Keynes to the Rescue?

John Maynard Keynes (pron. 'Caines') was an English economist in the early 20th Century. His ideas influenced the policies of various governments and his views changed how people studied economics. At the moment, there seems to be a revival in his way of thinking in how to deal with the recession. You see, he wrote a lot about the Great Depression of the 1930s and did not believe in laissez faire economics where the government intervenes little or not at all in the economy. In fact, he believed government fiscal policy was the best way to regulate the economy. He argued, that if the government increased borrowing and spent the money on public spending projects during a recession, that would stimulate demand and increase employment. This was down to what he termed 'The Multiplier Effect', i.e. any injection of money into the economy will create income greater than the actual size of the injection.

E.g. Let's say, the government invested in the roads network, the money would be used to employ workers who would in turn buy tools, a newspaper, a packet of cigarettes etc. The toolmakers, newspaper publishers and cigarette makers would respond to increased demand by upping production and taking on extra workers themselves. They would then spend their wage packets on goods and services and the whole circle would carry on.

Here are four recent articles about him and how his ideas may be still relevant today:

• We now face Keynesian conditions and need truly Keynesian solutions.
• How to kickstart a faltering economy the Keynesian way.
  
• The big question: Who was J.M. Keynes and does he offer solutions to the economic crisis?
• It's Keynesian, Captain, but not as we know it.