John Maynard Keynes was a British economist born in 1883, and He is considered the
Father of Keynesian economics. He came up with economic theories that address unemployment
causes, among other micro and macro-economic issues (BBC, 2019). In one of his scholarly
papers, Keynes talks about full unemployment and how the government can intervene as one
way to halt the economic recession. He served as an academician and in the British government
as one of their economic advisors (BBC, 2019). Among other economic theories, he also firmly
believed that governments should increase their spending and even lower taxes on their citizens
to increase demand in the face of recession.
In one of his books, “The General Theory of Employment, Interest and Money," Keynes
was highly against classical theory construction. The theory insinuated that in the wake of a
recession, business pessimism and other factors affecting market economies would bring about
economic weakness and, in turn, lead to a greater plunge in aggregate demand. Keynesian
economics, which is part of the many works he did, disputed the idea that lower wages could
help solve unemployment (Amadeo, 2018). This argument was initially made based on the
downward sloping labor demand curves like any other demand curve. Instead, he said that
employers could not add to their labor-force to produce goods that cannot be sold because of a
decrease in demand for their products. Keynes's implications from a policy standpoint are that as
businesses try to respond to various economic incentives, they will, in turn, take back the
economy to the point of equilibrium. This situation can only be prevented when the government
interferes with prices and wages making it look like self-regulation in the market.
Amadeo, K. (2018, March). Keynesian Economics Theory. The Balance; The Balance.
BBC. (2019, December 31). BBC – History – John Maynard Keynes. Bbc.co.uk.