Keynes’ Theory of Employment and Income

Keynes’ Theory of Employment and Income

Keynes’ book, “The General Theory of Employment, Interest and Money” published in 1936 is a highly significant work that marked a turning point in the development of modern economic theory.

The theory of Keynes was against the belief of classical economists that the market forces in capitalist economy adjust themselves to attain equilibrium. Keynes not only criticized classical economists but also advocated his own theory of employment.

Keynes’ theory was a general theory as it tried to explain all types of situations, i.e. not only equilibrium level of employment but also the concept of full employment as well as the possibility of underemployment.

Keynes theory of employment was based on the view of the short run. According to him, the factors of production such as capital goods, supply of labour, technology and efficiency of labour remain unchanged while determining the level of employment.

John Maynard Keynes was one of the most influential economists of the 20th century. He was born in Cambridge in1883. In addition to his work as an economist he held position as civil servant a director of the Bank of England, and leader of British delegation of negotiators at the Bretton Woods conference at points in his career. Economic theory based on his idea is known as Keynesian economics, and remain highly influential today, particularly in the field of macroeconomics.