John Maynard Keynes

The General Theory of Employment, Interest and Money

1. IDEA 1

   Markets may not fix unemployment

   Keynes challenged the classical view that markets naturally return to full employment. He argued that economies can stay stuck with high unemployment for long periods if demand is too low.

2. IDEA 2

   Demand drives output

   Keynes's key idea is effective demand: the total spending on goods and services determines how much is produced and how many people are employed. If spending falls, output and jobs fall too.

3. IDEA 3

   Unemployment can be involuntary

   Keynes argued that many people are unemployed not because they refuse to work at lower wages, but because there is not enough demand. This is involuntary unemployment. Cutting wages may not solve it.

All 8 ideas from The General Theory of Employment, Interest and Money →