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Economics in PerspectiveA Critical History$
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John Kenneth Galbraith

Print publication date: 2017

Print ISBN-13: 9780691171647

Published to Princeton Scholarship Online: May 2018

DOI: 10.23943/princeton/9780691171647.001.0001

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John Maynard Keynes

John Maynard Keynes

(p.241) Chapter 17 John Maynard Keynes
Economics in Perspective

John Kenneth Galbraith

Princeton University Press

This chapter examines the economic ideas of John Maynard Keynes. According to Keynes, the modern economy does not necessarily find its equilibrium at full employment; it can find it with unemployment. This is the underemployment equilibrium, in which Say's Law no longer holds; there can be a shortage of demand. The government can and should take steps to overcome this shortage. The chapter discusses in more detail the underemployment equilibrium, the repeal of Say's Law, the call for government spending uncovered by revenues to sustain demand—all of which made up the so-called the Keynesian Revolution. In particular, it considers Keynes's central prescription that there should be government expenditures financed by borrowing to sustain demand and employment. It also analyzes Keynes's criticism of Winston Churchill, his A Treatise on Money (1930), and the economic discussion that followed the publication of The General Theory of Employment Interest and Money (1936).

Keywords:   unemployment, John Maynard Keynes, underemployment equilibrium, Say's Law, Keynesian Revolution, government expenditures, borrowing, employment, Winston Churchill, A Treatise on Money

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