To what extent was John Maynard Keynes' principal contribution to Essay

To what extent was John Maynard Keynes' principal contribution to political economy a re-conceptualisation of optimal relation - Essay Example This is often the case between Keynesian economists and other reformists’ theories. Keynesianism or Keynesian economics is an economic theory based on the ideas John Maynard Keynes, as put forward in his book The General Theory of Employment, Interest and Money, available in 1936 as an answer to the Great Depression of the 1930s. Keynesianism advocates for a mixed economy, in which the state as well as the market or the private sector have both significant functions to operate. It should be noted that the advent and eventual rise of Keynesianism saw the collapse of laissez-faire economics which was of the view that both the state and the market could function, each on its own. Keynesianism also emphasizes of the significance of aggregate demand for goods as the lashing factor of the economy, particularly in periods of recession. For this reason, government plans or policies could be made use of to promote demand at a macro level, to counter high unemployment as well as deflati on. A significant conclusion of Keynesianism is that there is not a tough and automatic propensity for output and employment to move to full employment levels. Effective demand is therefore the fundamental idea underlying Keynesianism. Post Keynesian Criticisms After Keynes, a good amount of concentration has been dedicated to the problem of probability and uncertainty in Keynes’s General Theory by a set of economists frequently called ‘Post-Keynesians’. Over the years, there have risen a lot of economic theories and propositions which no longer see Keynesianism as a spur. As Chick and Tily (2004) mentions in mainstream economics, Keynes is dead1. Leijonhufvud (2008)2 gives explanations on the hypothetical blindness of the economic profession vis a vis interpretations from Keynesianism of the present financial crisis to conventional reliance on market efficiency theory, expectations based on reason as well as the representative agents3. Wray and Teymogne (2008) m ake us reminiscent of the fact that â€Å"the efficient market hypothesis, like all approaches derived from the old neoclassical theory, relegates money and finance to the sidelines.4† A latest volume, cataloguing the commentary of twelve prominent economists on Keynes’s Economic possibilities for our Grandchildren5, offers an outstanding incident to assess the space between conventional Keynesian views of capitalism with ‘love of money’. Keynes’s disapproval for the money drive and the demanding â€Å"purposeful money-makers (who) may carry all of us along with them into the lap of economic abundance† is dismissed as the befuddled and elitist phrase of moralistic narrow-mindedness and an ideal case in point of an irrational approach to economics. For example, Boldrin and Levine (2009) challenge Keynes for not being clear between real and monetary factors6. On his part, Phelps (2009) considers Keynes condescending approach towards the pursuit for wealth as unusual for an economist7, representative of anti-materialism as well as obscure to every scholastic satisfaction in business. Ohanian (2009) illustrates Keynes’ approach as that of a judgmental and critical social commentator who uses his economist’s pulpit to make a rather puritan-based vision of the future8. Fitoussi (2009) acknowledges that Keynes’ negative response to capitalism, with its acquisitiveness and inconsiderate conduct, is not so badly founded9. He however goes on to coin Keynes’