The General Theory of Employment, Interest, and Money by John Maynard Keynes is here presented as the third in our mini-series of major economic-philosophical works, the two others being Adam Smiths’s Wealth of Nations and Karl Marx’s Capital. Keynes’s work is the most recent, published in 1936, established economics as a modern scientific field and created a shift in the way societies, markets, companies, and even households thought about economics.
The theory describes how crises, booms, and unemployment are inevitable aspects of market economies.
What Keynes points out, is that the free hand of the market does not necessarily provide stability and fairness. This led many to believe that Keynes’s work was a critique of capitalism. It was not, even though he strongly advocates for economic intervention, his ideas were rather a showdown with the mainstream misinterpretations of economics at the time. Keynes’s economic theories became in the years are after the publication of The General Theory of Employment, Interest, and Money implemented in national policies all over the world and played a major role in formulating wartime and post-war economic policies.
Keynes introduced the idea that governments could and should use fiscal and monetary tools to manage aggregate demand and mitigate economic downturns. He believed that during times of recession, governments must increase spending—even if it meant going into debt—to stimulate job creation and restore confidence. This broke with the prevailing notion that markets are self-correcting and always tend toward full employment. Keynes argued that waiting for the market to recover on its own could lead to prolonged periods of stagnation and human suffering. His theories laid the groundwork for what would become known as Keynesian economics. In many ways, his ideas still shape debates on public spending, taxation, and central banking today. From the New Deal in the United States to modern stimulus packages, the echoes of Keynes’s thought remain audible. More than just an economist, Keynes reshaped how we understand the role of the state in economic life.
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