
| Keynes's insights into economic stability and political peace (E12) | guiding post-war reconstruction efforts (F35) |
| lack of attention to economic rehabilitation in the Treaty of Versailles (N13) | rise of nationalism and conflict in Europe (F52) |