The General Theory of Employment, Interest and Money - WikipediaHis book was a new understanding of money and markets. Markets were not seen as simply a self-correcting mechanism, but rather, a complex dynamic between, consumers, investors, and government where human emotion was coupled with economic incentives. This newfound role of government action was written in the context of a time of great economic upheaval known as the Great Depression. It appealed to academics and policymakers as it explained market failures to adjust to equilibrium. Keynesian economics theory was important, not only because of the logic behind the theory but specifically, the application empowered the espousers to help the situation of the time. Think about it. This one book was the basis of such much change in government intervention in economic affairs.
The General Theory of Employment, Interest and Money
The General Theory of Employment, Interest and Money is a highly significant work that marked a turning point in the development of modern economic theory. It also provides an introduction to the practical applications of Keynesian theory , the main criticisms of his work and modern extensions of his approach, giving you everything you need to understand this influential book in just 50 minutes. This accessible and insightful page summary and analysis is structured as follows:. It provides a full, detailed overview of his theories on macroeconomics, which challenged classical economic theory regarding the merits of state intervention in financial markets, and led to widespread shifts in both economic theory and government policies worldwide during the following decades. John Maynard Keynes was one of the most influential economists of the 20 th century. He was born in Cambridge in , and in addition to his work as an economist, he held positions as a civil servant, a director of the Bank of England, and a leader of the British delegation of negotiators at the Bretton Woods Conference at various points in his career. Economic theory based on his ideas is now known as Keynesian economics, and remains highly influential today, particularly in the field of macroeconomics.
It created a profound shift in economic thought, giving macroeconomics a central place in economic theory and contributing much of its terminology  — the " Keynesian Revolution ". It had equally powerful consequences in economic policy, being interpreted as providing theoretical support for government spending in general, and for budgetary deficits, monetary intervention and counter-cyclical policies in particular. It is pervaded with an air of mistrust for the rationality of free-market decision making. Keynes denied that an economy would automatically adapt to provide full employment even in equilibrium, and believed that the volatile and ungovernable psychology of markets would lead to periodic booms and crises. The General Theory is a sustained attack on the classical economics orthodoxy of its time. It introduced the concepts of the consumption function , the principle of effective demand and liquidity preference , and gave new prominence to the multiplier and the marginal efficiency of capital.