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Did John Maynard Keynes believe that it was the responsibilty of the government to use...

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lilylee | Student, College Freshman | Salutatorian

Posted July 28, 2013 at 6:55 PM via web

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Did John Maynard Keynes believe that it was the responsibilty of the government to use its powers to increase production, incomes and jobs?

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kipling2448 | (Level 1) Educator Emeritus

Posted July 28, 2013 at 7:47 PM (Answer #1)

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John Maynard Keynes absolutely believed that the government had a role -- and a major role, at that -- in the economy and in terms of how jobs are created.  Keynes was a firm believer that the markets, left to their own devices, could not be counted upon to provide employment opportunities, and that some level of government intervention in the marketplace was needed to boost employment.

Keynes was the anti-classicist in the study of economics.  From the United States' inception to the outbreak of the Great Depression, classic economic thought in the United States held that free market capitalist economic policies would provide full employment.  The onset of the depression, combined with his study of earlier economic recessions, convinced Keynes of the requirement for an active governmental role in the economy.  In his 1936 study The General Theory of Employment, Interest and Money, Keynes argued strongly for government and corporate spending, rather than savings or, as he called it, "Thrift," as an elixer for weaknesses in production and its associative creation of jobs: "It has been usual to think of the accumulated wealth of the world as having been painfully built up out of that voluntary abstinence of indiviuals from the immediate enjoyment of consumption, which we call Thrift.  But it should be obvious that mere abstinence is not enough by itself to build cities or drain fens...It is Enterprise which builds and improves the world's possessions...If Enterprise is afoot, wealth accumulates whatever may be happening to Thrift; and if Enterprise is asleep, wealth decays whatever Thrift may be doing."

John Maynard Keynes believed fervently in the inherent instability of markets, and that they could not be relied upon to provide employment.  Governments alone possessed the means and the authority necessary to ensure that production would remain high, and that employment and income would follow.  The key, he argued, was government spending and government influence over the direction of industry -- in other words, that government had a responsbility to set industrial policy so that inherently unstable markets alone did not dictate national welfare.

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