Keynes & Economics

The General Theory of Employment, Money and Interest, written by John Keynes has been considered to be one of the most dangerous books of the eighteenth century.

Keynes was a British economist, he perfected the theory of Macro-Economics.  This is all about government expenditure. His writing on this matter, had a huge influence on modern government. He also refined earlier work that focused on business cycles and expenditure within the 'Private Sector.' He wrote at the time of The Great Depression, meaning unemployment rates were high as well as economic downfall.

Keynes created two methods to try and get the country out of the depression, he realised this would not happen completely as like Marx, he believed in the social class structure but he felt as though his methods would help the economic situation of the time. The movements were:

• Friscal - Government expenditure and involvement.

• Monetary - Bank and Private Sector's involvement. 

His ideas are the basis of economic thought which is now used today and known as the Keynesian School of Thought. Keynes believed that the government should have more involvement and control over spending and less control should be given to private businesses. Investment from the government into the economy would boost spending, creating more jobs and reducing unemployment levels. At the time of writing, Keynes felt that the government was producing below the potential growth rate. 

Keynes also mentions Ricardo's Theory of Value in his work. This basically questions the value of objects and we can actually measure this. He uses a Biro vs a piano. The piano costs £5000 and the Biro pen costs £1. How do we actually determine that the piano should cost £5000?

At the time that Keynes was writing, Keynes work was unthinkable. He said he wanted to try and make the unthinkable thinkable.