John Maynard Keynes, The Social Philosophy Towards Which the General Theory Might Lead

John Maynard Keynes, The Social Philosophy Towards Which the General Theory Might Lead

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John Hawkins Policy Ideas in the History of Economic Thought Mario Rizzo October 18, 2010 J.M. Keynes: The Social Philosophy Towards Which the General Theory Might Lead Keynes sees the free market as a system that has chronic problems achieving its intended aims of full employment and growth of capital, most of which arise from his paradox of thrift. A low propensity to consumer brought on by uneconomically high- interest rates that evolve out of a “rent” on capital dampen aggregate demand and, thusly, dampen aggregate supply (production) as well. In order to ameliorate this problem, or optimistically, to solve it, the government must create a centralized bank (in Keynes’ words, take over the “Instruments of production”) to lower interest rates so that both consumption (demand) and investment (supply) may be increased. He defends this as a means towards individualism (the only means) without witch individualist (capitalist)
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Unformatted text preview: societies would collapse under the political pressures of their own creation, as markets would fail time and time again. His main contention is that the inefficiencies of the purely capitalistic markets leads to unjust outcomes, and that adequate demand should bring average fortune to the average skill. He also contends that this system of centralized banking, because of decreased political pressures, would be advantageous towards peace (saying nothing of the governments newly created system for funding the military). He also states that this new approach to the free enterprise system would foster better relations between nations, as one states economic woes would not affect the others. The ending paragraph could be construed as prophetic, for Keynes ideas are still with us, perhaps having already overwhelmed our vested interests....
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John Maynard Keynes, The Social Philosophy Towards Which the General Theory Might Lead

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