ABSTRACT
John Maynard Keynes’s book The General Theory of Employment, Interest and Money fundamentally reshaped the study and practice of economics and government policy. Keynesian economics has shown itself relevant to all contexts and economic debates. It provides a coherent theoretical framework for addressing key economic questions such as unemployment, demand, economic growth, and the role of the government in the economy. The theory of classical economics rests on two propositions. The first is, very roughly, that wages tend to equal the productivity of labor. The second is that wages tend to equal the marginal disutility of labor to the laborer. Regarding fiscal policy, governments around the world undertook a massive expansion of government borrowing and spending, in line with Keynesian theory. Keynes’s achievement came as a result of a widespread loss of confidence in classical economics during the Great Depression of the 1930s, and the desire for greater state control of the economy following World War II.
