Influence of Keynes

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Influence of Keynes

To explain, We must go back and pay tribute to another French economist, J. B. Say, who lived from 1767 to 1832.

Say was the man who brought the ideas of Adam Smith to France.

But he added a very important idea of his own, Say's Law of Markets.

This held that whenever something was produced and sold, someone, of necessity, received in wages, profit or rent the wherewithal to buy that product.

Every sale created the income and therewith the demand, in some form or other, for the product that was sold.

Even if the recipients of profits or rents didn't spend what they received, their savings would be borrowed by someone else at some rate of interest.

And if savings weren't borrowed, prices would fall so that purchasing power would still be sufficient.

There would always thus be enough demand for the product.

So there could never, never in the economic system be a shortage of purchasing power.

Learn More About Commodity And Labour

The Neo-classical System

This is still how many economists perceive reality today in 2015. Or, more precisely, without their quite believing it, it is still what they teach to the young. The major modification came in the Great Depression. Then it was seen and accepted that the equilibrium could exist with a very great deal of unemployment. The equilibrium system was no longer thought to be quite the best in the best of all possible worlds.

John Maynard Keynes was the great hero of our generation. But it's always important to see first what Keynes didn't do. He did not attack the notion of the motivating power of self-interest.... see: The Neo-classical System

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