Jone Maynard Keynes
Jone
Maynard Keynes stands with Adam Smith and Karl Marx as one of the world`s most
influential economists. The son of a noted British economist, Keynes amassed a fortune through
speculation in stocks and commodities. He served the British government as a
financial adviser and treasury official through most of his adult life and was
a key participant in the negotiations following both World Wars I and II.
Although Adam Smith had written The
Wealth of Nations about the time of the American Revolution, by the 1930s
little had changed in the thinking of mainstream economists. Most would have
agreed with Smith, that the best thing government could do to help the economy would
be to keep its hands off. They reasoned that as long as the economy was free to operate without interference, the
forces of supply and demand would come into balance. Then, with total supply
and demand in eguilibrium, everyone looking for work could find a job at the
prevailing wage, and every firm could sell its products at the market price.
But the 1930s was the period of the Great Depression. Despite the
assurannces of the classical economists, the fact was that unemployment and
business failure had reached record proportions in the United States and the
rest of the industrialized world. It was at this time (1936) that Keynes`
General Theory transforment, Interest, and Money was published. The General
theory transformed economic thinking in the 20th century, much the
way that The Wealth of Nations had in the 18th.
The “someone” keynes had in mind was
government. He reasoned that if for example, government spent money on public
works, the income received by formerly idle workers would lead to increased
demand, a resurgence of business activity and the restoration of full
employment.
