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The General Theory of Employment, Interest and Money is a book by English economist John Maynard Keynes published in February 1936. It caused a profound shift in economic thought, [1] giving macroeconomics a central place in economic theory and contributing much of its terminology [2] – the "Keynesian Revolution".
The Failure of the "New Economics" sold well but did not have a large impact on the general public or academia. [2] Economic professor Louis Hacker, writing in The New York Times, called Hazlitt's efforts to debunk Keynes a "heroic and perhaps even a Sisyphean task...Mr. Hazlitt, for his part, has written a technical book which is not obscure—although it is difficult reading" and predicted ...
Keynesian economics developed during and after the Great Depression from the ideas presented by Keynes in his 1936 book, The General Theory of Employment, Interest and Money. [5] Keynes' approach was a stark contrast to the aggregate supply-focused classical economics that preceded his book.
The Economics of John Maynard Keynes: The Theory of Monetary Economy is a non-fiction work by Dudley Dillard which seeks to make The General Theory of Employment, Interest and Money by John Maynard Keynes understandable to both the economist and to the non-economist. It was first published in 1948.
In Keynes's Treatise, he explained how recessions could happen, but not long-term depressions. He was able to address this further in The General Theory of Employment, Interest and Money. In his General Theory, Keynes argued against the seesaw theory and said that the economy was more like an elevator that can stop at any level.
The nexus between the Book IV theory and the Chapter 3 interpretation is the portrayal of the schedule of the marginal efficiency of capital as a demand function (which Hicks accepted). Hicks may be considered to have presented a General Theory free from any concept of aggregate demand.
The Keynesian Revolution replaced the classical understanding of employment with Keynes's view that employment is a function of demand, not supply. [3] Peter Drucker said: He had two basic motivations. One was to destroy the labor unions and the other was to maintain the free market. Keynes despised the American Keynesians.
An economic depression for instance, would not necessarily set off a chain of events leading back to full employment and higher wages. Keynes believed that government action was necessary for the economy to recover. In Book V of Keynes's theory, Chapter 19 discusses whether wage rates contribute to unemployment and introduces the Keynes effect.