The Economic Consequences of the Peace · Chapter
VI: Europe After the Treaty explained
This chapter presents a pessimistic view of Europe after the Treaty of Versailles, arguing that the treaty failed to address economic rehabilitation, stabilization of new states, or recovery of Russia.
What happens
This chapter presents a pessimistic view of Europe after the Treaty of Versailles, arguing that the treaty failed to address economic rehabilitation, stabilization of new states, or recovery of Russia. It describes Europe's dense population dependent on complex trade and food imports, now threatened by destruction of organization, inflation, and potential starvation. Keynes warns that inflation and currency debasement undermine capitalism, and that the treaty's reparations and lack of economic planning will lead to social collapse and revolution.
Themes in this chapter
Reparations and Inter-Allied Debt
The treaty's reparations are criticized for ignoring economic realities and contributing to Europe's collapse.
Social Upheaval and Revolution
The chapter warns that starvation and inflation may lead to revolution, citing Lenin's methods and the weakness of the capitalist class.
Inequality and the Capitalist System
Inflation arbitrarily redistributes wealth, enriching profiteers and impoverishing the bourgeoisie, undermining confidence in capitalism.
Political Failure and Leadership
The Council of Four is blamed for neglecting economic issues, prioritizing politics over Europe's survival.
Characters to notice
- Unknown
The narrator provides a pessimistic analysis of Europe's post-treaty economic situation.
- Germany
Germany is discussed as an industrial state dependent on imports, now facing destruction of industry and inability to feed its population due to treaty terms.
- The Germans
The German Economic Commission's report is cited, detailing Germany's transformation from agricultural to industrial state and the impact of the treaty.
- Lenin
Lenin is quoted on currency debasement as a means to destroy the capitalist system, and his insight is validated by the narrator.
- Clemenceau
Clemenceau is criticized for focusing on crushing Germany's economic life rather than addressing Europe's fundamental problems.
- Mr. Lloyd George
Lloyd George is portrayed as seeking a deal that would pass muster, neglecting economic rehabilitation.
- Wilson
President Wilson is described as preoccupied with doing what is just and right, but failing to address economic issues.
- M. Klotz
M. Klotz is mentioned as an example of how the capitalist class may bring about revolution through weakness.
Key passages
“The Treaty includes no provisions for the economic rehabilitation of Europe—nothing to make the defeated Central Empires into good neighbors, nothing to stabilize the new States of Europe, nothing to reclaim Russia; nor does it promote in any way a compact of economic solidarity amongst the Allies themselves”
The treaty fails to address Europe's economic recovery, stabilize new nations, or foster cooperation among the Allies.
Keynes criticizes the treaty's lack of economic planning.
“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency.”
Lenin argued that inflating the currency is the most effective method to overthrow capitalism.
Keynes endorses Lenin's insight on inflation as a revolutionary tool.
“The danger confronting us, therefore, is the rapid depression of the standard of life of the European populations to a point which will mean actual starvation for some (a point already reached in Russia and approximately reached in Austria).”
Europe faces a rapid decline in living standards that could lead to starvation, as already seen in Russia and Austria.
Keynes warns of imminent humanitarian crisis.
“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
Inflation allows governments to quietly seize citizens' wealth without their knowledge.
Keynes explains how inflation undermines economic security.
