Keynes Essay Example | Topics and Well Written Essays - 3250 words

Keynes - Essay Example nce these conflicts usually come to an end †¦ It is only in the field of economics that the state of war seems to persist and remain permanent.† (Dillard, 1948) This observation by Knut Wicksell is perfectly applicable to the impact and interest Keynesian economics has generated in the last seventy years or so. The rest of this essay is an attempt to assess the impact made by the Keynesian school of thought in the context of international economy. John Maynard Keynes’ seminal work, the General Theory, has had a profound effect on the way macroeconomic thought had evolved ever since. It divided the fraternity of economists into two groups. On one side were those who believed that a capitalist market economy does not need governmental interference as it is intrinsically regulated by underlying price mechanisms. The other group questioned this supposed self-equilibrating economy’s ability to minimize unemployment rates. This was a widely debated topic during the 1950s and 1960s. Ironically, economists resorted to the neoclassical analysis for settling this argument. As it stands, some form of reconciliation seem to have been achieved between the two viewpoints, but not a convincing one. The economic mechanism behind unemployment rates is of interest to both politicians and businesses alike (Dillard, 1948). In this context, Keynes had made a significant contribution in deciphering and helping understand these key ec onomic processes that concern public representatives and common citizens. To quote, â€Å"The theoretical debate relating to the consistency of macroeconomic equilibrium with an excess supply of labour appeared to have been won by supporters of the invisible hand view, but as a practical matter it was accepted that the self-righting properties of the market were too weak and needed the helping hand of fiscal and monetary policies in order to achieve and maintain the primary stated objective of full employment. Keynesians of all persuasions