John Maynard Keynes was a British economist. He was born in 1883 in Cambridge, England. His mother Florence Ada Keynes was the mayor of Cambridge and his father John Neville Keynes was an economist. At first, John did not realize that he wanted to become an economist like his father. Instead, he went through many careers after graduating from Cambridge University.
He did civil service in India for a short time and then lectured at Cambridge University, and after pursued editing for an influential journal. John Keynes was also a chairman for an insurance company and then, later on, the director of Bank of England.
He published a book called, “The General Theory of Employment” in 1936 which became a hit and gave him fame. Many economists rejected John Keynes’ ideas mainly because they did not understand them.
John Keynes’ theory was in order to keep people fully employed; the government would have to run deficits when the economy is slow. The deficit is a shortage so it is less money than what is expected. His theory was to do this because the private sector will not invest enough money which can cause problems. Fewer investment results in job loss.
As mentioned before, Keynes’ theory was unaccepted by many people. However, when the Depression was occurring in America, the U.S president was desperate. He tried farm subsidies, public works, and other such things to help boost the economy. Franklin D. Roosevelt then decided to experiment with Keynes’s theory. Between 1939 and 1944, America’s output doubled and unemployment reduced in a large amount. After this, Keynes got more respect for his ideas.
One weakness of J. M. Keynes theory is that, for the economy to reach a perfect balance, it will be at the cost of social misery and high unemployment. In order to keep people fully employed, the economy must go through a cycle with one of the stages resulting in very low employment and high social misery to achieve full employment at a later stage in the cycle.
This cycle will always need to be repeated with no alternative choice(s). The complete opposite of the weakness would be positive to this theory; that although employment rates will be low at a stage in the cycle, at one point they will also take a turn for the best and be very high. One issue which may be seen as a strength or a weakness is that the cycle will affect the whole economy and not just a particular group or establishment.
Since governments have a tendency to be big and desirous of getting bigger, isn’t this system of economic intervention just playing into a bureaucracy’s hands?
Governments do have a tendency to be big and desirous of getting bigger, but they cannot get big or prosperous without individuals, society, and the general public that falls under that government’s jurisdiction. The success of an economy cannot be made possible without the success of the general public. In a long shot that could be seen as incorrect and disagreeable by many, the desire of governments to be big and get bigger would mean fuelling the economy and society that makes those governments bigger.
Governments must provide a solid base, institutions, resources, and other useful measures to fuel the economy. The success of the government is not in the bureaucracy’s hands but in the hands of the general public. Without a government people, a government would not be a government. Individuals must be successful and big before their government can be successful and big.