Introduction

John Maynard Keynes was a British economist from Cambridge. Nowadays, he is considered the father of macroeconomics. He never used the term "neoclassical" and considered them "just" classics.

The Great Depression, a crisis in the 1930s, changed his mind and led him to challenge the definitions of the neoclassical dogma. The neoclassical model, which is supposed to be balanced and provide full employment, was not verified after this crisis. Keynes argued that Say's Law is wrong: he studied (global) demand instead of (global) supply. He argued that wages (and thus the cost of labor) are rigid and not flexible. They cannot vary as easily as neoclassicals claim.

He defended the implementation of fiscal & monetary policies. The State has to intervene.

His most famous book is The General Theory of Employment, Interest and Money (TG), published in 1936. Western economies largely followed Keynes' advice. Almost all capitalist governments used Keynes' writings to reduce the impact of the Great Depression.

He was not a true liberal in the classical sense: he thought that capitalism is the best of the worst. He actively criticized capitalism while not stating that another system is better.

For him, Economics is a moral science. He was against the "mathematical quackery" of the neoclassicals as it loses the moral aspect of the economy. He was also critical of Jan Tinbergen, the first winner of the Nobel Prize in Economics and founder of econometrics. In his books, he proposed tests for cycles. Keynes was very critical of quantifying cycles in equations. He compared econometrics to alchemy, viewing it as an aberration.

Politically, he was a member of the Liberal Party and believed in the New Liberalism school of thought, focused on social justice to achieve economic efficiency and political freedom.

How did Keynesian macroeconomics revolutionize economic analysis?