Welcome, Guest: Join Nairaland / LOGIN! / Trending / Recent / New
Stats: 2,711,110 members, 6,403,082 topics. Date: Sunday, 25 July 2021 at 12:00 AM

John Maynard Keynes Is The Cause Of The Economic Problems Facing The World - Politics - Nairaland

Nairaland Forum / Nairaland / General / Politics / John Maynard Keynes Is The Cause Of The Economic Problems Facing The World (155 Views)

Police Reveal The Cause Of Akure Explosion (Photo, Video) / Nigeria's Economic Problems Not Created By Present Government - Peter Obi / Buhari Vows To Jail ‘more Thieves’ Who Caused Nigeria’s Economic Problems (2) (3) (4)

(1) (Reply) (Go Down)

John Maynard Keynes Is The Cause Of The Economic Problems Facing The World by Ynix: 9:55am On Jun 25
Dating back to our secondary school, we were introduced to Keynesian theory of Economics, most importantly the theory of micro and macro economics.
His economic theory that emerged in 1921 might seem to be of great benefit in that era of great depression but careful observations has proved that it has caused more harms than good.

His introduction of other theories like debt spending has created a hell of economic monsters who have directly and indirectly plunge many into poverty most especially in third world nations.

The painful part is that the debts are not for capital investments but for spending. And when they talk about investment in things like infrastructures, history has proved that any nation that borrow to develop it's economy without focus on Human Capital Development and Industrialization of its local economies will plunge the people to greater poverty
Re: John Maynard Keynes Is The Cause Of The Economic Problems Facing The World by Ynix: 2:05pm On Jun 30
What Is Keynesian Economics?
Keynesian economics is a macroeconomic economic theory of total spending in the economy and its effects on output, employment, and inflation. Keynesian economics was developed by the British economist John Maynard Keynes during the 1930s in an attempt to understand the Great Depression.

Keynesian economics is considered a "demand-side" theory that focuses on changes in the economy over the short run. Keynes’s theory was the first to sharply separate the study of economic behavior and markets based on individual incentives from the study of broad national economic aggregate variables and constructs.

Based on his theory, Keynes advocated for increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression. Subsequently, Keynesian economics was used to refer to the concept that optimal economic performance could be achieved—and economic slumps prevented—by influencing aggregate demand through activist stabilization and economic intervention policies by the government.
KEY TAKEAWAYS
Keynesian economics focuses on using active government policy to manage aggregate demand in order to address or prevent economic recessions.
Keynes developed his theories in response to the Great Depression, and was highly critical of previous economic theories, which he referred to as “classical economics”.
Activist fiscal and monetary policy are the primary tools recommended by Keynesian economists to manage the economy and fight unemployment.

PART OF
What Is Keynesia Economics?
Keynesian economics is a macroeconomic economic theory of total spending in the economy and its effects on output, employment, and inflation. Keynesian economics was developed by the British economist John Maynard Keynes during the 1930s in an attempt to understand the Great Depression. Keynesian economics is considered a "demand-side" theory that focuses on changes in the economy over the short run. Keynes’s theory was the first to sharply separate the study of economic behavior and markets based on individual incentives from the study of broad national economic aggregate variables and constructs.


Based on his theory, Keynes advocated for increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression. Subsequently, Keynesian economics was used to refer to the concept that optimal economic performance could be achieved—and economic slumps prevented—by influencing aggregate demand through activist stabilization and economic intervention policies by the government.

KEY TAKEAWAYS
Keynesian economics focuses on using active government policy to manage aggregate demand in order to address or prevent economic recessions.
Keynes developed his theories in response to the Great Depression, and was highly critical of previous economic theories, which he referred to as “classical economics”.
Activist fiscal and monetary policy are the primary tools recommended by Keynesian economists to manage the economy and fight unemployment.
1:40
Keynesian Economics

Understanding Keynesian Economics
Keynesian economics represented a new way of looking at spending, output, and inflation. Previously, what Keynes dubbed classical economic thinking held that cyclical swings in employment and economic output create profit opportunities that individuals and entrepreneurs would have an incentive to pursue, and in so doing correct the imbalances in the economy. According to Keynes’s construction of this so-called classical theory, if aggregate demand in the economy fell, the resulting weakness in production and jobs would precipitate a decline in prices and wages. A lower level of inflation and wages would induce employers to make capital investments and employ more people, stimulating employment and restoring economic growth. Keynes believed that the depth and persistence of the Great Depression, however, severely tested this hypothesis.


Source: Investopedia
Re: John Maynard Keynes Is The Cause Of The Economic Problems Facing The World by Ynix: 2:06pm On Jun 30
In his book, The General Theory of Employment, Interest, and Money and other works, Keynes argued against his construction of classical theory, that during recessions business pessimism and certain characteristics of market economies would exacerbate economic weakness and cause aggregate demand to plunge further.

For example, Keynesian economics disputes the notion held by some economists that lower wages can restore full employment because labor demand curves slope downward like any other normal demand curve. Instead he argued that employers will not add employees to produce goods that cannot be sold because demand for their products is weak. Similarly, poor business conditions may cause companies to reduce capital investment, rather than take advantage of lower prices to invest in new plants and equipment. This would also have the effect of reducing overall expenditures and employment.

Keynesian Economics and the Great Depression
Keynesian economics is sometimes referred to as "depression economics," as Keynes's General Theory was written during a time of deep depression not only in his native land of the United Kingdom but worldwide. The famous 1936 book was informed by Keynes’s understanding of events arising during the Great Depression, which Keynes believed could not be explained by classical economic theory as he portrayed it in his book.

Other economists had argued that in the wake of any widespread downturn in the economy, businesses and investors taking advantage of lower input prices in pursuit of their own self-interest would return output and prices to a state of equilibrium, unless otherwise prevented from doing so. Keynes believed that the Great Depression seemed to counter this theory. Output was low and unemployment remained high during this time. The Great Depression inspired Keynes to think differently about the nature of the economy. From these theories, he established real-world applications that could have implications for a society in economic crisis.

Keynes rejected the idea that the economy would return to a natural state of equilibrium. Instead, he argued that once an economic downturn sets in, for whatever reason, the fear and gloom that it engenders among businesses and investors will tend to become self-fulfilling and can lead to a sustained period of depressed economic activity and unemployment. In response to this, Keynes advocated a countercyclical fiscal policy in which, during periods of economic woe, the government should undertake deficit spending to make up for the decline in investment and boost consumer spending in order to stabilize aggregate demand.

Source: Investopedia
Re: John Maynard Keynes Is The Cause Of The Economic Problems Facing The World by spy24(m): 2:28pm On Jun 30
This guy turned economics that I was enjoying in secondary School to something else in the university cry cry

Eco is interesting but tough

1 Like

(1) (Reply)

NUJ Disowns Okeoma, Punch Correspondent / "We Need Biafra In A Peaceful Way" Say BLC / Nnamdi Kanu Was Remoted Back Home With Fulani, Yoruba Juju

(Go Up)

Sections: politics (1) business autos (1) jobs (1) career education (1) romance computers phones travel sports fashion health
religion celebs tv-movies music-radio literature webmasters programming techmarket

Links: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Nairaland - Copyright © 2005 - 2021 Oluwaseun Osewa. All rights reserved. See How To Advertise. 67
Disclaimer: Every Nairaland member is solely responsible for anything that he/she posts or uploads on Nairaland.