Keynes

Keynes as an Influential Twentieth Century Economist

John Maynard Keynes, the author of the book titled “The General Theory of Employment Interest and Money” formulated a theory at a time that greatly needed such intervention, which could have led to his common reference as one of the most prominent economist in the 20th Century. This work was published in 1935-36, which was during the Great Depression. The General theory offered the much needed explanation for the difficult economic situation that was being experienced at the time as well as the state of unemployment characterizing the situation. Through his theory, Keynes challenged the prevailing view of dealing with unemployment through wage deduction (Gordon, 1990). The theory was acceptable the political, social and economic angles although it has also received its share of criticisms.

Keynes advocated for various things. First, he refuted Say’s law which presented supply as a creator of its own demand. Instead, he stated that supply had the potential of exceeding demand (Lindahl, 1954). This resulted with goods remaining unsold while unemployment and production were cut. Hence, this economist indicated that the solution to this kind of situation was increased government spending in order to increase consumption. This contradicted the classical perception, which presented wage and price reduction as a solution to such as an economic situation.

Generally, Keynes argued that the depression was not a situation that was to be present in the long-run, hence leaving the market to sort itself out. He felt that the depression was a short-run issue that emerged from the lack of demand. He therefore advised economics that this short-run problem would be solved through the government’s market interference, especially if the private sector was unwilling to spend in order to uplift demand (Lindahl, 1954). After solving the problem, hence the increase in demand, which increase private spending, the government would...