The single most important aspect of Keynes the economist is his orientation toward
policy. He attended the Versailles peace conference as a representative of the British Treasury
Department but resigned abruptly in 1919. He was disgusted by the terms of the Versailles
treaty, which imposed on Germany large reparations that he thought could never be paid.
He received international acclaim for his criticism of the terms of the treaty, published in
1919 in his Economic Consequences of the Peace. In 1940, he wrote How to Pay for the War,
and in 1943, he advanced a proposal called the Keynes Plan for an international monetary
authority to be put into effect after World War II. As head of the British delegation to
Bretton Woods, he was instrumental in the formation of the International Monetary Fund
and the International Bank. But his most important contributions to policy and theory are
contained in his book The General Theory (1936), which created modern macroeconomics
and still forms the basis of much of what is taught in undergraduate macroeconomics. Paul
Samuelson captured its importance when, reflecting on the Keynesian era, he wrote, “The
General Theory caught most economists under the age of thirty-five with the unexpected
virulence of a disease first attacking and decimating an isolated tribe of South Sea Islanders.”