John Maynard Keynes

John Maynard Keynes is a well known British economist whose ideas, known as Keynesian economics, had a significant influence on modern economic and political philosophy as well as on many governments' fiscal policies. He advocated the interventionist form of government policy in order to avoid depressions, recessions, and booms at any cost. To this day, John Maynard Keynes continues to hold the position titled the "father of macroeconomics."

Keynes opposed the classical economists' beliefs that, in due time, the market would clear. He also stated that the disequilibrium could remain in certain markets such as the market for "loanable funds" and the "goods market." In Keynes perspective, wage decreases would be fought by employees. Also, if the demand for labor was reduced, wages may not decrease significantly enough to open up the labor market. Furthermore, if wage decreases were put into play, it would reduce workers' consumption and ,as a result, decreasing demand for labor. Keynes also rejected the "quantity theory". He believed that if there was a blip in the economy, "manipulating the money supply" may lead to an increase in the output instead of prices. Also, he was controversial against the classical solution of increased saving as a source of "stimulating" growth and investment. He argued that if the economy was below full employment that governments should increase "aggregate demand" by using the "fiscal policy" or "monetary policy".

I agree with Keynes in his beliefs and views of our economy; and it can still be viewed in the same way today, it seems. He argued that the rich were getting richer while the incomes of the poor were stagnating. Keynes had a remarkably good understanding of the governments' policies and seemed to know the character of financial markets. I also agree with Keynes' thoughts that if governments did not take action in this critical point in time, then we are to expect a breakdown of the existing structure- with a future we cannot predict. He was motivated by preserving the market economy by making it work. His fundamental insight was that it might last a long time in a state of underemployment equilibrium, meaning the economy will not just bounce back.

Today, much of the same situation still confronts us. The United States exhibits a form of government similar to the basis of the Keynesian-style manner in which it implements using a stimulus. The stimulus was supposed to help our economy's recession and save it from becoming worse. However, it did not "cure" our recession partly because at 2 percent of GNP for only three years they were useless in size for the problem; and because federal spending was undercut by sharp reductions in the state and local levels.

In my opinion, the past events in our history, reveal that the Keynesian remedies failed, but not