Who was Keynes? How did his theories came to be in the 1900's?

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enotechris eNotes educator| Certified Educator

Englishman John Maynard Keynes (1883 – 1946) was an economist who believed in the circular flow of money, or that the spending of money is what kept the economy flowing. One person's spending will go towards another person's earnings, who will then spend, etc.

During the Great Depression in the 1930's, people stopped spending their money while the economies around the world were stagnant. It was then that his economic philosophy gained in favor; governments, by instituting large amounts of spending, would thereby "prime" the economic pump of circulating currency.

Thus the government could regulate the economy by printing and spending more money, which was a radical departure from Capitalism, which advocated that the economy, if left alone, would in time right itself.

Keynesian economic philosophy (also known as macroeconomics) advocates a massive redistribution of wealth throughout the population, so that the population may continue to spend, which will increase economic growth. Unfortunately, part of that requires that parts of the population remain unemployed.