John Maynard Keynes Essay

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What was Keynes' theory and how did he influence the world| economy in the 19th century? Before the 1930s the US economy had been ruled by the forces of supply and demand and with as little government interference as possible and it seemed if everything went smooth. But in reality the system favorite the middle- and the upper-class, so about half of the American population did not participate in the economic growth. Wealth and purchasing power were uneven distributed and over production in industry and agriculture became a severe problem. In addition, speculation in stocks had driven the value of the stocks up to unrealistic heights. All this is said to be some of the causes for the Great Depression that reflects the 1930s. What…show more content…
What was missing was purchasing power. If the workers got money then they would spend it and the money would change owner and eventually create willingness to invest. But the government had to start the process, and use money, increase the salary and take up loans even though it could lead to deficit budgets. The most important thing was to get people back at work. It is clear to see that President Franklin D. Roosevelt and the U.S. administration adopted Keynes' theory, known as the "General Theory", in their recovery plan, "New Deal". The government became actively involved in creating jobs and economic activity. One example is the Tennessee Valley Authority (TVA), where the government built reservoirs and power stations. Women were now also allowed into the government and the administration. The goal was to get one of the family members a job. To get better control over the economy Roosevelt got the Congress to pass a law which was called the National Recovery Act. Its intention was to regulate prices and wages. Even though USA had adopted his theory, it was until the postwar era Keynes' theory about an active government really got approval in the industrialized countries. Even when conservative governments were in control they kept their economies under close surveillance. In Britain, France and Italy the postwar governments nationalized number of the
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