Developedby the economist Keynes, Keynesian economics relate to the classicalview points of the economy especially in solving economic processesof recession. Keynesian economics are economic principles andmacro-economic school that introduces the view of solving theeconomic problems through demand (Dimand6)Keynesian takes the view that the economy is driven demand andtherefore assumes that demand and public consumption has a higherposition than any other macro-economic factor. In particular,Keynesianism views aggregate demand of the economy as the mostimportant element of solving the economic problems that areexperienced by economies during recession (Dimand117).However, the Keynesian view aggregate demand as a factor equal to theproduction of the economy.
ToKeynesians, aggregate demand is the sum total of all the demandquantities of the people in the economy, a total that reflects acountry’s demand for all products and services. However, theeconomy is influenced by several factors in the macro-economic front.These factors influence economic situations of production, employmentand national consumption (Keynes135).This is why the Keynesian economics served as the main guidelines ofthe economic practice during the great recession and the time afterthe world war two a period when many economies were down inproduction, consumption and investment. Due to low variables in thesefactors, economic production was low and affected the performance ofthe macro-economic elements. This led to a need for a guideline foreconomies in regard to the balance between public policy and privatesector.
TheKeynesian economic argue that mixed economies are the mostappropriate economies to solve any macro-economic problem relating torecession. This made the recommendation for government control inaddition to the private sector freedom in the economy. Keynesianeconomics hold that although the private sector is important, somedecisions in the sector can lead to inefficiencies in themacro-economic scene. Some of private decisions lead to inefficientmacroeconomic consequences that reflect the active responses from thepublic policy as well as the government (Keynes159).These responses would involve be elements like monetary policies bythe governments and policies to restore the economic cycle.
Keynesianeconomics became a bridge to different views in regard to positionsof various macro-economic players. With the support of the governmentpolicy and recognition of the private sector, Keynesian economicsalso held that demand and consumption is influenced by both consumersand producers. Before the development of this viewpoint, it was heldthat consumer needs are supreme in a macro-economic set up. This isbecause there was a classical view that consumers hold a biggereconomic position than producers. However, Keynesian economics holdthat all the different views of the economic situations should becentrally handled by public policy.
Keynesianeconomics views macro-economic structural problems as resultants ofimbalances between the main economic factors especially demand. Forinstance, Keynesian views that unemployment is not a result oflaziness of individual problems but a result of imbalanced demand inthe economy that cannot handle increased consumption. Keynesianeconomies also influence the conventional way of handling economicinadequacies especially those brought up by global recession. Theview point tried to create greater awareness of structural problemsin economies such as unemployment. This led to a higher considerationby the economies on structural economic factors like employment,savings investment and public spending.
Dimand,William. Theorigins of the Keynesian revolution.Stanford: Stanford University Press.
Keynes,John. TheGeneral Theory of Employment, Interest and Money.New York: BN