Before becoming one of the twentieth century’s most celebrated economists, John Maynard Keynes served as a financial representative for the British Treasury at the 1919 Paris Peace Conference to negotiate the Versailles treaty which would officially end World War I. Keynes resigned from the treasury in protest about a month before the final treaty was signed, and The Economic Consequences of the Peace describes his reasons for doing so. Keynes contends that domestic political considerations and a desire for revenge led to an unreasonably high burden being placed on the defeated Germany. In making the argument he paints unflattering portraits of the then French President Georges Clemenceau, the British Prime Minister David Lloyd George, and the American President Woodrow Wilson.…
"It’s among the dozen—perhaps half-dozen—most influential economics books that have ever been written. For a hundred years, it has set the terms of the debate over the Versailles Treaty. It galvanized the political dialogue around what was going to take place post-World War I. This book, combined with subsequent events, shaped the much more generous approach that was taken to the defeated countries in creating an international system after World War II. “There will be a tendency, after any period when things go well for people, to become complacent and take more risks.” From an economic point of view, it highlighted the importance of the transfer problem—the fact that when you force a country to pay resources, it not only loses those resources but, because it has to sell more, it puts its goods on sale, which is further impoverishing. And it established a model that no economist has subsequently lived up to, the model of an economist as both an analyst and an extraordinary polemicist. Not many economists have the powers of description of a skilled novelist or a journalist. But as Keynes punctures what he sees as the pompous moralism of Woodrow Wilson or the small-minded hypocrisy of Lloyd George and Georges Clemenceau, it’s an extraordinarily vivid depiction of not just the outcome, but also the process. All analogies are imperfect—and it’s always wrong to analogize without reflection on difference—but it is relevant to situations like the debt burden facing Greece and other questions on the European periphery. It is relevant, more broadly, to the need for a global order and global cooperation if the descent of the global economy is to be avoided."
