Published: February 20, 2015
John Maynard Keynes, the namesake of Keynesian economics and among the most influential economists in history, was on a heavy regimen of mind-altering drugs when he negotiated with the United States to create the modern economic order, according to a British journalist and economic historian.
“It’s a little-known fact that John Maynard Keynes was dosed up on mind-altering drugs when he carried out one of the most important economic negotiations in British history,” writes Ed Conway for Medium. Conway is the economics editor of Sky News and recently authored the book “The Summit,” about the pivotal Bretton Woods Conference held in 1944.
Following the defeat of Germany in 1945, Keynes, in the last year of his life, was sent to the U.S. by the British government in order to negotiate an agreement to provide financial aid for his bankrupt government. Keynes was expected to play hardball with the Americans, extracting either a grant or an interest-free loan, and threatening to blow up negotiations if his country didn’t get its way.
Instead, in a baffling negotiating failure, Keynes entirely capitulated to American demands.
“Out of nowhere, he showed his entire hand, spelling out precisely what the British would accept in extremis: a loan, the lifting of those controls that were preventing money escaping the UK,” writes Conway. “It was a bizarre, unexpected move; unsurprisingly the Americans grabbed it with both hands, to the dismay of the rest of the British delegation.”
That deal, Conway says, had disastrous consequences for the UK, and in turn played a significant role in the realignment of the world economy away from the UK. The British economy, once a world leader, grew at half the pace of Germany’s from 1950-2000. The deal left the world economy “scarred forever, since the ordeal terrified any country considering making their currency convertible in the future.”
What explains Keynes’s capitulation? According to Conway, there may be a simple one: Mind-altering drugs, prescribed by his Hungarian doctor, Janos Plesch (nicknamed ‘The Ogre’ by Keynes’s wife).
“The medicine Keynes was taking to help with his heart conditions at this time was a barbiturate called sodium amytal,” writes Conway. “Indeed, Keynes wrote to The Ogre during the negotiations saying he had only managed to stay afloat thanks to the drug. What he didn’t seem to be aware of was that sodium amytal, taken in high enough doses, acts as a truth serum.”
Thanks to his growing reliance on the drug to cope with the pains of old age, Conway suggests, “Keynes’s poker face failed,” and he was unable to avoid making dramatic concessions to the U.S.
The powerful barbiturate wasn’t the only heavy-duty drug Keynes relied upon, either. Other remedies he used included “opium pills, weird experimental drugs from Germany,” and even having The Ogre jump on top of him has he lay in bed.
“It is an astonishing detail which I couldn’t quite believe had been overlooked by previous historians,” says Conway.
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