The Economic Consequences of the Peace: The General Theory of Employment, Interest and Money (1918-1919)

John Maynard Keynes, 1st Baron Keynes, British economist and bureaucrat.​

The Fashoda War (1896-1901), the American Wars (American-German and Latin American, 1902-1916), the Great Depression (1903-1918) and the Second Great War (1911-1916) left important marks on the world on many levels, including the evolution of economic thought.

Most capitalist countries had hitherto applied Laissez-Faire (free trade) measures, with protectionist policies for occasional periods or colonial systems.

And of course, it was believed that until then the markets alone would solve the problems of the crisis in the short and medium terms ...

Many people have actually been disappointed that for a long time, it was not like that.

Some opted for communism or maintaining Laissez-Faire, but Keynes instead developed another way of thinking about the study of economics.

Keynes studied his home (the Imperial Federation), colonial empires, the United States and the Russian Empire of the Alexandrian period and the reign of Nicholas II.

It is the latter country that was an important basis for Keynesianism and other terms applied by Keynes.

Keynes advocated that economic activity is determined in part by total spending in the economy (aggregate demand, which if inadequate could lead to prolonged periods of high unemployment that would not immediately rebound back into the economy) and that to resolve or mitigate the negative effects of economic depressions-recessions, it was necessary to use appropriate fiscal and monetary policies.

Russia had done this during the Great Depression, using public spending for job creation through works that re-invested in the population (education, health, services, etc).

Although perhaps the Russian state had too much control of certain sectors, which made it a strange mix between economic models and theories.

But that's another topic that could be detailed on its own.

The creation of Keynesianism was an important contribution to economic thought, and it would undoubtedly attract attention during the following decades in various countries.

But it is not the only contribution of Keynes in 'The Economic Consequences of the Peace: The General Theory of Employment, Interest and Money', his magnus opus.

Keynes also invented the modern concept of Gross Domestic Product.

It is true that William Petty devised a basic concept of GDP in the seventeenth century, but it was for a different situation and Keynes also added other elements to that concept.

Keynes's GDP was the market value of all final goods and services produced in a specific period of time, which calculates, among other things, the added value of the public sector, financial industries, and the creation of intangible assets of a country. .

A product derived from a vast mosaic of statistics and set of processes on raw data, adjusted to a conceptual framework.

Despite its criticisms and problematic-limitations (it does not reflect differences in the cost of living and inflation rates of countries) it is still an important measure in a developed economy used today by countries and international organizations.

* Using a GDP per capita base in Purchasing Power Parity (PPP) may be more useful when comparing living standards across nations.

* Nominal GDP is most useful when comparing national economies in the international market.

Why is the development of the GDP concept important?

Very simple, before the developed economy was measured more mainly in other methods, among them especially the production of steel and more 'simple' industrial factors, such as railways.

Europe, Japan, and North America were developed because they had sizable manufacturing industries, while Latin America, Africa, and most of Asia were minor economies because they generally only produced raw materials.

But the reforms and changes in the international situation meant important changes in the economic situation and the understanding of the economy.

During the next two decades there were many issues and discussions about Keynesian economic thought and the Gross Domestic Product.

But there were already important changes that found their origin in the late 1910s.

Important support for the Gross Domestic Product was found in Eurasia.

Precisely where it was an important measurement for the results of the Reconstruction Plans that Alexander III implemented first in the post-Ottoman Empire world (Middle East in particular) and Nicholas II in the post-WW2 and post-Great Depression in different parts of Eurasia . *(OOC: Think in how Marshall plan helped the GDP as a measure)

Not only this, but also in the New Economic Policy of the European socialist countries and the economic development of the Emirate of Ha'il.

The results were positively terrifying in many cases.

Also the metallurgical reforms of the Russian Empire paved the way for the creation of commercial containers in 1926, which greatly facilitated the trade of goods across the ocean (the main route of international trade).

Through this, the globalization of the economy increases and important moments come for international trade.

Now products could be manufactured with resources from different parts of the world and shipped like never before.

But this is history by another time.