No mountain high enough. Ben Pimlott acclaims a monumental biography of Keynes, who struggled against an incurable heart condition to become the architect of the postwar consensus

John Maynard Keynes: Fighting for Britain 1937-1946

Robert Skidelsky <em>Macmillan, 580pp, £25</em

What makes a human being describable as great? The main thing is to have changed the world. Economists, widely seen as technicians, seldom make the grade. In the past century, there is only one exception: Maynard Keynes. In this gripping and brilliant final volume of his biography, Robert Skidelsky compares Keynes to the wartime prime minister. "Churchill fought to preserve Britain and its empire against Nazi Germany," he begins. "Keynes fought to preserve Britain as a Great Power against the United States." The historic irony, Skidelsky suggests, is that both men won the battle but, in the long run, lost the war. Germany was defeated, and Britain came out of the conflict with a courtesy seat at the top table. But it was shortly to lose both an empire and any pretension to world economic leadership.

For the modern reader, the interesting question is how much of the victory and defeat can be laid at the door of individuals - and especially a particular individual who never sought an executive role. Skidelsky's answer - warding off the revisionist historians who have argued that Keynes was merely one important cog in the so-called "Keynesian" wheel - is to blame the epic economic defeat on changing world conditions, and to credit a significant part of the victory to Keynes, whom he compares not only to Churchill, but to Odysseus - a successful hero, not a tragic one.

In volume one, the author looked at Maynard the picaresque adventurer, tweaking the beards of his betters. In volume two, Skidelsky focused on the genesis, gestation and publication of the most celebrated work on economics of the era, The General Theory of Employment, Interest and Money, which appeared - not by chance, historians may consider - in the turning-point year of 1936. Volume three covers the "long Second World War", from looming war clouds to hungry, fearful aftermath. If the first two volumes were about a brilliant but usually marginal thinker, the third places Keynes firmly at centre stage, with an influence that pervades every corner of the free world's economic planning and action. It is a story of restless endeavour, intellectual fecundity, of travel, diplomacy, politics and horse-trading. It is also an account of debates over public policy pursued at a higher cerebral level than ever before or, possibly, since.

That Keynes should have had such a role is more remarkable because, for much of the time, he was seriously ill with an incurable heart condition. Fighting for Britain opens with his long convalescence following an attack. Health problems and alarms punctuate the book. Yet physical constraints seldom seem to have dampened Keynes's spirits, or his optimism, not least in relation to the war. Indeed, it is part of Skidelsky's case that his subject was upbeat about practically everything. He quotes Keynes as saying, during the war's darkest hour, "I do not feel the least anxiety as to the eventual outcome", and predicting that the Fuhrer would "meet his Waterloo a long way east of Berlin". By and large, however, the economist had little to say on the fighting. Keynes had been a semi-pacifist in the 1930s; in the early 1940s, he steered clear of the generals, merely noting, from time to time, that the top brass tended to take the bottom line for granted. Skidelsky wryly observes that, when Churchill, Roosevelt and Stalin got together, they did not talk about sums. (It is symptomatic of the curiously submerged nature of economics that there is only one mention of Keynes in the whole of Churchill's five-volume history of the conflict.)

This is more extraordinary because Keynes was close to the heart of affairs throughout the war. His entry ticket was partly The General Theory (which, however, aroused suspicion as well as admiration) and partly a polemical squib called How to Pay for the War, published early in 1940, which rejected reliance on inflation as a de facto system of rationing by reducing working-class consumption and, instead, recommended compulsory savings.

In May 1940, the government collapsed and Churchill formed his coalition. "For almost a year, Keynes had been knocking at the Treasury's door," according to Skidelsky. "At last he was let in." In August, he was taken on as an unpaid adviser-without-portfolio, with a place on important committees, access to secret information, and permission, more or less, to poke his nose in wherever he felt like it. "In the Treasury but not of it", Keynes enjoyed astonishing freedom, retaining his position until his death six years later - by which time, he had served three very different chancellors: Sir Kingsley Wood, Sir John Anderson and Hugh Dalton.

"He was enormously influential," writes Skidelsky. Few would dispute it. He "was the Treasury", according to a colleague - the architect of successive Budgets and of the Bretton Woods Agreement, which laid the foundations for the postwar economic system. He was, however, much more than a technical expert. He was a fifth columnist for his own teachings - something that became apparent with Wood's 1941 Budget, the launch pad for the Keynesian revolution.

It helped, rather than hindered, that Churchill took little interest in the home front and left domestic matters to Anderson, as Lord President, and to the powerful Lord President's Committee. Flanked by a dozen or so disciples in the new Economic Section of the Cabinet Secretariat, Keynes's ideas captured first the Anderson Committee, and then Whitehall. How did he do it? Skidelsky rightly stresses that Keynes's influence was the result of persuasion, not command. He provides a vivid portrait of this most improbable of revolutionaries, gauntly stalking the corridors of the Treasury, with dark blue eyes, dark clothes and ivory pallor, "in slow processional dignity", lord of all he surveyed entirely on the basis of his intellectual authority.

Or almost. It did the government's chief economic adviser no harm that, despite the prime minister's serene disregard for the dismal science, he knew Churchill personally. Little did Hitler appreciate the hidden power of very British get-togethers such as the Other Club, a dining society set up by Churchill himself, and of which Keynes had been a member since 1927. "I went to my Other Club and was put next to Winston," Keynes wrote to his sister, typically, in September 1940, "so I had some two or three hours conversation with him . . . he placed my new war damage scheme in his speech in the afternoon, so I am now hopeful that that will get through."

Was Keynes a thorn in the flesh of the Establishment, or part of it? According to Skidelsky, the economist thought "orthogonically" - that is, at an angle of 180 degrees to orthodoxy. Yet by "upbringing, inclination, aptitude, language and, above all, by his Englishness", he was a quintessentially Establishment figure. The knack was to wrap up radicalism in the language and context of social accessibility. Keynes was an iconoclast, and yet, like his Fabian friends the Webbs and the Woolfs, he did not scruple to exploit his access to inner-circle networks; in the Second World War, a direct line to the apex of the political pyramid gave him an asset of incalculable value.

Yet it would be quite wrong to see Keynes as power hungry in any commonplace sense. On the contrary, his secret lay in conveying the impression that he minded more about winning an argument than victory in a political fight. Perhaps there was an element of bluff. However, no serious control freak would have retired to Cambridge every weekend in order to administer the affairs of his college (King's) as its bursar - a post he continued to hold, without reluctance or leave of absence, until his death.

He had other hobbies and idiosyncrasies. One was chairing what became the Arts Council. A second was advising his old school, Eton, on its investments. A third was a penchant for counter-intuitive, Bloomsburyish quips, which often unnerved less confident people. Thus Keynes once remarked that the unworldliness of G E Moore's Principia Ethica made the New Testament, by comparison, a "handbook for politicians". Embarked on the planning of the world post bellum, he affably commented that he "used the calm of war to reflect on the turmoil of the coming peace". He also remarked - with superficially chilling cynicism - that he hoped "the Japanese would not let us down by surrendering too soon", something that they proceeded to do, upsetting Keynes's economic calculations.

He was, indeed, not right about everything. As well as misjudging the timing of the end of the war, he misjudged its effects. He was over-pessimistic about domestic employment (when William Beveridge published Full Employment in a Free Society at the end of 1944, Keynes wrote that a target of 3 per cent unemployment was unobtainable). More important, he was wildly over- optimistic about American attitudes to giving Britain a postwar loan on favourable terms. If there is a major criticism, it is here.

There is a case, too, for saying that, in his final, postwar enterprise as negotiator for the Attlee government in Washington, Keynes was not so much a hero, even a tragic one, as a Don Quixote - naively imagining that, because he had convinced himself that American generosity to Britain was in the US's own interest, American negotiators would see the logic and act accordingly. The result was a disappointing and ill-fated package based on unreal assumptions, which brought down the financial world around the ears of the British government in July 1947, barely a year after Keynes's death.

Having sought "to avert a financial Dunkirk" - as he saw it - in Washington, Keynes returned to Britain so weary that, at a welcoming party, he had to lie on a sofa and rest for most of the evening. When he died a few months later, he was hailed as a genius. Even his intellectual enemies acknowledged his achievement. Friedrich von Hayek wrote, at the time, that "he was the one really great man that I ever knew, and for whom I had unbounded admiration". Keynes died at the height of the Labour government's orgy of spending on social reform and reconstruction, prosecuted by the then chancellor, Hugh Dalton, "with a song in his heart", on the back of the American loan. Whether the obituaries would have been quite so enthusiastic had Keynes died 15 months later, after the party was over and Britain was close to bankruptcy, is impossible to say. It was one of Keynes's strengths that he had exquisite timing.

Good timing, it should be said, is one of his biographer's strengths, too. The triumphant conclusion to Skidelsky's own 20-year enterprise catches a tide in which Keynesian ideas - after a period in the doghouse - are back in fashion, albeit in modified form. Modern followers will find this marvellous book a rich source for many years to come. Meanwhile, among biographers casting around for subjects, Skidelsky's work will cause disquiet as well as pleasure. In political and economic history, there are no higher mountains to climb.

Ben Pimlott is warden of Goldsmiths College