The Economic Consequences of the Peace

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In 1919, Keynes participated in the negotiations of World War I’s armistice. He strongly disagreed with terms of reparation imposed on Germany, arguing in this controversial book that German impoverishment would threaten all of Europe. This prophetic view of the European marketplace in the early 20th century represents a much-studied landmark of economic theory.
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The Economic Consequences of the Peace

5 Comments For This Post

  1. George Coppedge Says:

    This book achieved instant fame when it was published in 1919, not only for its scathing criticism of the Versailles Treaty but also for its personal attacks against leading signatories (especially Clemenceau and Wilson). For a book focused primarily on economic concerns, the text is surprisingly easy to read. However, the book’s poor organization vitally detracts from its effectiveness. The principle reason the book is still famous today lies in the fact that it was written by none other than John Maynard Keynes, the founder of 20th century style, gov’t & debt driven economics.

    The book is organized into chapters on pre-war Europe, Allied statesmen, summary of key treaty points, reparations, post-war Europe predictions, and Keynes’ suggestion of remedies to provide a practical treaty settlement. Unfortunately, within each chapter things are jumbled together without clear rhyme or reason. (Is this indicative of Keynes’ own personal organization and logical thinking?)

    Within the book, he makes a very practical (but politically infeasible) argument for a non-vindictive treaty. He basically suggests that the Allies should forget both about reparations and repayment of wartime debts from the other Allies, and instead they should settle (though not ideally) for frontier adjustments and confiscation of only German gov’t property. (Did the German gov’t sponsor Keynes’ work in writing this book?)

    Keynes argues that a crushing reparations burden on the German people would disincent them to produce anything beyond a mere subsistence minimum and discourage entrepreneurial enterprise. There is some logic in this point; however, later on he goes on to state that the US should forgive its $10 billion debt to its wartime allies ($5 billion of which was owed by the UK). Forgive me if I’m wrong, but doesn’t such a move disincent American entreprises from entrepreneurship as well. It’s extremely hypocritical that the Allied gov’ts desperately sought loans from the US during the war and then once it was over to claim that they couldn’t pay them. If they didn’t want to repay, then they shouldn’t have borrowed the money – period. (If I borrow money to buy a home, the bank won’t ever agree to forgive my debt – regardless of whether I’m out of work, injured, or the house burns down. I don’t see why gov’ts should get any exceptional treatment.)

    Notwithstanding his problems with disorganization and inconsistent logic, Keynes does produce a reasonable, brief list of treaty rememdies, especially in his efforts to restore economic life throughout Central and Eastern Europe. Not until the advent of the Cold War and the interests of extending American political influence would Keynes’ policies largely succeed (albeit yet again to the detriment of American taxpayers).

    Overall, I felt the book was ok. I would only recommend it if you have an interest in reading all of Keynes’ work. Don’t expect to find any theoretical economic insights in the book, though. Based on the high ratings on this page, I think the other reviewers here might have some pro-Keynesian bias.
    Rating: 2 / 5

  2. Jamal Nazir Says:

    In this book Keynes brilliantly presents the nature of political and economical conditions in the Europe after WWI. Keynes in this also criticizes the Versailles treaty, which was aimed towards punishing Germany. He believed it would just make economic conditions worse in Germany, which would lead to the stronger position of Nazi party.
    Rating: 5 / 5

  3. C. E. R. Mendonça Says:

    The art of writing a valuable work on a conjuntural topic of politics is a difficult one. One must at the same time have an eye for the detail of ongoing developments as well as grasp the concrete goals of the main protagonists, and eventually be able to devine the overall logic of the general process. Few writers on politics mastered this art. One, for instance, was Marx in his accounts of contemporary Franch politics- “Class Struggles in France” and the “Eighteenth Brumaire”. Another was this work by Keynes, that dealing with an event fraught with bitter partsan struggles, was able at the same time to wite a history of the Versailles Treaty and at the same time an history of the crisis of XIXth. Century laissez faire capitalism. Simply a classic.
    Rating: 5 / 5

  4. Sin Fung Ting Christy Says:

    John Maynard Keynes is the most famous and important economist in the 30¡¦s decade of 20th century. The insight of this book is very thorough. Keynes¡¦s way of analysis is well worth to learn. He can balance between the real situation and ideal situation. He suggests three compensation approaches:

    ¡P Conservative prediction: 20 hundred million
    ¡P Realistic prediction: 30 hundred million
    ¡P Optimistic prediction: 40 hundred million

    However, none of the parties support his recommendations. They believe that Germany must bear full responsibility for the war. Therefore, Keynes have written this book and exposed a plot of the Versailles Peace Treaty, which was not only highly exceeded the compensation capacity of Germany, and also it would led the middle part of Europe become pauperization. Therefore, Keynes was disagreeing with the Versailles Peace Treaty. He believed that the Versailles Peace Treaty would bring another crisis to the world and affect the peace of the world. Germany will arouse another war for revenge.

    To conclude, the economic consequences of the peace is the beginning of another war.
    Rating: 5 / 5

  5. Maurice Mpayamaguru Says:

    I was expecting a little more meat out of this book and it turned out to be more of a rant than real credible solutions and commentary.
    Rating: 3 / 5

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