Changes

==Keynesian Economics==

==Keynesian Economics==

Keynesianism centres around the concept of total spending within an economy, what Keynes terms [[aggregate demand]] and its effect upon output and inflation. In the eyes of Keynesians, the [[free market]] does not necessarily tend toward [[full employment]]. Periods such as this were witnessed in the 1930's during the [[Great Depression]], and in the eyes of Keynes could only be solved by increasing the level of expenditure within the economy. In order to do this Keynes advocated increasing government expenditure, frequently in the form of deficit spending, in order to extricate the economy from recession. At the same time Keynes argued that if expenditure within the economy was too high and the economy was at full employment then this would inevitably lead to inflation, as such in periods such as this Keynes advocated tax increases, and a reduction in government expenditure in order to "deflate" the economy.

Keynesianism centres around the concept of total spending within an economy, what Keynes terms [[aggregate demand]] and its effect upon output and inflation. In the eyes of Keynesians, the [[free market]] does not necessarily tend toward [[full employment]]. Periods such as this were witnessed in the 1930's during the [[Great Depression]], and in the eyes of Keynes could only be solved by increasing the level of expenditure within the economy. In order to do this Keynes advocated increasing government expenditure, frequently in the form of deficit spending, in order to extricate the economy from recession. At the same time Keynes argued that if expenditure within the economy was too high and the economy was at full employment then this would inevitably lead to inflation, as such in periods such as this Keynes advocated tax increases, and a reduction in government expenditure in order to "deflate" the economy. In Keynes view this can level off the peaks and fill in the valleys, solving the problem of depressions.

As is evident, Keynesian thinking went on to influence the fiscal policy of many governments, as well as influencing a generation of economists. "We are all Keynesians now," said President Richard Nixon in 1969.

As is evident, Keynesian thinking went on to influence the fiscal policy of many governments, as well as influencing a generation of economists. "We are all Keynesians now," said President Richard Nixon in 1969.

Keynesianism became the dominant policy in the U.S., Britain and Canada, and a few smaller countries, after 1945. The economic disciples were themselves too young to take much credit--not until the 1960s would they be top government advisers.  However Keynesianism suited the needs of many key players. To politicians it gave a formula that demonstrated they were doing something to avoid another Great Depression.  Liberals and labor welcomed the high government spending. Businessmen were relieved that Keynesianism a barrier to nationalization of industry  or government ownership and socialism. Indeed the Keynesians paid little attention to control or regulation of specific industries; that was unnecessary said the Keynesian model, because tax rates and government deficits or surpluses were paramount.

Keynesianism became the dominant policy in the U.S., Britain and Canada, and a few smaller countries, after 1945. The economic disciples were themselves too young to take much credit--not until the 1960s would they be top government advisers.  However Keynesianism suited the needs of many key players. To politicians it gave a formula that demonstrated they were doing something to avoid another Great Depression.  Liberals and labor welcomed the high government spending. Businessmen were relieved that Keynesianism a barrier to nationalization of industry  or government ownership and socialism. Indeed the Keynesians paid little attention to control or regulation of specific industries; that was unnecessary said the Keynesian model, because tax rates and government deficits or surpluses were paramount.

==Criticism of Keynes and Keynesian Economics==

==Criticism of Keynes and Keynesian Economics==