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John Maynard Keynes: The Man From Harvey Road
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14642 |
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Section : |
MODERN THOUGHT
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| Issue
Date : |
5 / 1988 |
3,149 Words |
| Author
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Fred Glahe and Frank Vorhies
Fred Glahe is professor of economics at the University of
Colorado. He is the author of Macroeconomics: Theory and
Policy and coeditor of The American Family and the State.
Frank Vorhies is professor of business economics at the
University of the Witwatersrand, Johannesburg, South Africa. |
During the Great Depression of the 1930s, there was serious concern about the viability of the Western economies. Britain, France, and America were in trouble. As the years went by, the market economies did not spontaneously recover. The Depression persisted.
In the 1930s the nonmarket economies staged a grand revival. They exhibited impressive growth. The Soviet Union underwent industrialization and exported agricultural crops under Stalin's Bolshevik socialism (while millions starved in the Ukraine). Germany became wealthy again and militarized itself under Hitler's national socialism (while women were removed from the work force and intellectuals fled the country). Italy became orderly--even the trains ran on time under Mussolini's fascism (while poor African nations were conquered by force of arms). The Continental message seemed clear to many in the West--extensive government control and intervention brought about economic growth and prosperity.
During the 1930s, socialism in all its variants gained many supporters. The socialist parties had their strongest followings in the United States; the labor parties were politically powerful in Britain. Perhaps government intervention was the permanent solution to economic depression and stagnation.
In the midst of these troubling developments, John Maynard Keynes emerged as a pioneer of economic theory. In economic circles, the persistence of the Depression shook confidence in laissez-faire solutions. In political circles, socialism and greater government intervention became ever more acceptable. Keynes did not believe the market economy could take care of itself, and he also feared bolshevism and the rising interest in a socialist order. Seeking a middle way, Keynes hoped to save capitalism through government intervention.
In 1936 Keynes published The General Theory of Employment, Interest, and Money. His concern was that the market economies, of Britain and America in particular, were not going to pull themselves out of the Depression. He realized that capitalism did not spontaneously guarantee an economic growth path that would maintain full employment of labor. His insight was the development of a macroeconomic model that showed this inherent weakness of capitalism and provided a solution that saved capitalism from the threat of national socialism.
Savings and Investment
Keynes
...
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