Keynes s contribution to the economy of capital, Keynes s contribution to economics

Keynes made great contributions to economics throughout his life, and was once known as the "savior" and "father of post-war prosperity". Keynes was born at a time when Say's law was enshrined as a deity, and he believed that the economy could be sustained by automatically reaching full employment with the help of market supply and demand, so he devoted himself to the study of monetary theory.

His major work, The General Theory of Employment, Interest and Money, published in 1936, revolutionized economics. This work had a profound impact on people's perceptions of economics and the role of political power in social life. Keynes developed a general theory about the level of production and employment.

Its revolutionary theory is mainly about equilibrium in the presence of involuntary unemployment: unemployment is possible when effective demand is at a certain level. Contrary to the classical school of economics, he believes that a simple ** mechanism cannot solve the problem of unemployment.

The introduction of instability and anticipation establishes a monetary theory based on the tendency of liquidity preference: the introduction of the concept of investment marginal effect overturns Say's law and the causal relationship between deposits and investments.

The theoretical system of Keynesianism is centered on solving the problem of employment, and the logical starting point of employment theory is the principle of effective demand. The basic point of view is that the amount of employment in society depends on effective demand, and the so-called effective demand refers to the aggregate demand when the aggregate supply of commodities and the aggregate demand reach equilibrium.

When aggregate demand is greater than aggregate supply, the demand for commodities in society exceeds the supply of commodities, and the capitalists will hire more workers and expand production; On the contrary, when aggregate demand is less than aggregate supply, there will be an oversupply, and the capitalists will either be forced to reduce the price of goods, or let some commodities be unsalable, and because they cannot achieve their minimum profits, they will lay off employees and shrink production.

Therefore, the amount of employment depends on the equilibrium point between aggregate supply and aggregate demand, and since in the short run the cost of production and normal profits do not fluctuate much, so the output that the capitalists are willing to supply will not change much, and the aggregate supply is basically stable. In this way, the amount of employment actually depends on aggregate demand, which is in equilibrium with the clear band of aggregate supply.

Keynesianism (Keynesiani** or Keynesian Theory) was born in the thirties of the 20th century.

Scientific theories in the context of the Great Depression.

From 1929 to 1933, the world experienced an unprecedentedly severe economic crisis.

This great crisis has swept the countries of the world.

After a four-year-long crisis, the whole world has fallen into a long-term depression.

The Great Crisis and the ensuing special depression in Western countries became known as the "Great Depression of the 30s".

2. Scientific theories that are compatible with state interventionism.

Before the First World War, state interventionism began to emerge.

In the intervening years of the Great War, this state intervention developed rapidly and took on an extraordinary military character.

New economics opposes laissez-faire and advocates state interventionism; It points out the important role of the "visible hand" in ensuring the smooth operation of the economy, and does not simply emphasize the role of the "invisible hand" market mechanism.

3. Academic background.

Before the emergence and spread of Keynesian economics, the dominant economics was traditional economics represented by Marshall, Pigou (and others).

Veblen first used the term "neoclassical" to describe Marshallian economics in 1900.

Later, economics generally accepted the terms "neoclassical school" and "neoclassical economics" to refer to Marshall, Pigou and others and their economics.

Neoclassical economics dominates mainstream academia, both in theory and in terms of policy.

Keynes himself grew up under the influence of neoclassical economics.

Keynesian economics critiques the employment theory in neoclassical economics, inheriting the mercantilist theory of state intervention, Malthusian theory of insufficient effective demand, Mendeville's theory that high consumption promotes prosperity, and Hobson's theory that excessive savings lead to unemployment and economic depression.

<>1. The decline of the British economy: The recession of the British economy lasted until the outbreak of the Great Depression, which made Keynes pay attention to the problem of unemployment earlier, as well as the relationship between deflation and unemployment, fiscal policy and unemployment;

2. The Great Depression: The Great Crisis of the Capitalist World from 1929 to 1933 was an unprecedented crisis in the history of capitalism;

3. The practice of Roosevelt's New Deal: During the American crisis, Roosevelt's New Deal used a lot of leniency to learn from Keynesianism, and invested heavily in infrastructure and set up a large number of volunteer positions, effectively saving the social collapse caused by the economic crisis.

<>1. The decline of the British economy: The recession of the British economy continued until the outbreak of the Great Depression, which made Keynes pay attention to the problem of unemployment earlier, as well as the relationship between deflation and unemployment, fiscal policy and unemployment;

2. The Great Depression: The Great Crisis of the Capitalist World from 1929 to 1933 was an unprecedented crisis in the history of capitalism;

3. The practice of Roosevelt's New Deal: During the American crisis, Roosevelt's New Deal borrowed a lot from Keynesianism, and invested heavily in infrastructure and set up a large number of volunteer positions, which effectively saved the social collapse caused by the economic crisis.