Keynes: an influential economist

John Maynard Keynes had published economic theories regarding unemployment and solutions to economic recession. His most important work was the The General Theory of Employment, Interest and Money (1935–36) which contains these theories. His work was based off his support for government intervention in markets.

He strongly affected fiscal policy until the 1970s, believing that when household savings exceeded investment, it caused deflation, and vice versa for inflation.

This is why his primary view was that recessions and unemployment can be significantly reduced using government spending that was targeted at increasing aggregate demand.

When aggregate demand increases, it incentivises firms to increase output and production to meet the increase in aggregate demand. As a result, unemployment falls, and revenue and profits rise for firms. This is important as it can lead to economic growth and therefore help the economy recover in time of a recession.

The period from 1945-1979 had also been referred to as the Keynesian era because governments implemented Keynesian macroeconomic policies. This involved three key policy objectives as set out in Keynes's theories: full employment, economic growth and a fair distribution of income and wealth.

This changed with the government changing to Prime Minister Margaret Thatcher in 1979, after which point the government started to incline towards more pro-free market policies.

This information has taken ideas from https://www.britannica.com/biography/John-Maynard-Keynes

I believe Keynes had a key part to play in defining macroeconomics now; some of his ideas have been applied by governments in recent years such as recovering from the 2008 recession. It also played a key role in the furlough scheme implemented by the UK government in response to the COVID-19 pandemic. By paying 80 percent of the wages from the hours they work, it was effective in preventing mass unemployment, considering that households retained a stable source of income despite being unable to work under lockdown.

Without his views being published all those years ago, it would be difficult to imagine the government as it is today.

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