Keynes on capital mobility

John Maynard Keynes, [21 July 1998]

I sympathize with those who would minimize, rather than with those who would maximize, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel—these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible and, above all, let finance be primarily national.

Keynes, John Maynard. 1933.
National Self-Sufficiency.
Yale Review, 22: 4 (June): pp. 755-769;
reprinted in D. Moggeridge, ed.,
The Collected Works of J. M. Keynes,
Vol. 21 (Macmillan).

Freedom of capital movements...assumes that it is right and desirable to have an equalization of interest rates in all parts of the world. It assumes, that is to say that if the rate of interest that promotes full-employment in Great Britain is lower than the appropriate rate in Australia, there is no reason why this should not be allowed to lead to a situation in which the whole of British savings are invested in Australia, subject only to different estimations of risk, until the equilibrium rate in Australia has been brought down to the British rate. In my view the whole management of the domestic economy depends upon being free to have the appropriate interest rate without reference to the rates prevailing in the rest of the world. Capital controls is a corollary to this.

Keynes, Collected Works, Vol. XXV, p. 149