John Maynard Keynes: Fighting for Britain, 1937-1946 v.3: Fighting for Britain, 1937-1946 Vol 3 (Keynesian studies) [Hardcover]

Before the war, Keynes defended his 'Treatise' policies, but saw them applied in Germany by a very clever economist, Hjalmar Schacht, who also saved the German economy internationally by creating a bilateral trade system.
Prof. Skidelsky shows us also pregnantly the deterioration of Keynes's physical condition, aggravated by his exhausting travels, difficult (empty handed) negotiations and even hard opposition at home when he was in the US.

One could perhaps slightly criticize the exhaustive excerpts of letters or the extremely detailed evolution of the negotiations in Bretton-Woods or about British debt relief. But, all in all, this is a fascinating read.

Keynes always opposed the laisser-faire doctrine that sacrificed domestic employment to free trade. "If nations can learn to provide themselves with full employment by their domestic policy there need be no important economic forces calculated to set the interests of one country against that of its neighbours." The necessary domestic policy meant socialising investment, controlling capital markets to reduce deflationary pressure, and controlling imports through state trading agreements. Keynes wrote, "We must avoid dear money as we would hell-fire." He urged a steady cheap money policy for investment in rebuilding Britain.

He stressed that national authorities must keep control over both the domestic rate of interest and the currency so that the country could pursue full employment and progressive social policies. He believed that national monetary sovereignty was vitally important.

In 1944, Keynes summarised his policies, "We are determined that, in future, the external value of sterling shall conform to its internal value as set by our own domestic policies, and not the other way round. Secondly, we intend to retain control of our domestic rate of interest, so that we can keep it as low as suits our own purposes, without interference from the ebb and flow of international capital movements or flights of hot money. Thirdly, whilst we intend to prevent inflation at home, we will not accept deflation at the dictate of influences from outside." Every Chancellor of the Exchequer should heed these words: these policies would have prevented our debacle in the ERM, and saved manufacturing industry from its ongoing destruction. They would also rule out our ever joining the euro.