America's Money Machine

The Keynesian Influence 171
This practice, which he described as the gold exchange standard, Keynes
defended with eloquence: "So long as gold is available for payments of
international indebtedness," he wrote, "it is a matter of comparative
indifference whether it actually forms the national currency." 1
Keynes returned from India to become a lecturer at King's College,
Cambridge. During World War I he was attached to the British Treasury
and was its official representative at the Paris Peace Conference up to
June 7, 1919. He also sat as deputy for the Chancellor of the Exchequer
on the Supreme Economic Council. Frustrated at what he regarded as the
fruitlessness of the negotiations and persuaded of the hopelessness of
abating the harshness ofthe peace terms being imposed, he resigned and
wrote a book called The Economic Consequences of the Peace. His book was
widely read, and its impact was profound. It was almost as influential as
the course of events in the subsequent modification of the war settlements.
In fact, Keynes in this and later writings was to prove what he himself
was to write, somewhat ironically, regarding the influence ofeconomists:
The ideas of economists and political philosophers, both when they are
right and when they are wrong, are more powerful than is commonly understood.
Indeed this world is ruled by little else. Practical men, who believe
themselves to be quite exempt from any intellectual influences, are usually
the slaves ofsome defunct economist. Madmen in authority, who hear voices
in the air, are distilling this frenzy from some academic scribbler of a few
years back. I am sure that the power ofvested interests is vastly exaggerated
compared with the gradual encroachment of ideas. 2
The influence attained by Keynes is not easy to explain except by the
profound respect-almost idolatry-paid to economics and its high
priests in an age that worshipped the standard of living above all other
reality, and in the United States gave the position of privy council to the
Chief Magistrate exclusively to the profession of economics.* What put
Keynes above his competitors was partly his capacity for irony and scorn,
of which we have just given an example, and his willingness to use it to
reduce to ashes all other theories but his own. At the same time he had
skill to dress his own ambiguities with such density of verbiage, such
mystifying abstruseness, and such mathematical dogmatism as was exceeded
only by Karl Marx. All of which served, just as it served the
necromancers and astrologers of Babylon, to compel a submissive awe
among his readers and listeners. Like Marx, also, Keynes had an infinite
*The President's Council of Economic Advisers.