World economic crisis 1929-1933 fell with colossal force on both developed and undeveloped countries in industrial terms. Therefore, it was in 1929-1933. the period of "hidden" economic development has ended; It was the time of the end of a whole series of old and the opening of new technological horizons, the glimpse of a new civilized system.

If the "strength" of neoclassical economic theory of the late XIX - early XX century. extended mainly to microeconomic analysis, then in the conditions of an atypical, one might say, crisis accompanied by general unemployment, another became necessary - macroeconomic analysis, to which, in particular, one of the greatest economists of this century, the English scientist J.M. Keynes, turned.

So, the world economic crisis of 1929-1933. predetermined the emergence of new scientific research, which do not lose their relevance in our days, because their main content is the state regulation of the economy in the market economy. Since then, two theoretical directions aimed at solving these problems have originated. One of them is based on the teachings of J.M. Keynes and his followers and is called keynesian(keynesianism), and the other, which substantiates conceptual solutions alternative to Keynesianism, is called neoliberal (neoliberalism).

John Maynard Keynes (1883-1946) studied with the founder of the Cambridge School of Economic Thought A. Marshall. But, contrary to expectations, he did not become his heir and almost eclipsed the glory of his teacher.

A peculiar understanding of the consequences of the longest and most severe economic crisis of 1929-1933. reflected in the provisions published by J.M. Keynes in London for a book entitled The General Theory of Employment, Interest and Money (1936). This work brought him wide popularity and recognition, since already in the 30s it served as a theoretical and methodological basis for programs to stabilize the economy at the government level in a number of European countries and the United States. And the author of the book himself was an adviser to the British government and developed many practical recommendations in the field of economic policy. Throughout the parliamentary history of Great Britain, J.M. Keynes became the first among economists to be awarded the title of Lord by the Queen of England, giving him the right to participate as a peerage in meetings of the upper house of parliament in London.

Among his publications: "A Treatise on Probability" (1921), "A Treatise on Monetary Reform" (1923), "The Economic Consequences of Mr. Churchill" (1925), "The End of Free Enterprise" (1926), "A Treatise on Money" (1930 ) and some others.

"General theory" by J.M. Keynes was a turning point in the economics of the 20th century. and largely determines the economic policy of countries at the present time. Its main new idea is that the system of market economic relations is by no means perfect and self-regulating and that the highest possible employment and economic growth can only be ensured by active state intervention in the economy.

The methodological innovation of Keynes's economic doctrine manifested itself, firstly, in the preference of macroeconomic analysis to the microeconomic approach, which made it the founder of macroeconomics as an independent section of economic theory, and, secondly, in substantiating (based on a certain “psychological law”) the concept of called effective demand, i.e. potential and government-stimulated demand.

Relying on his own research methodology that was "revolutionary" at that time, Keynes, unlike his predecessors, spoke about the need to prevent the government from cutting the wage crowd as the main condition for eliminating unemployment, and also about the fact that consumption is growing due to the psychologically determined propensity of a person to save. much slower income.

According to Keynes, the psychological tendency of a person to save a certain part of income inhibits income growth due to a decrease in the volume of capital investments, on which permanent income depends. As for the marginal propensity of a person to consume, it, according to the author of the General Theory, is constant and can therefore determine a stable relationship between an increase in investment and the level of income.

Keynes's research methodology takes into account the important impact on economic growth and non-economic factors, such as: the state (stimulating consumer demand for means of production and new investments) and human psychology (which predetermines the degree of conscious relationships between business entities).

Keynes did not deny the influence of the mercantilists on the concept of state regulation of economic processes that he created. His common judgments with them are obvious:

In an effort to increase the mass of money in the country (as a means of making it cheaper and, accordingly, lowering interest rates and encouraging investment in production);

In approving price increases (as a way to stimulate the expansion of trade and production);

In the recognition that lack of money is the cause of unemployment;

Understanding the national (state) nature of economic policy.

In his teachings, the idea of \u200b\u200bthe inexpediency of excessive frugality and accumulation and, conversely, the possible benefits of all-round spending of funds, is clearly traced, since, as the scientist believed, in the first case, funds are likely to acquire an ineffective liquid (monetary) form, and in the second, they can be aimed at increasing demand and employment. He also sharply and arguing criticizes those economists who adhere to the dogmatic postulates of the "law of markets" Zh.B. Say and other purely "economic" laws, calling them representatives of the "classical school".

Keynes makes a counter-conclusion: "The psychology of society is such that with an increase in total real income, total consumption increases, but not to the same extent as income increases." To identify the causes of underemployment and incomplete implementation, the disequilibrium of the economy, as well as to substantiate the methods of its external (state) regulation, the “psychology of society” is no less important than the “laws of economics”.

Meanwhile, the increase in investment and the resulting growth in national income and employment of the population can be regarded as a reasonable economic effect. The latter, which received the name in the economic literature multiplier effect, means that "an increase in investment leads to an increase in the national income of society, and by an amount greater than the initial increase in investment."

J.M. Keynes called it "the investment multiplier", which characterizes the position that "when the total investment increases, the income increases by an amount that is n times greater than the investment increase." The reason for this situation lies in the "psychological law" by virtue of which "as real income increases, society wants to consume a constantly decreasing part of it."

He further concludes that "the principle of the multiplier provides a general answer to the question of how fluctuations in investment, which make up a relatively small share of national income, can cause such fluctuations in total employment and income, which are characterized by a much larger amplitude."

But, according to him, "although the multiplier is relatively large in a poor society, the impact of fluctuations in the size of investment on employment will be much stronger in a rich society, since it can be assumed that it is in the latter that current investments make up a much larger share of current production."

So the essence of the multiplier effect is really simple. The decisive factor here is the incentive to invest. Several decades later, sharing Keynes's ideas about "people's propensity to save," J.K. Galbraith wrote that “these earnings must be invested and thus spent (or offset by the costs of someone else). Otherwise, the purchasing power will decline. Goods will remain on the shelves, orders will decrease, production will fall, and unemployment will increase. As a result, there will be a decline. "

Keynes believed that the result of his research was the creation of a theory that “points to the vital need to create centralized control in matters that are now largely left to private initiative ... percent and, possibly, in other ways ", because" it was in the determination of the volume of employment, and not in the distribution "of the labor of those who already work, that the existing system turned out to be unsuitable." But still there are ample opportunities for private initiative and responsibility. "

The effectiveness of government regulation of economic processes, according to Keynes, depends on the search for funds (government investments, achievements) for full employment of the population, reducing and fixing the rate of interest. At the same time, he believed that public investments in case of their shortage should be guaranteed by the release of additional money, and a possible budget deficit would be prevented by an increase in employment and a fall in the rate of interest. In other words, the lower the lending rate, the higher the incentives to invest, to increase the level of investment demand, which in turn expands the boundaries of employment and leads to overcoming unemployment. At the same time, he considered the starting point for himself such a provision on the quantitative theory of money, according to which, in reality, “instead of constant prices in the presence of unused resources and prices that grow in proportion to the amount of money in the conditions of full use of resources, we practically have prices gradually increasing in as the employment of factors increases. "

For Keynes, full employment depends on the correct ratio of interest rates and wages and can be achieved by lowering the former rather than reducing the latter. Keynes' fundamental reason for unemployment is that the rate of interest remains too high in the long run.

Roosevelt's New Deal.The crisis of the 1920s. was such a catastrophe that economists began to talk about the end of capitalism, that in its former form the capitalist economy could not continue to exist. Keynes's doctrine served as the theoretical basis for state-monopoly capitalism.

The essence of state-monopoly capitalism is that the state begins to regulate and manage economic development, organizes the programming of the economy, i.e. will acquire functions that the capitalist state did not have before. Therefore, it would be more correct to talk about state regulation of the economy.

How did this happen in the USA? The new US President Franklin D. Roosevelt announced a system of measures to improve the economy - the so-called "New Deal". Under the government, a "National Administration for Industrial Recovery" was created. It was headed by a "brain trust" - a council of major economists and industrialists, which began to carry out state regulation of the economy.

The industry was divided into 17 industry groups. Each group was headed by its own body, and for each group its own rules were introduced - "codes of fair competition". "Codes" established the volume of production, prices, etc., set production within certain limits in accordance with the capacity of the sales market, ie. with the expectation not to produce more products than the market can absorb.

Another direction of Roosevelt's course was the organization of large-scale government work, for which more than $ 3 billion was allocated, - the construction of roads, airfields, schools, hospitals and other structures, mainly in the infrastructure sphere. To organize this work, 2.5 thousand tent camps were built, where the unemployed were gathered.

These works reduced unemployment and increased the sales market, because the former unemployed now received wages and bought goods, and for the works themselves, building materials, construction mechanisms and much more were purchased from the market. Thus, these works absorbed goods from the market without producing goods, and this resolved the crisis.

Corresponding measures were taken in agriculture. The state began to buy land from farmers, leaving this purchased land as wasteland, without use, began to pay premiums for reducing the number of livestock, for reducing production, i.e. tried to reduce the volume of agricultural production, to bring it in line with the sales opportunities.

Such government regulation was unusual for old capitalism and was perceived as something non-capitalist. Because Roosevelt’s measures limited free enterprise, the US Supreme Court ruled Roosevelt’s policies contrary to the constitution, and in 1934 most New Deal activities were banned.

After the end of the crisis, the recovery was rather weak. In 1937 a new crisis began to swing. Industrial production fell by 36%, the number of unemployed rose to 10.5 million. The way out of this crisis was associated with the outbreak of World War II.

During the Second World War, the first situation was repeated for the United States. Military actions took place in Europe, its economy was destroyed. The United States entered the war later than other countries, but even after that did not experience its destructive effect: no military operations were conducted on the territory of the United States. Human losses in the United States amounted to 6 people who died from the explosion of a bomb launched from Japan in a hot air balloon. According to surveys conducted, the American population during the war years dressed and ate better than in the pre-war years.

The US contribution to the victory over Germany was mostly material. 46 billion dollars were delivered under Lend-Lease, i.e. transfer of various military materials to participants in the war against Germany. It was not a gift. President Truman rightly noted: "The money spent on Lend-Lease has certainly saved many American lives."

But Lend-Lease was beneficial not only for this. To send equipment to the Allies, it was purchased from American corporations; lend-lease caused patriotic revival, increased employment, new income, new construction.

During the war, the weight of the state increased. Military industrial enterprises were then built by the state. 2.5 thousand new factories were built, equipped with advanced technology. After the war, these enterprises were sold to monopolies, and they were sold 3-5 times cheaper than they cost the state. Naturally, under these conditions, the war provided a new leap in the economic development of the United States. Industrial production increased from 1938 to 1948. more than doubled.

The share of the United States in world production also increased. If before the war the United States provided 40% of world capitalist industrial production, then by the end of the war - 62%

John Maynard Keynes, a short biography and interesting facts from the life of the founder of the theory of Keynesianism and macroeconomics are presented in this article.

John Keynes biography briefly

John Keynes was born on June 5, 1883 in the family of an economist, professor of philosophy and economics at the University of Cambridge.

He received his education first at Eton, King's College at Cambridge. John, as a student, participated in a scientific circle, was a member of the philosophical club "Apostles", a member of the intellectual Bloomsbury circle.

His successful training promised him a brilliant career. Between 1906 and 1914, he was assigned to the Department of Indian Affairs and the Royal Commission on Indian Currency and Finance. At the same time, he began writing his book entitled “Indian Currency and Finance” and a dissertation covering the problems of probability. The article "Treatise on Probability" became a preview to the scientific work. After defending his thesis, Keynes was invited to teach at the college where he studied.

From 1915 to 1919 he worked at the Ministry of Finance. Keynes takes part in the peace talks in Paris and proposed his plan for postwar economic recovery in Europe. But his plan was not instituted, as he advocated economic recovery in Germany, not more reparations.

Since 1919, Keynes spends more and more time in London, so he is on the editorial board of magazines - the weekly "Nation", the magazine "Economic Journal" and the board of financial companies, was engaged in consulting the government. The economist also successfully played on the stock exchange.

For a long time he was engaged in research of finance, gold standard and exchange rates. He was the first to come up with the idea that there is no balance between expected investment and savings.

Keynes was a member of the Royal Industry and Finance Commission and the Economic Advisory Council. He published his main work in 1936 - it was "The General Theory of Employment, Interest and Money." In it, he explains the new concept of the accumulation multiplier and formulated the basic psychological law.

In 1940, Keynes became a member of the Treasury's Advisory Committee on Military Problems, then became an adviser to the minister. After 2 years he was given the title of baron. In 1944 he was elected President of the Econometric Society.

During World War II, John developed the concept of the Bretton Woods system and put forward the idea of \u200b\u200bcreating a system dealing with the regulation of exchange rates. In 1946, he was one of the founders of the International Monetary Fund.

John Keynes interesting facts

• Keynes's biographers report that he was homosexual. John had a pretty serious relationship with Duncan Grant, an artist. Even after their breakup, Keynes financially supported his former lover for the rest of his life.
• In 1918, Keynes attended a performance, where he met his future wife, Lydia Lopukhova, a Russian ballerina. They got married in 1925. The couple did not have children, but, despite this, their marriage was happy.
• Playing on the stock exchange and investing, he managed to make a good fortune for himself. But in 1929 the stock market crashed and Keynes went bankrupt. The economist soon improved his financial condition.
• He was fond of collecting book relics. His library contained the original works of the scientist Isaac Newton.
• He was interested in drama and literature, financially helped the art theater in Cambridge.

John Maynard Keynes is an English economist, founder of Keynesian direction in economic theory.
He was born on June 5, 1883 in Cambridge. His parents are an economist, professor of economics and philosophy at the University of Cambridge, John Neville Keynes and Floren Ada Brown, who was known in England as a writer and public figure.
In 1925, Lydia Lopukhova, a Russian ballerina of the Diaghilev enterprise, became Keynes's wife.

Keynes as an educator and public figure

Keynes's pedagogical career began in 1908, when he began teaching at the Economics Department of the University of Cambridge.
He devoted his free time to studying probability theory and the inductive method.
The result of his work was a dissertation, which was published in 1921 under the title A Treatise on Probability.

During World War I, Keynes served in the Treasury Department, where he was responsible for relations with the Allies and foreign exchange reserves.
After the end of hostilities, he was appointed a representative of the ministry at the Paris Peace Conference, where he opposed the collection of reparations from Germany, considering this decision a step towards destabilizing the European economy.
Returning to teaching duties at King's College, Keynes continued his research into the economic situation in Europe.
He was also very successful in business and by the end of the 30s became a wealthy man, was engaged in charity work in the field of literature and theater. He provided financial assistance to the Cambridge Art Theater, was seriously interested in literature (he collected books, for example, was able to acquire many of Isaac Newton's original works), was a great fan of the theater, and even composed ballet librettos himself. In addition, he was an excellent public speaker and gained a reputation as a talented debater on topics related to philosophy and economics.
In June 1942, Keynes became a member of the House of Lords as Baron Tilton. In 1943-1944 he took part in the preparation and adoption of the agreement in Bretton Woods on the establishment of the IMF and the International Bank for Reconstruction and Development (World Bank).

Scientific and literary activities

Keynes received his education at Eton, King's College in Cambridge, where he already demonstrated as a student a penchant for scientific research in the field of philosophy (he took an active part in the work of a scientific circle led by the famous philosopher George Moore, was a member of the philosophical club "Apostles").
After graduating from Eton from 1906 to 1914, Keynes worked in the Department of Indian Affairs, the Royal Commission on Indian Finance and Currency. He then served in the Treasury Department as an advisor, participated in the Paris Peace Talks and even proposed his plan for a post-war recovery of the European economy.
At the age of 30, he wrote his first book, Indian Currency and Finance (1913). The next work - "Treatise on Probability" - was published in 1921. Another book by Keynes ("The Economic Consequences of Peace") is based on the plan for the post-war restoration of the European economy, proposed by him during the Paris peace talks. In this work, he rightly objected to the economic oppression of Germany, which could subsequently lead (as confirmed by the subsequent development of history) to the strengthening of revanchist sentiments.

Another work that brought the author wide fame was the book "The Economic Consequences of the Versailles Treaty."
Later, studies of economic problems led to the writing of such well-known works as The General Theory of Employment, Interest, and Money (1936).
In these works, Keynes proved the inconsistency of the concept of a self-regulating economy and proposed a number of measures for lending, money circulation and ensuring employment.
He also developed the idea of \u200b\u200bpsychological stimulation of demand and market preferences of individuals as a factor in state regulation of the economy.
In the 1920s, Keynes dealt with the problems of the future of the world economy and finance. He outlined his position on this issue in the Treatise on Monetary Reform (1923). Keynes believed that monetary policy should be based on maintaining the stability of domestic prices, and not on the overvaluation of the currency, as the British government did at that time.
In the second half of the 1920s, Keynes was working on A Treatise on Money (published in 1930). In it, he sets out his views on the issues of exchange rates and the gold standard.
In 1940, Keynes became a member of the Treasury Advisory Committee on Military Issues, then an adviser to the minister. In the same year he published How to Pay for the War? He believed that military actions of the state should largely be paid by the population of the country. To do this, he proposed to compulsorily deposit all the funds remaining with the population after taxes and exceeding a certain level, to special accounts in the Postal Savings Bank with their subsequent unblocking.
During World War II, Keynes dealt with issues of international finance and the post-war structure of the world financial system. In particular, he took part in the development of the concept of the Bretton Woods system, and in 1945 he negotiated American loans to Great Britain. In March 1946, Keynes participated in the opening of the International Monetary Fund.

Creator of Keynesian theory

Keynes entered the history of the world economy as the creator of a new theory, which is named after him - Keynesianism. This is the theory of state-monopoly regulation of the capitalist economy, which was formed under the influence of a sharp exacerbation of the contradictions of capitalist reproduction in the era of the general crisis of capitalism with the emergence of state-monopoly capitalism. The theory was formed under the influence of a sharp exacerbation of the contradictions of capitalist reproduction in the era of the general crisis of capitalism with the emergence of state-monopoly capitalism.
The essence of Keynesianism is to substantiate the need for state regulation of the capitalist economy in order to ensure the uninterrupted progress of capitalist reproduction in the interests of monopolies.
Keynes formulated the principles of state-monopoly regulation of the capitalist economy in the form of the "theory of employment", on the basis of which he developed a program of anti-crisis economic policy of the bourgeois state.
Critics note a number of significant shortcomings of this theory, for example, underestimating the social essence of economic phenomena, ignoring the historical nature of the objective economic laws of capitalism, exaggerating the role of the subjective factor in the economic life of society.

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Of all the economic theories of the 20th century, the greatest contribution to the economy of the United States and Western Europe was made by john Maynard Keynes theory (1883-1946, England). His work The General Theory of Employment, Interest and Money, published in 1936, revolutionized economic theory, sharply criticizing the theory neoclassicists.

The immediate cause of the appearance of Keynes's concept was the most severe crisis of 1929-1933. named The great depression, which was characterized by huge unemployment, on the one hand, and a surplus of completely unused capacities, on the other.

The crisis of 1929-1933 discovered a discrepancy between the theories of neoclassicists and reality. Neoclassicists believed that capitalism is a self-regulating system. State assistance in regulating the economy is unnecessary and, moreover, harmful.

Keynes, having analyzed the capitalist economy of his day, came to the conclusion: the era of free competition is a thing of the past, the capitalist economy does not fully use the possibilities of productive and labor resources and is shaken by periodic crises.

Keynes, John Maynard

Keynesian Theory - recognition that develop the economy is cyclical nature, and the crisis is a phenomenon organically inherent in the market economy, the recognition of the inability of the economy to self-regulation. Since the market economy is not perfect and self-regulating, the highest possible employment and economic growth can only be ensured by active government intervention in the economy.

The state should actively stabilize the economy by increasing or decreasing demand (consumer and investment), using tools such as monetary policy (first of all - lowering the interest rate), and fiscalpolitics (financing of private companies from the state budget and manipulation of the tax rate).

Developed by Keynes theory of state regulation of the capitalist economy got the name keynesianism (Keynesian theory).

Significance of Keynesian theory is as follows:

• Keynes laid the foundation for a new direction in economics, which continues to be refined and deepened to this day. He moved in the analysis of economic processes from the micro level to the macro level. His theory is macroeconomic theory.
• A new approach to the regulation of production and employment in society with the help of the state is proposed, the role of the state as a very active economic force, the most important participant and regulator of the economic life of society is shown.
• J. Keynes found the relationship between the psychology of human behavior and real economic processes, outlined the relationship between the propensity of people to save and invest in the economy.
• The theory of J. Keynes gave many states specific recommendations for organizing the economic process, had a direct outlet for practice.

The recognition of the inevitability of state intervention in the economy served as the basis for the proclamation by the President of the United States of America F.D. Roosevelt of the New Deal, aimed at solving a set of tasks to ensure stable reproduction through government measures. J.M.'s ideas Keynes found widespread in the state practice of Western European countries in the 1940s – 1960s.

Other articles on this topic:

Analysis of the main goal of the theory of Keynesianism. The essence of the views of the founder of the school J.M. Keynes. Study of the relationship between investment and national income, government spending and the volume of state production. The main ideas of the Keynesian model.

Students, graduate students, young scientists who use the knowledge base in their studies and work will be very grateful to you.

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FSBI HE BSMU of the Ministry of Health of Russia. Department of Philosophy and Social and Humanitarian Disciplines with a course in social work.

TOeinsian School of Economics

Teacher: Semyonova Larisa Vasilievna.

Khisamova V.A., Fattakhova L.R.

Keynesianschool

Keynesianism - the direction of modern economic theory, which arose in the 30s of the 20th century. The name of this trend is associated with the name of the English economist J.M. Keynes (1883-1946). Keynesians investigate the most important macroeconomic relationships, in particular, the relationship between investment and national income, between government spending and the volume of national production.

Keynes' merit lies in the fact that he proposed a new approach and developed a new theory of state regulation of production and employment. Its theoretical provisions, terminology, methodological approaches to the analysis of macroeconomic processes form the basis of modern science and continue to be developed by supporters of the Keynesian school. Keynesian doctrine influenced the content and directions of economic policy, as well as various directions and areas of research: the development of a system of national accounts in conjunction with the practical needs of economic regulation, the initial provisions of countercyclical policy, the concept of deficit financing, a medium-term programming system.

The market economy, Keynes argues, cannot be self-regulating, cannot fully use the resources available in society. To stimulate aggregate demand, and hence production, it is necessary to regulate the economy with the help of fiscal and monetary policies.

In 1936. was published "The General Theory of Employment, Interest and Money", which made a real revolution in economic theory. The problem was to find methods to ensure a way out of the deep crisis, to create conditions for the growth of production and overcoming unemployment. Keynesianism investment income production

The essence of Keynesianism.

The essence of Keynesianism is to substantiate the need for state regulation of the capitalist economy in order to ensure the uninterrupted progress of capitalist reproduction in the interests of monopolies. When considering economic phenomena in their national economic (macroeconomic) aspect, Keynesianism is characterized by obscuring the social essence of economic phenomena, ignoring the historical nature of the objective economic laws of capitalism, exaggerating the role of the subjective factor - the psychology of people in the economic life of society.

The main goal of Keynesian theory is to save the capitalist production system from collapse. This is clearly expressed in the so-called principle of "effective demand" - the central point of Keynesianism. By "effective" is meant the demand that is able to ensure the capitalists receive the maximum profits.

In the mid-20s. Keynes visited the Soviet Union and was able to observe the experience of a controlled market economy during the NEP period. He presented his impressions in a small work "A quick glance at Russia" (1925). Keynes argued that capitalism is in many ways a very dysfunctional system, but if it is "wisely managed" it can be "more effective in achieving economic goals than any alternative system that has hitherto existed." However, already in the mid-20s. Keynes comes to the conviction that the days of automatic self-regulation of capitalism are a thing of the past and government influence is an indispensable companion of a healthy market economy. This conclusion is the main theoretical result of this stage.

Keynesian model preconditions

The model of the economy, proposed by J. M. Keynes, The General Theory of Employment, Interest, and Money (1936), offered an alternative view of the macroeconomic system, emphasizing the short run, during which the chains tend to be tight and the economy to a change in the market situation occurs mainly due to changes in quantitative indicators (output, volume of inventories, the number of employed and unemployed, etc.). Before Keynes, macroeconomic equilibrium was described by a neoclassical model that examined the long-term period in which prices for goods and factors of production are flexible, the economy operates at the level of potential output, and therefore forced unemployment is impossible. However, the Great Depression of 1929-1933. showed that the theoretical conclusions of the neoclassical model are of little use for solving the practical problems of bringing the economy out of the crisis, and in practice the market mechanism is not so flexible as to automatically ensure a quick and painless return of the economy to the level of potential output and full employment. The changed macroeconomic situation ceased to correspond to the postulates of the neoclassical model, and the need arose for a new, more general model. It should be emphasized that J. Keynes did not completely reject the neoclassical model. He believed that it is valid for a particular particular case and its conclusions can be used if the economy reaches a state when the premises of the neoclassical model will again become adequate to reality.

Taking into account the changes in the market economic system, the premises of the Keynesian model can be reduced to the following.

1. The economy is considered in the short term.

2. Prices of goods, including factors of production, are rigid (ie, the price level for the period under review is unchanged).

3. The leading conjuncture-forming force is aggregate demand: it plays an active role, while aggregate supply plays a passive role, adjusting to current demand.

4. The adjustment of economic agents to changes in the market situation occurs with the help of quantitative parameters (output and employment, the degree of utilization of production capacities, the volume of inventories, etc.).

5. Salaried workers are subject to "money illusions": they tend to resist any reduction in nominal wages, regardless of what the level of real wages turns out to be.

6. Psychological factors (propensities and expectations) play an important role in decision-making by economic agents (firms and households).

To increase aggregate demand (this is the real volume of national production of goods that consumers, enterprises and entrepreneurship are ready to buy at a given price level) Keynes recommended using the fiscal and monetary policy of the state.

The main ideas of the Keynesian model.

1. It is necessary to reduce interest on loans. This, firstly, will enable entrepreneurs to take loans more actively, and secondly, it will make it more profitable for capital owners to invest in production than in securities. Together, this will increase the inflow of investments, and therefore increase the pace and scale of production.

2. Government spending, investment and procurement of goods should be increased. The increase in demand for goods and services (initiated by the state) should revive production. The latter, firstly, will make investments a more attractive form of investing money and will attract additional capital, and secondly, it will increase employment, which in turn will increase the population's ability to pay, and therefore further increase the demand for goods and services.

3. It is recommended to ensure the redistribution of income in the interests of social groups receiving the lowest income. Such a policy will make it possible to increase the mass value of demand by involving all segments of the population in the economic life of the country.

As a result, Keynes argued, production will expand, additional workers will be attracted, and unemployment will decrease. Considering two instruments of demand regulation: monetary and budgetary, Keynes gave preference to the latter. During a downturn, investments do not respond well to lower interest rates (monetary regulation). This means that the main attention should be paid not to lowering the interest rate (an indirect form of regulation), but to budgetary policy, including an increase in government spending that stimulates investment by firms.

Keynes's theory provides for active government intervention in economic life. Keynes did not believe in a self-regulating market mechanism and believed that external intervention was necessary to ensure normal growth and achieve economic equilibrium. By the beginning of the 70s, the period of high rates of economic growth ended. Two energy crises plunged the economies of developed countries in the second half of the 70s into a prolonged period of stagflation - a period when prices began to rise unusually quickly, and at the same time there was a decline in production. Inflation has become the number one problem. Traditionally, the Keynesian concept of economic policy did not count on inflation. By underestimating the danger of inflation, the Keynesian concept by its emphasis on the growth of government spending and deficit financing of the economy, in fact, itself contributed to the development of inflation. If in the 60s budget deficits were rare, then after the 70s they have become stable. It is no coincidence that the priority task of the financial policy of the governments of all developed countries has become the improvement of public finances and the reduction of budget deficits. Added to inflation was the deterioration of the conditions of reproduction, which shifted the focus of economic contradictions from the tasks of implementation to the problems of production. Increasing the degree of "openness" of the economy: internationalization and strengthening of external economic relations.

All these circumstances have caused extreme dissatisfaction with Keynesian macroeconomic policy and sharp criticism of the entire Keynesian theoretical system. They began to attribute to it all the real and imaginary reasons for the failures of economic development, and above all the aggravation of inflationary tendencies. The crisis was experienced not only by Keynesian theory, but by the entire concept of the "welfare state," in other words, the concept of broad state regulation of the economy. As a result, the victorious march of Keynesianism as a theory and as an economic policy in the late 70s - early 80s ended with the "Keynesian counterrevolution" and the "conservative shift" - in economic theory and in the politics of all developed countries.

D. Keynes's Contribution to Economic Science J. M. Keynes has a special place in the history of economic thought of the 20th century. Modern economic theory is unthinkable without the contribution made by Keynes, primarily without its completely new section - macroeconomics and the theory of macroeconomic regulation. Even his most ardent critics cannot deny the fact that without him not only economics would be different, but also economics. The highest tribute that can be paid to an economist is to recognize that economic theory cannot be imagined without him.

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Keynesianism - a trend in the economy that prevailed in the first half of the 20th century. The name comes from the eminent English economist John Maynard Keynes, author of The General Theory of Employment, Interest, and Money, published in 1936.

Keynesianism is based on the assumption that an equilibrium that ensures full employment is unattainable in a market economy. The reason for this is savings, as a result of which the aggregate demand is not equal, but less than the aggregate supply.

Thus, Keynesian doctrine, explaining the operation of a number of economic mechanisms, is based on the following provisions:

1. the level of employment is determined by the volume of production;
2. total demand is not always set at a level corresponding to the volume of means of payment, since some of these funds are set aside in the form of savings;
3. the volume of production is actually determined by entrepreneurial expectations of the level of effective demand in the coming period, which facilitate capital investment;
4. with the equality between investments and savings, indicating the comparability of the bank interest rate and the percentage efficiency of capital investments, the act of investment and the act of savings become practically independent.

It cannot be done so that the population does not keep a part of the income. The only thing that is possible in this situation is to influence demand, regulate the amount of money in circulation and interest rates at the state level, stimulating production and sales. The lack of demand from the point of view of Keynesianism should be compensated by government procurement and public works, paid for by the budget.

In Precaysian economics, the drive to save was believed to be the good that underlies growth and progress. However, Keynesianism separates savings and investments, considering them not equal to each other. Savings depend primarily on the level of income, while investments depend on a number of factors, incl. from the current interest rates.

Keynesianism explores practical ways of stabilizing the economy, quantitative relationships of macroeconomic values: national income, investment, employment, consumption, etc. The decisive sphere of reproduction is the market, the main goals are to maintain effective demand and full employment. The economic program of Keynesianism includes: an all-round increase in state budget expenditures, the expansion of public works, an absolute or relative increase in the amount of money in circulation, employment regulation, etc.

Thus, Keynes rejected the main postulate of the neoclassicists about the effectiveness of market self-regulation and substantiated the need for state regulation of the economy; switched the attention of economists from supply to demand, substantiated the possibility of inflationary financing of economic growth.

Keynesianism - the economic concept of John Maynard Keynes: a brief description

He put in the foreground the problems of short-term economic dynamics, whereas before him, mainly static economics was analyzed. Keynes actually developed a new language of economic science and a new science of macroeconomics, introducing the concepts of aggregate demand, aggregate supply, effective demand, marginal propensity to consume and save, investment multiplier, marginal capital efficiency, marginal investment efficiency, etc.

Keynesianism was formed thanks to the analysis of the situation in the world economy during the Great Depression. It was contrasted with the laissez fair doctrine. Keynes' followers argue that the state should influence aggregate demand when its volume is insufficient. They consider monetary and budgetary policies as instruments for regulating the amount of demand.

The emergence of Keynes's economic theory is called the Keynesian revolution. From the 40s to the first half of the 70s of the XX century, the concept of J.M. Keynes occupied dominant positions in government and academic circles of the most developed industrial countries of the West. In the 1950s and 1960s, many of the tenets of Keynesianism were challenged by representatives of the neoclassical school. The emergence of monetarism interrupted the dominance of Keynesianism, however, monetarism used the concept of monetary regulation developed by J.M. Keynes. It was Keynes who came up with the idea of \u200b\u200bcreating the IMF.

Under the influence of Keynesianism, most economists came to the conviction of the usefulness and necessity of conducting macroeconomic policies for long-term growth, avoiding inflation and recessions. However, in the 1970s. in the United States again there was a crisis in which there was high unemployment and at the same time high inflation, this phenomenon was called stagflation. This weakened economists' confidence in Keynesianism. Subsequently, Keynesians were able to explain the stagflation phenomenon within the framework of their model.

Within the framework of Keynesianism, the following areas are distinguished:

• neo-Keynesianism;
• post-Keynesianism;
• new Keynesianism.

Neo-Keynesianism a number of modern currents of economic thought, united by Keynes's theory as a methodological basis. The starting point in neo-Keynesianism is the central idea of \u200b\u200bKeynes's theory that a spontaneously developing market economy is not an ideal system of self-regulation. The denial of capitalism's ability to spontaneously provide the fullest and most rational use of economic resources is the main criterion that separates Keynesian economists from all modern defenders of the free enterprise economy.

In neo-Keynesianism, there are two main approaches. One, emphasizing the novelty of Keynes's theory, its revolutionary role, its break with the neoclassical school, gave birth to left Keynesianism. Another approach, on the contrary, sought to emphasize its connection with the neoclassical tradition. This direction of development of Keynesianism formed the basis for the creation of neoclassical synthesis, that is, the formal inclusion of Keynesian theory in the neoclassical general equilibrium system, in which Keynesianism explained a particular case of equilibrium - equilibrium in conditions of underemployment.

However, the most important drawback of Keynesianism - the underdevelopment of its microeconomic foundations - was not overcome until the early 80s of the XX century. Neo-Keynesian studies have not provided a convincing and logically consistent explanation for the lack of the potential for self-regulation in the capitalist economy. Moreover, the proposed interpretations often contradicted the principle of rationality of the behavior of economic agents. The latter circumstance made neo-Keynesian constructions very vulnerable to criticism from representatives of monetarism and the new classical macroeconomics, who had a much more developed microeconomic analytical apparatus. But in the 1980s. in the development of neo-Keynesianism, new trends were outlined, as a result of which it took the path of creating a more realistic foundations of microeconomic theory.

Post Keynesianism economic theories containing an attempt to return to the methods of economic policy proposed by J.M. Keynes on an updated theoretical basis. For example, former Keynesians often believe that Keynesian theory is outdated. However, they continue to believe that government intervention to alleviate involuntary unemployment is justified.

Historically, post-Keynesianism has evolved from the merging of two streams. On the one hand, it was English Ricardian Keynesianism, the center of which was in Cambridge, and on the other, American unorthodox Keynesianism, whose representatives sought to revive what they believed to be the true meaning of the Keynesian revolution.

Examples of new theoretical approaches used by post-Keynesians include the theory of effective wages and the theory of implicit (hidden) contract. Some post-Keynesians rely on more radical approaches, including Marxism, to defend the government intervention in the economy proposed by their theory. In general, post-Keynesianism is a trend whose followers have undertaken a lot of research, but have achieved limited success.

New Keynesianism it is a school of modern macroeconomics that seeks to provide the microeconomic underpinnings of Keynesian economics. New Keynesianism arose in part in response to criticism of Keynesian macroeconomics by proponents of the new classical macroeconomics.

Two key assumptions shape the new Keynesian approach to macroeconomics. Like the new classical approach, Keynesian macroeconomic analysis usually assumes that households and firms have reasonable expectations. But the two schools differ in that Keynesian analysis usually takes into account different market deviations. In particular, New Keynesians suggest that there is imperfect competition for price and wages to help explain why prices and wages can become "frozen," meaning that they do not instantly equalize in response to changes in economic conditions.

The stagnation of wages and prices, as well as other market anomalies present in Keynesian models, justifies why the economy may not receive full employment. Therefore, New Keynesians argue that macroeconomic stabilization by the government (using fiscal policy) or the central bank (using monetary policy) can lead to more efficient macroeconomic outcomes than laissez faire policies.

New Keynesian economists do not advocate the use of expansive monetary policy for short-term growth in production and employment, as this will raise inflationary expectations and thereby transfer problems to the future. Instead, they advocate using monetary policy to stabilize. That is, a sudden increase in the money supply just to create a temporary economic boom is not recommended, since the elimination of increased inflationary expectations will be impossible without a recession.

However, when the economy is facing an unexpected external shock, it is a good idea to offset the macroeconomic impact of the shock through monetary policy. This is especially true if the unexpected shock is due, for example, to a drop in consumer confidence, which tends to reduce both production and inflation; in this case, expanding the money supply (lowering interest rates) helps to increase output while stabilizing inflation and inflation expectations.

Keynesian theory and its meaning

Search Lectures

In classical and Keynesian models

1. The main reason that allowed Keynesian theory to squeeze out the classical one is that:

Keynesian theory explained the behavior of the economy in the long run;

Keynesian theory explained the behavior of the economy in the short run;

The classical theory failed to explain the behavior of the economy in a short period;

Keynesian theory did not connect its main provisions with the amount of money circulating in the country;

Answers "b" and "c" are correct.

2. Say's law fixes the connection between:

Sun spots, weather conditions and agricultural production;

The demand for money and its supply;

Savings, investments and interest rates;

Credit, production and labor market;

Production, income and costs.

3. Self-regulatory market system guarantees:

No shortage of goods;

Impossibility of excess of goods;

Possibility of frequent persistent and long-term shortages of goods;

Deficits and surpluses of the commodity mass, which quickly disappear as a result of the price mechanism;

Answers "a" and "b" are correct.

4. Demand for labor:

Directly related to the level of wages;

Directly related to the offer of the product produced by this labor;

Determined by the demand for machinery and equipment;

Determined by the demand for the product that is produced by this labor;

Answers "a" and "d" are correct.

5. If people become less frugal, other things being equal:

Demand for credit will grow;

The loan price will fall;

The savings curve will shift to the left;

The amount of savings will grow for each given level of interest rate;

6. The idea that the level of production at full employment and full use of all resources does not depend on the money supply and the price level, refers to:

Keynesian theory;

Towards a Marxist theory;

To the quantitative theory of money;

Say's law;

All of the above answers are correct.

7. Which of the following concepts of classical macroeconomic theory was criticized by J. M. Keynes:

Say's law;

Quantitative theory of money;

The theory of market self-regulation of the economy;

All previous answers are correct;

John Maynard Keynes. Keynesian theory

According to the theory of J.M. Keynes, savings can exceed investment if:

The interest rate is rising;

Overproduction and unemployment have existed in the economy for a long time;

Say's law does not work;

Overproduction and unemployment are not possible in this economy;

Answers "b" and "c" are correct.

9. According to the Keynesian concept of consumer spending:

Consumer spending is directly related to disposable income;

If disposable income rises, consumer spending falls;

If disposable income rises, then its share devoted to consumption falls;

All previous answers are correct;

Only answers "a" and "c" are correct.

10. The idea that with a change in disposable income, the volume of consumer spending also changes, but to a lesser extent, an important component:

Keynesian Investment Theory;

Keynesian theory of employment;

Classical macroeconomic theory;

Quantitative theory of money;

Keynesian theory of consumption.

11. According to Keynesian theory, the level of production is determined by the amount of aggregate demand. It means that:

The production of income creates a demand for that income;

The demand for money forces entrepreneurs to produce goods and services;

Entrepreneurs will try to expand production to full employment;

The volume of products that entrepreneurs decide to produce will be determined by the demand for it;

Only answers "a" and "c" are correct.

12. According to the Keynesian equilibrium model, the economy will be in equilibrium if:

Consumer spending minus savings equals investment;

The dynamics of the money supply is constant over a certain period;

Planned consumer spending plus investment is equal to total "withdrawals";

The state budget is balanced;

Aggregate supply equals aggregate demand.

13. According to the "paradox of frugality", the desire to save at each income level will cause:

Downward shift of the consumption curve;

Decrease in the equilibrium level of national income and production;

Upward shift of the savings curve;

An increase in the number of people who make savings;

Only answers "a", "b" and "c" are correct.

14. In the simple model of J.M. Keynes, if the aggregate supply is equal to the aggregate demand, then:

Stocks will decrease and entrepreneurs will begin to expand production;

Stocks will not change, but entrepreneurs will expand production;

Stocks will grow and entrepreneurs will start to cut production;

Stocks and production levels will not change;

Stocks will not change, but entrepreneurs will cut production.

15. If the produced and sold NPP are balanced in the economy, then:

Total income is equal to total supply;

"Injections" are equal to "withdrawals";

The economy operates at full employment and stable prices;

All previous answers are correct;

Only answers "a" and "b" are correct.

16. Growth in exports of a given country, other things being equal:

Will increase aggregate demand but decrease national income;

Reduce aggregate demand and increase national income;

Will increase net exports;

Will increase aggregate demand and national income;

Only the answers "c" and "d" are correct.

17. Which of the following is included in the term "injection":

Investments;

Saving;

18. An increase in aggregate demand will lead to an increase in the equilibrium NPP and the price level if the shift in aggregate demand occurs by:

Keynesian segment of the AS curve;

Intermediate segment of the AS curve;

Keynesian and intermediate segments of the AS curve;

Classic curve segment AS;

Keynesian, intermediate and classical segments of the AS curve.

19. In the model "aggregate demand - aggregate supply", the growth of the price level:

Will lead to an increase in the marginal propensity to consume;

Will lead to an increase in the impact of the multiplier on income;

Will reduce the impact of the multiplier on income;

Will not affect the level of impact of the multiplier on income;

All of the above answers are incorrect.

20. An increase in aggregate spending in the Keynesian model will lead to a shift in the aggregate demand curve:

Right by the amount of growth in total costs;

To the right by the amount of growth in total costs multiplied by the value of the multiplier;

To the left by the amount of growth in total expenses multiplied by the value of the multiplier;

All of the above answers are incorrect.

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J.M. Keynes biography

History of Economic Thought

INTRODUCTION

If the last third of the XIX century. represented in the theory of the West primarily by the names of A. Marshall and L. Walras, then the first half of this century was marked by the formation of the economic system of the outstanding English economist John Maynard Keynes (1883-1946). It was Keynes who brought Western economic theory out of a state of deep crisis, it was he who was able to provide the most convincing answer to the question of why there is a catastrophic overproduction and what should be done to prevent it in the future. Keynes largely contributed to the restoration of the prestige of Western economic science, undermined by the dramatic events of the "Great Depression" of the 1930s, and his teachings for several decades became a true guide to action for the governments of the most developed capitalist countries.

1. Biography of J. M. Keynes

John Maynard Keynes (KEYNES, JOHN MAYNARD) (1883-1946) is an outstanding scientist and economist of our time. He studied under the no less eminent scientist, the founder of the "Cambridge school" of economic thought A. Marshall. But, contrary to expectations, he did not become his heir, almost overshadowing the glory of his teacher.

A peculiar understanding of the consequences of the longest and most severe economic crisis of 1929-1933, which engulfed many countries of the world, was reflected in the completely extraordinary provisions of the book published by J.M. Keynes in London, entitled "The General Theory of Employment, Interest and Money" (The General Theory of Employment, Interest, and Money) (1936). This work brought him extremely wide fame and recognition, since it already in the 30s served as a theoretical and methodological basis for programs to stabilize the economy at the government level in a number of European countries and the United States. And the author of the book himself, who did not bend in his youth, which brought him a fair amount of stock market games, had the honor of being an advisor to the British government and participating in the development of many practical recommendations in the field of economic policy, which added to his scientific success and a significant personal fortune, and high social position. Indeed, in the entire parliamentary history of Great Britain, J.M. Keynes became the first among economists to be awarded the title of Lord by the Queen of England, giving the right to participate as a peerage in meetings of the upper house of parliament in London.

The biography of the son of the professor of logic and economics John Neville Keynes and the husband of the Russian ballerina Lydia Lopukhova JM Keynes as a scientist and public figure was as follows.

His extraordinary ability in mathematics, discovered back in the private school of Eton, became an important help to him during his years of study at King's College at the University of Cambridge, where he studied from 1902 to 1906. Moreover, he had the opportunity to listen to "special" lectures by A. Marshall himself, on whose initiative, at the University of Cambridge in 1902, the course "economics" was introduced instead of "political economy" in the tradition of the "classical school".

The postgraduate career of J.M. Keynes is a combination of activities in the field and public service, and journalism, and economics.

From 1906 to 1908 he was an employee in the Ministry (Directorate of Indian Affairs), having worked in the military department in the first year, and later in the department of income, statistics and trade.

In 1908, at the invitation of A. Marshall, he had the opportunity to read a course of lectures on economic problems at King's College, after which, from 1909 to 1915, he was engaged in teaching here on a permanent basis, both as an economist and as a mathematician.

Already his first economic article entitled "The Index Method" (1909) aroused lively interest; it is even celebrated with the Adam Smith Prize.

Soon enough, JM Keynes also received public recognition. So, from 1912 he became the editor of the "Economic Journal", keeping this post until 1945. In 1913-1914. was a member of the Royal Commission on Finance and Currency of India. Another appointment during this period was his confirmation as Secretary of the Royal Economic Society. Finally, the first book, "Monetary Circulation and Finance of India", published in 1913, also brought him wide popularity.

Then the popular in his country economist J.M. Keynes agrees to join the British Treasury, where from 1915 to 1919 he dealt with the problems of international finance, often acts as an expert in the financial negotiations of Great Britain, held at the level of the Prime Minister and the Chancellor of the Exchequer. In particular, in 1919 he was the main representative of the Treasury at the peace conference in Paris and at the same time the representative of the British Minister of Finance in the Supreme Economic Council of the Entente. In the same year, his book The Economic Consequences of the Versailles Peace Treaty, published by him, brought him worldwide fame; it is translated into many languages.

In this book, J.M. Keynes expresses a clear dissatisfaction with the economic policies of the victorious countries, which put forward, in accordance with the Treaty of Versailles, reparation demands against Germany that were unrealistic, as he believed, and also sought an economic blockade of Soviet Russia.

JM Keynes, who in fact left the Paris Peace Conference in protest, for a considerable period of time leaves the service in government agencies, focusing on teaching at the University of Cambridge and preparing scientific publications. Among them there are "Treatise on Probability" (1921), "Treatise on Monetary Reform" (1923), "The End of Free Enterprise" (1926), "Treatise on Money" (1930) and some others that brought the great scientist closer to the most important , published in 1936 to the work - "General theory ...".

In September 1925, Keynes visited the Soviet Union and was able to observe the experience of a controlled market economy during the NEP period. He presented his impressions in a small work "A quick glance at Russia" (1925). Keynes argued that capitalism is in many ways a very dysfunctional system, but if it is "wisely managed" it can be "more effective in achieving economic goals than any alternative system that has hitherto existed."

J.M. Keynes returned to active social and political activity at the end of 1929, when in November of the same year he was appointed a member of the government committee of finance and industry. During the Second World War (1940), he was appointed advisor to the British Treasury. In 1941 he was included in the British government delegation to participate in the preparation of materials on the lend-lease agreement and other financial documents with the US government. The following year, 1942, he was appointed to the post of one of the directors of the Bank of England. In 1944, he was approved as the main representative of his country at the Bretton Woods currency conference, which developed plans for the creation of the International Monetary Fund and the International Bank for Reconstruction and Development, and then was appointed one of the board members of these international financial organizations. Finally, in 1945, J.M. Keynes again heads the British financial mission - this time to the United States - to negotiate the end of Lend-Lease aid and agree on the conditions for obtaining a large loan from the United States.

Referring to the biography of J.M. Keynes, we can confidently assert that now he could also refer to himself the words he wrote at the end of the General Theory ... that “the ideas of economists and political thinkers - and when they are right and when they are wrong are much more important than is commonly thought. In reality, they alone rule the world. "

2. Methodological foundations of the study by J. M. Keynes

Keynes's predecessors, who developed the functional connections of the reproduction process and the positions of which he develops further, can be considered the so-called Stockholm school - B. Umen, E. Lindahl; F. Kahn in Great Britain and A. Hunt in Germany. However, only Keynes clearly formulated a new direction of economic theory - the theory of state regulation of the economy.

Unlike other bourgeois economists who focused their attention on the activities of individual economic units, Keynes significantly expanded the scope of the study, making an attempt to consider the national capitalist economy as a whole, to operate mainly with aggregate categories - consumption, savings accumulation, investment, employment, i.e. e. values \u200b\u200bthat determine the level and rate of increase in national income. But, the main thing in Keynes's research method was that, analyzing the aggregate national economic values, he strove to establish cause-and-effect relationships, dependencies and proportions between them. This marked the beginning of such a direction of economic science, which today is called macroeconomic. "Keynes should probably take a permanent place in the history of economic thought as the first person to develop a fully grounded theory of what we now call macroeconomics."

Many of the mistakes of the economists of the Precaysian era stemmed from attempts to provide microeconomic answers to macroeconomic questions. Keynes showed that the economy of a country as a whole cannot be adequately described in terms of simple market relations. Keynes was responsible for the discovery that the factors governing a "large" economy are not simply an enlarged version of the factors governing the behavior of its "small" parts. The difference between macro and micro systems predetermines the difference in methods of analysis.

The innovation of the economic doctrine of J.M. Keynes in methodological terms was manifested, firstly, in the preference of macroeconomic analysis to the microeconomic approach, which made it the founder of macroeconomics as an independent section of the theory, and, secondly, in substantiation (proceeding from a certain “psychological law”) the concept of the so-called "effective demand", that is, potential demand and stimulated by the state. Relying on his own "revolutionary" research methodology at that time, J.M. Keynes, in contrast to his predecessors and contrary to the prevailing economic views, argued the need to prevent wage cuts with the help of the state as the main condition for eliminating unemployment, as well as the fact that consumption due to the psychologically conditioned propensity of a person to save, income grows much more slowly.

It should be noted that the research methodology of J.M. Keynes takes into account the important influence on economic growth and non-economic factors, such as the state (stimulating consumer demand for means of production and new investments) and human psychology (predetermining the degree of conscious relationships between economic entities). At the same time, Keynesian doctrine is predominantly a continuation of the fundamental principles of the neoclassical direction of economic thought, since both J.M. Keynes himself and his followers (as well as neoliberals), following the idea of \u200b\u200b"pure economic theory", proceed from the priority the economic policy of society, first of all, economic factors, determining the quantitative indicators that express them and the relationship between them, as a rule, on the basis of the methods of limiting and functional analysis, economic and mathematical modeling.

3. Basic provisions of the "General theory of employment, interest and money"

The General Theory of Employment, Interest and Money is the main work of J. M. Keynes. The ideas of this book were received with enthusiasm in the circles of the bourgeoisie. The book was called the "Keynesian Bible." Western economists even proclaimed a "Keynesian revolution" that will finally defeat Marxism. And the American historian of economic thought Seligman placed Keynes's book next to Smith's Wealth of Nations and Karl Marx's Capital.

Keynes's doctrine became a kind of reaction to the neoclassical school and marginalism, which prevailed in economics before him, and to which he himself once belonged as a student of A. Marshall and the Cambridge School. The economic crisis of 1929-1933 sharply changed the views of J. Keynes, he decisively and recklessly breaks with the views of A. Marshall, his ideas of free trade and expresses the idea that capitalism of the time of free competition has exhausted its possibilities.

In setting out his own system of views, Keynes found it necessary to criticize a number of prejudices rooted in contemporary Western economic science. One of these prejudices, the inconsistency of which during the years of the "Great Depression" became quite obvious, was JB Sey's law of markets. In this regard, J. M. Keynes wrote: "Since the days of Say and Ricardo, classical economists have taught: supply itself generates demand ... that the entire cost of production should be spent directly on the purchase of products." That is, according to the views of Say, which were also shared by the neoclassicists, the commodity producer sells his product in order to buy another, that is, each seller necessarily becomes a buyer later. Consequently, the supply automatically generates the corresponding demand, the general overproduction is impossible. Only the overproduction of certain goods, in certain sectors (partial overproduction), is possible, which is then quickly eliminated.

Keynes rejected this position, pointing out that the capitalist economy is based not only on the exchange of goods for goods, it is mediated by the exchange of money. Money is not just a veil thrown over barter deals. The monetary factor plays a very active independent role: by accumulating banknotes, performing the function of saving, economic agents reduce the total volume of effective demand. Thus, general overproduction can and does arise.

In criticizing the doctrine of J. B. Sey, J. Keynes pointed only to the external cause of the crises of overproduction, while the deeper causes of crises, generated by the specifics and contradictions of capital accumulation, remained unexplored. Nevertheless, the criticism of Say's "law of markets" led Keynes to an important conclusion: the volume of production of national income, as well as its dynamics, are determined not directly by the factors of supply (the amount of labor, capital used, their productivity), but by the factors of effective (effective) demand.

In contrast to Say and the neoclassicists, who believed that the problem of demand (that is, the realization of a social product) is not essential and resolved by itself, Keynes placed it at the center of his research, made it the starting point of macroanalysis. Keynesian demand-side factors are decisive in explaining total employment.

The main provision of the general theory of employment is as follows. Keynes argued that with an increase in employment, the national income increases and, consequently, consumption increases. But consumption grows more slowly than income, because as incomes grow, people become more “hungry to save”. “The basic psychological law,” writes Keynes, “is that people tend to increase their consumption as income rises, but not to the same extent as income increases.” Consequently, according to Keynes, the psychology of people is such that income growth leads to an increase in savings and a relative reduction in consumption. The latter, in turn, is expressed in a decrease in effective (actually presented, not potentially possible) demand, and demand affects the size of production and thus the level of employment.

Insufficient development of consumer demand can be compensated by an increase in the cost of new investments, i.e. an increase in production consumption, an increase in demand for means of production. Total investment plays a decisive role in determining the size of employment. According to J.M. Keynes, the amount of investment depends on the incentive to invest. The entrepreneur expands his investment until the declining "entrepreneurial efficiency" of capital (profitability measured by the rate of return) falls to the level of interest. The source of the difficulty lies in the fact that, according to Keynes, the return on capital is falling, and the level of interest remains stable. This creates narrow boundaries for new investment and therefore for employment growth. Keynes explained the decrease in the “marginal efficiency of capital” by the increase in the mass of capital, as well as the psychology of capitalist entrepreneurs, their “tendency” to lose faith in future income.

According to Keynes's theory, the total amount of employment is determined not from the movement of wages, but from the level of production of "national income", that is, from the effective aggregate demand for consumer and capital goods. The latter tends to lag behind, to imbalance, which makes full employment under capitalism an exceptional phenomenon.

JM Keynes worked hard to prove the fallacy of using wages as a treatment for unemployment. Regarding the economic consequences of wage cuts, Keynes thought this: first, the demand for labor and the level of employment are determined by real, not nominal, wages, as the classical economists taught; secondly, a decrease in nominal wages is always accompanied by an equivalent decrease in real wages, since prices in a competitive environment are determined by direct marginal costs, which in the short term consist exclusively of their labor costs; third, since real consumption is a function of only real income and the real propensity to consume is less than one for workers, after a decrease in wages they will spend less on consumption than before; Fourth, although labor costs and prices have fallen, the next cut in the interest rate will not be able to stimulate investment, so a decrease in wages will only lead to a decrease in aggregate demand, while unemployment will either increase or, at best, remain at the same level. This is why, Keynes argues, reducing wages, even if it can be done, cannot reduce unemployment.

In practice, such a situation is impossible, since workers will not sacrifice their own wages for the sake of employment of some unknown unemployed. The wisest policy, Keynes writes, is to maintain a consistent overall level of money wages.

The devastating conclusion of the Kensian theory is that under capitalism there is no single mechanism to guarantee full employment. Keynes argues that the economy can be balanced, that is, it can achieve equilibrium in the total volume of production with a high level of unemployment and inflation. J. Keynes recognizes that unemployment is an organic phenomenon of capitalism, which "inevitably accompanies modern capitalist individualism" and is conditioned by the organic shortcomings of the system of free competition.

Full employment (casual rather than regular) is not automatically secured. “Effective demand combined with full employment is a special case that only occurs if the propensity to consume and the desire to invest are in a certain ratio ... But it can only exist when current investment (accidentally or intentionally) determines the demand , just equal to the surplus of the aggregate supply price of products in comparison with the costs of society for consumption in conditions of full employment. "

In "General Theory ..." Keynes rejected the classical theory of the demand for money, giving priority to his own theoretical constructions, in which the concept of the rate of interest plays the main role. He considered money as one of the types of wealth and argued that the part of asset portfolios that economic agents want to keep in the form of money depends on how high they value the property of liquidity. Therefore, the Keynesian theory of demand for money is called the theory of "liquidity advantage". Keynes's liquidity is the ability to sell any property at a maximum price per unit of time. When buying assets, economic agents give preference to more liquid ones due to fears of significant financial costs due to a decrease in business activity.

People, for a number of reasons, are forced to retain at least part of their wealth in the form of liquid monetary assets, such as cash, and not in the form of assets that are less liquid, but such that give income (for example, bonds). And it is precisely this speculative motive that forms an inverse relationship between the amount of demand for money and the rate of interest on loans: the demand for money gradually increases with the fall of the rate of interest on the securities market.

Thus, J. Keynes considers the demand for money as a function of two variables. In other equal conditions, an increase in nominal income generates an increase in the demand for money, which is due to the existence of the transactional motive of caution. Lowering the lending rate also increases the demand for money through speculative motives.

J.M. Keynes was a supporter of the presence of a large amount of money in circulation, which, in his opinion, had little effect on reducing the interest rate. This, in turn, would stimulate a decrease in liquidity caution and an increase in investment. According to Keynes, high interest is an obstacle to converting monetary resources into investment, that is, he advocated the need to reduce the level of interest as much as possible as a way to encourage the use of savings for production purposes.

It is from Keynes that the concept of deficit financing, or artificially pumping money into the economy, the creation of "new money", which is in addition to the general flow of costs and, thereby, compensates for insufficient demand, employment and accelerates the increase in national income, originates to a greater extent. Deficit financing in practice means abandoning a balanced budget policy and a systematic increase in public debt, which in turn provides for the use of inflationary trends as a way to support business activity at a high level.

The main strategic direction of the state's economic policy, according to Keynes, should be to support investment activities, to promote the maximum transformation of savings into investment. It was the decrease in the level of investment activity that J. M. Keynes and his followers considered the main reason for the "Great Depression" of the 1930s. In order to overcome the main weakness of the capitalist economy - insufficient propensity to invest - the state must not only create the most favorable conditions for investment activities of entrepreneurs (lower interest rates, deficit financing of inflationary price increases, etc.), but also take on the functions of a direct investor.

Keynes also calls the fiscal policy, which regulates the amount of net taxes and government purchases, the most important measures that can compensate for the lag in demand and activate the "propensity to consume".

J. Keynes and his supporters hoped to mitigate the negative consequences of business cycles through the systematic implementation of countercyclical policies. In their opinion, in the event of a threat of an economic downturn, the government can increase taxes, reduce transfer payments, and postpone planned government purchases.

When characterizing the Keynesian model of macroeconomic equilibrium, one should definitely pay attention to the theory of the multiplier. An important point of this model is that the change in the equilibrium level of the national income is greater than the change in the initial level of autonomous costs that caused it. This concept in macroeconomic theory is known as the multiplier effect. Its effect can be clearly shown by the example of the relationship between investment growth and national income: an increase in capital investment leads to an increase in the production of goods and services. But Keynes considers this dependence through the prism of the formation of individual monetary income. The logic of this approach is as follows: the national income consists of individual income, therefore, it is necessary to find out how investments affect the value of these individual incomes.

In the end, each investment turns into the sum of the income of individuals, and whenever these incomes are spent, the increase in national income over a certain period of time would equal, as we have already defined, the increase in investment. But in practice, the income received is spent and turns into new income, which, in turn, is again spent, etc. Ultimately, the increase in national income after a certain time will be much larger than the increase in initial investment, that is, it will become the multiplied value of initial investment. The multiplier itself, or the multiplier itself, depends on how much of its income the society spends on consumption: the higher the propensity to consume, the greater the multiplier, and vice versa.

The cost multiplier is defined as the ratio of deviations from the equilibrium income to the initial change in costs that caused this change:

where? Y - income growth;

I - the increase in investment, which led to the increase in income;

r - "marginal propensity to consume";

This is the magnitude of the multiplier, which is expressed through the “marginal propensity to consume”.

"In the given circumstances," Keynes argues, "a certain ratio between income and investment can be established, which should be called a multiplier." Based on this formal algebraic relationship, Keynes argues that investment growth automatically leads to an increase in employment and to a proportional increase in national income, and the coefficient of proportionality is the value of the multiplier.

Similarly, the multiplier effect is manifested in relation to other types of costs, in particular, government spending. With insufficient demand, an increase in government spending leads to an increase in economic activity. At the same time, covering the difference between supply and demand does not require a full equivalent increase in government spending, precisely due to the presence of the multiplier effect.

Starting with J.M. Keynes, the problem of factors that determine the value of consumption and accumulation as the main components of national income, the relationship between them and national income, is brought to the fore.

CONCLUSION

The value of the work of JM Keynes "Total thorium of employment, percent of money" for the development of economic thought is invaluable. Its main idea is that the system of market economic relations is by no means perfect and self-regulating, and that the maximum possible employment and economic growth can only be ensured by active state intervention in the economy. In fact, this idea triggered the so-called Keynesian Revolution, which ended the overwhelming dominance of laises faire, laises passer — that fervent appeal of eighteenth-century economists to the state. It was a real revolution in economic thought: a sudden and incredibly rapid transformation of the entire theoretical sphere, including the metaphysical “vision” of the economic process, from which all previous theories began. Keynes fostered the belief that governments can eliminate depression and unemployment by regulating government spending and taxes.

The importance of Keynes's theory as the initial basis for the development of the theory of macroeconomic dynamics is determined by many significant points:

macroeconomic research method;

he highlights the problem of implementation, or "effective demand", which marked the beginning of the development of the dynamic theory of the cycle;

his theories of national income in general and the multiplier were organically incorporated into post-Keynesian theories of economic growth;

he combined economic theory and economic policy into a single whole, which is designed to help support the life of the capitalist system of the state.

Keynes's theory bore the imprint of the depressive economy of the 1930s, and this affected not only the absolutization of the problem of implementation, a negative attitude to savings, but also an underestimation of the forms of government intervention.

Since the mid-70s. a serious crisis of Keynesianism began. The crisis of the Keynesian concept of state regulation is caused by numerous factors, among which, in the first place, there are technological and social shifts generated by the scientific and technological revolution, as well as the comprehensive internationalization of production and capital. The first factor led to a gigantic expansion of the range of products with its extreme variability, led to an unprecedented mobility of production and financial proportions, increased the proportion of small and smallest enterprises. In these conditions, the role of incentives and levers of spontaneous market regulation has objectively increased, while the importance of state regulation has relatively decreased. The internationalization of the economy of the leading capitalist countries acted in the same direction, reducing the effectiveness of national means of influencing the economy.

It is impossible not to see that over a number of decades Keynes and his followers provided the leading circles of the West with a new theory of macroanalysis and a corresponding economic formula, which made a significant contribution to the economic upsurge of the 1940s and 1960s. and in the general long-term stabilization of capitalism.

LITERATURE

History of Economic Studies: Pidruchnik / A. Ya.Korniychuk, N.O. Tatarenko, A.K. Poruchnik, ta in; Ed. L. Ya.Korniychuk, N.O. Tatarenko. -K .: KNEU, 1999.-564s.

I.E.U .: Textbook for econ. specialist. universities / Ryndina M.N., Vasilevsky E.G., Golosov V.N. et al. -M .: Higher school, 1983. -559s.

Yadgarov Ya. S. IEU. -M .: Economics, 1996. -249s.

Keynes JM General theory of employment, interest and money. M .: Progress, 1978