Keynesian Economics- 1930's- 1970s

During the 2009 recession, many Americans criticized Keynesian economics as being old fashioned and not useful anymore. The cartoonist's message is that Keynesian economics is what is going to help America to recovery even though Americans still criticize it. (3)
During the 2009 recession, many Americans criticized Keynesian economics as being old fashioned and not useful anymore. The cartoonist's message is that Keynesian economics is what is going to help America to recovery even though Americans still criticize it. (3)


- Is based on the economic theories of John Maynard Keynes in the 20th century.
- It was an economic model used after the Great Depression and during WWII Great Depression in the 1930’s
- It’s an alternative to classical liberal economics
- Keynes’ theories were presented in his book, The General Theory of Employment, Interest and Money
- The basis of Keynesian economics is a mixed economy which predominantly supports economic freedom but requires some governementt intervention during economic hardship
- According to Keynes, inflation periods are always followed by recession periods which are caused by consumer demand.
- The only ways to stimulate the economy are to reduce interest rates and for the government to invest in
infrastructure
- In conclusion, Keynes suggested that the only way to lessen the severity of a recession is an increase in government spending and reduce taxes
- During inflationary periods governments should spend less money and increase taxes. [1] [2]

Significance to Liberal Economics


The significance of Keynesian economics regarding Classical Liberal economics is that although Keynesian economics holds capitalist ideals which are extremely supported by classical liberal principles, the belief that there has to be some government intervention to regulate the economy shifts Keynesian economics more towards the left of the economic spectrum. Keynesian economics was an effective solution to the Great Depression for many countries therefore is considered as an improvement to Classical Liberal economics.

References


1. Christison, Fielding, Harding, Meston, Smith, Zook, (2009). Perspectives of Ideology (pp. 147-149)
Canada, Ontario: Oxford University Press.

2. Keynesian economics (13 March 2012) From Wikipedia, the free encyclopedia
Retrieved March 14,2012 from http://en.wikipedia.org/wiki/Keynesian_economics

3. (2009) from http://www.amptoons.com/blog/2009/11/03/regarding-the-ongoing-irrelevance-of-keynesian-economics/