Keynes, the Great Depression, and International Economic Relations

Two diametrically opposed positions have developed in the literature as regards the impact of the Great Depression on Keynes’s economics: while ‘externalists’ consider the Great Depression as the determining cause of Keynes’s revolution, other subscribe to an ‘internalist’ view of the development of Keynes’s thinking from the "Treatise on Money" to the "General Theory". The article suggests a third possibility, namely that Keynes’s ‘method’, and methodological continuity throughout his writings, allow the possibility to adapt theories to changing times and circumstances, that is, to different quaesita. It thereby emphasizes that, though elaborated having in mind the theoretical framework of the "Treatise on Money", Keynes’s early articles on the Great Depression tell much about the future as well as the past of his theoretical journey. In particular, the article illustrates two ‘big pictures’ providing the background for the Keynes’s evolving thoughts on the main issues of capitalism. The criticality of investment decisions under conditions of irreducible uncertainty, and the ineliminable tensions between creditors and debtors, also at the international level, endangering national autonomy and policy space, are here discussed as two main constants in the evolution of Keynes’s thinking, providing insights that might be relevant to interpret the current recession.