Definition
John Maynard Keynes, 1st Baron Keynes, was a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. He built on and greatly refined earlier work on the causes of business cycles, and was one of the most influential economists of the 20th century and the founder of modern macroeconomic theory. His ideas are the basis for the school of thought known as Keynesian economics, and its various offshoots.
John Maynard Keynes
Who was ‘John Maynard Keynes’
John Maynard Keynes was a 19th-century British philosopher and economist who spent his working years with the East India Company and is known as the father of Keynesian economics. He is specifically known for his theories of Keynesian economics that addressed, among other things, the causes of long-term unemployment. In a paper titled “The General Theory of Employment, Interest and Money,” Keynes became an outspoken proponent of full employment and government intervention as a way to stop economic recession.
Explaining ‘John Maynard Keynes’
John Maynard Keynes was born in 1883 and grew up to be an economist, journalist and financier, thanks in large part to his father, James Mill, a practicing economist. Mill published one of his most influential works, “On Liberty”, in 1859 and also wrote a widely used textbook, “Principles of Political Economy”, which was based on David Ricardo and Adam Smith’s ideas.
Principles of Keynesian Economics
The most basic principle of Keynesian economics is that if an economy’s investment exceeds its savings, it will cause inflation. Conversely, if an economy’s saving is higher than its investment, it will cause a recession. This was the basis of Keynes belief that an increase in spending would, in fact, decrease unemployment and help economic recovery. Keynesian economics also advocates that it’s actually demand that drives production and not supply. In Keynes time, the opposite was believed to be true.
Further Reading
- John Maynard Keynes 1937–1946: the Creation of International Macroeconomics: A Review article on – academic.oup.com [PDF]
- John R. Commons and John Maynard Keynes on economic history and policy: the 1920s and today – www.tandfonline.com [PDF]
- Retrospectives: John Maynard Keynes, Investment Innovator – www.aeaweb.org [PDF]
