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Finance & Development, September 2014 [1]

Sarwat Jahan, Ahmed Saber Mahmud, and Chris Papageorgiou. The central tenet of this school of thought is that government intervention can stabilize the economy
During the Great Depression of the 1930s, existing economic theory was unable either to explain the causes of the severe worldwide economic collapse or to provide an adequate public policy solution to jump-start production and employment.. British economist John Maynard Keynes spearheaded a revolution in economic thinking that overturned the then-prevailing idea that free markets would automatically provide full employment—that is, that everyone who wanted a job would have one as long as workers were flexible in their wage demands (see box)
Keynes further asserted that free markets have no self-balancing mechanisms that lead to full employment. Keynesian economists justify government intervention through public policies that aim to achieve full employment and price stability.

Constitutional Rights Foundation [2]

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England’s Glorious Revolution | John Maynard Keynes and the Revolution in Economic Thought | William Jennings Bryan, the “Great Commoner”. John Maynard Keynes and the Revolution in Economic Thought
He argued that uncertainty caused individuals and businesses to stop spending and investing, and government must step in and spend money to get the economy back on track. John Maynard Keynes (pronounced canes) was one of the great economic thinkers
His mother was a teacher who later served as mayor of Cambridge.. After Eton, he went to King’s College at Cambridge University

“Priming the pump” [3]

“Priming the pump,” or “pump priming”–this is the key principle behind Keynesian economics: the idea that the state can–and should–artificially stimulate “aggregate demand” (as opposed to aggregate supply) to revitalize the economy.. It was an idea first pioneered by John Maynard Keynes, the eminent British economist adored by the American Left, and later perfected by various theorists, including John Kenneth Galbraith, the distinguished Harvard “economist” and noted socialist.
The main aim was to stimulate the demand side and thereby spend the nation’s way out of the economic doldrums. It was a revolutionary new way of spending the nation into unprecedented economic prosperity and vitality, rather than what we would normally expect: massive debt, bankruptcy and hyper-inflation
Indeed, Keynesian pump-priming economics first took hold in America during the Great Depression. It was an economic school of thought cleverly exploited to justify President Franklin Delano Roosevelt’s notorious New Deal policies, which, incidentally, never did anything to end America’s greatest economic depression.

Chapter 9 [4]

Veblen died a few months before the “Great Crash” of 1929 — when stock values reached an all-time high before tumbling down. There were no official warnings that such a financial catastrophe could occur
In the United States there were 45 million jobs, a total income of $77 billion, and the average American family enjoyed the highest standard of living in history.. Magazines featured articles on how everyone could get rich — the formula was to save a portion of one’s earnings and invest regularly in good common stocks
It was easy to do, for they all could buy “on margin” — that is, for as little as 10 percent in cash.. Beneath this surface boom, however, lay disturbing, but unnoticed facts

Where Keynes Went Wrong [5]

It is generally recognized that the conceptual underpinnings for so-called stimulus programs lie in the theory developed by John Maynard Keynes in the 1930s. That the practical results of these programs in recent years have been negligible, if not negative, while their costs have been high, may be sufficient grounds for avoiding them in the future.
Moreover, it would mean no amount of effort to improve the design of stimulus programs is likely to help.. Before addressing questions about the theory, let’s briefly recap the costs and results of the stimulus so far.
They include $787 billion in federal spending that was legislated and appropriated in 2009 with the “stimulus” label attached to it. In addition, a proper accounting of the cost should include several other programs and outlays that, while not carrying the “stimulus” label, were designed to boost domestic spending or preclude reductions in spending that were otherwise expected to occur

The Trouble with Money | Corey Robin [6]

If eros, as Freud believed, is what binds us to the world, creating ever-larger units of society, economics could be seen as the child of eros. So it has been at least since the eighteenth century, when “commerce” and “intercourse” began to be used interchangeably and the modern idea of the economy was born in the writings of philosophers such as Adam Smith, whom I discussed in the first of these articles.1 Hume saw merchants and money as the instruments of an expansive and intimate contact among peoples from afar
Even the ancient Greeks, who sought to restrict the economy to the needs and activities of the household, felt the outward pull of trade. So powerful was its draw that Plato feared it might lead the city, like a lusty teen, to open its arms to “diverse and low habits” from abroad
John Maynard Keynes was born into this inheritance, which he described in loving and gently ironic detail in the opening pages of The Economic Consequences of the Peace (1919), his scorching criticism of the Treaty of Versailles. Europe in the late nineteenth century was an “economic Eldorado” where the “internationalization” of “social and economic life” was “nearly complete.” Labor was on the move, emigrating to far-off lands, building transportation systems to carry goods and people more easily across the globe

John Maynard Keynes [7]

John Maynard Keynes, 1st Baron Keynes, CB (pronounced “canes”, IPA /keɪnz/) ( 5 June 1883 – 21 April 1946) was a British economist whose ideas, called Keynesian economics, had a major impact on modern economic and political theory as well as on many governments’ fiscal policies. He is particularly remembered for advocating interventionist government policy, by which the government would use fiscal and monetary measures to mitigate the adverse effects of economic recessions, depressions and booms
His popular expression “In the very long run, we are all dead” is still quoted.. Born at 6 Harvey Road, Cambridge, John Maynard Keynes was the son of John Neville Keynes, an economics lecturer at Cambridge University, and Florence Ada Brown, a successful author and a social reformist
Keynes was very tall, standing at approximately 6′ 6″ (198 cm). He had a serious relationship with the Bloomsbury painter Duncan Grant from 1908 to 1915

READING KEYNES’S POLICY PAPERS THROUGH THE PRISM OF HIS TREATISE ON PROBABILITY: INFORMATION, EXPECTATIONS, AND REVISION OF PROBABILITIES IN ECONOMIC POLICY [8]

READING KEYNES’S POLICY PAPERS THROUGH THE PRISM OF HIS TREATISE ON PROBABILITY: INFORMATION, EXPECTATIONS, AND REVISION OF PROBABILITIES IN ECONOMIC POLICY. Published online by Cambridge University Press: 24 November 2021
By contrast, this paper aims to investigate the connections between Keynes’s probability theory, on the one hand, and his economic policy recommendations, on the other. It concentrates on the policy recommendations defended by Keynes during the Great Depression but also after the General Theory
– Symposium: Celebrating the Centenary of Keynes’s Treatise on Probability. – Journal of the History of Economic Thought , Volume 43 , Issue 4 , December 2021 , pp

Keynesian Impact on Public Policy [9]

To many people, the Keynesian Revolution is often associated with the rationalization of active government macroeconomic policy. Indeed, one of the major appeals of Keynes’s General Theory was precisely that it seemed to lend theoretical guidance to policy-makers in an era when the Great Depression still had its grip on the industrialized world and Neoclassical economists offered no tools, if not quite the wrong tools, to address it.
Pigou and Lionel Robbins were calling for further wage cuts to reduce unemployment and even for higher taxes to prevent people from “overconsuming”:. “But in general it is true to say that a greater flexibility of wage rates would considerably reduce unemployment….If it had not been for the prevalance of the view that wage rates must at all costs be maintined in order to maintain the purchasing power of the consumer, the violence of the present depression and the magnitude of the unemployment that accompanied it would have been considerably less…[We must] realize that a policy which holds wage rates rigid when the equilibrium rate has altered is a policy which creates unemployment.”
To the more practically-minded, it seemed as if Neoclassical theory was out of touch with common sense.. Keynes’s theory, in contrast, was simple, intuitive and practical: firms will hire more labor only if they believe they can sell the extra output; consequently, if demand as a whole declines, they will cut back production and lay workers off

Sources

  1. https://www.imf.org/external/pubs/ft/fandd/2014/09/basics.htm#:~:text=Keynes%20argued%20that%20governments%20should,the%20economy%20at%20full%20employment.
  2. https://www.crf-usa.org/bill-of-rights-in-action/bria-25-3-john-maynard-keynes-and-the-revolution-in-economic-thought.html#:~:text=British%20economist%20John%20Maynard%20Keynes,the%20economy%20back%20on%20track.
  3. https://www.saipantribune.com/index.php/945deaa6-1dfb-11e4-aedf-250bc8c9958e/
  4. https://www.cliffsnotes.com/literature/w/the-worldly-philosophers/summary-and-analysis/chapter-9
  5. https://www.rand.org/blog/2011/11/where-keynes-went-wrong.html
  6. https://www.nybooks.com/articles/2022/12/22/the-trouble-with-money-john-maynard-keynes/
  7. https://cs.mcgill.ca/~rwest/wikispeedia/wpcd/wp/j/John_Maynard_Keynes.htm
  8. https://www.cambridge.org/core/journals/journal-of-the-history-of-economic-thought/article/reading-keyness-policy-papers-through-the-prism-of-his-treatise-on-probability-information-expectations-and-revision-of-probabilities-in-economic-policy/8719A951A0E5C8B277476B9214E3BB63
  9. https://cruel.org/econthought/essays/keynes/publicpolicy.html

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