The Economics of Keynes

The 20th-century British economist John Maynard Keynes developed a theory of macroeconomics called Keynesian economics. Keynesian economics doubts that the free market can always achieve efficient outcomes and therefore advocates active government involvement.
  1. History

    • Keynes published "The General Theory of Employment, Interest and Money" in 1936, during the Great Depression. His economic ideas prevailed after World War II, especially in the 1960s, according to The Economist. In the 1970s, however, Keynesian economics were criticized for causing inflation.

    Features

    • Keynesian economists believe that changes in aggregate demand affect output and unemployment more than they affect prices, according to the Library of Economics and Liberty. Since prices and wages adjust slowly to changes in demand and supply, labor shortages and surpluses inevitably occur.

    Fun Fact

    • Keynes famously stated that "in the long run, we are all dead," illustrating his belief that people live in the short run and cannot rely on what should happen in the long run.

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