Keynes In the Treatise on MoneyKeynes had argued the importance of the relationship between savings and investment as a cause of the trade cycle, and in the General Theory he tried to explain the factors affecting the level of employment. The community's expenditure on consumption and investment goods deter-mined the level of economic activity, but as incomes rose savings tended to increase. The relative fall in expenditure caused the economy to spiral down into depression. His theory of interest, which differed from the classical theories, was widely thought to show that the system was liable to stay in this position unless expenditure was increased in some way. The policy recommendation following from this analysis was that the Government was responsible for promoting public works in order to generate the expenditure that would remove .unemploymentand in general to maintain demand at a level that would create full employment. The theory also argued out that the reverse process would be capable of removing inflationary conditions. Such views created a great deal of opposition, but eventually Keynes won. The Coalition Government's White Paper on Employment Policy marked the acceptance of the 'Keynesian Revolution'.

Some economists were thought to take the Keynesian reaction against classical economics too far: Keynes rebuked them for overlooking the merits of classical economic doctrine and policy. More recently Keynes's thinking has been reinterpreted by Keynesian economists as a special rather than a general' theory of employment. Attention has also been directed to structural .unemploymentwhich is unavoidable as changes in techniques and home or world demand reduce the markets for products of the older industries and which cannot be removed by raising monetary demand in the economy as a whole.

Keynes's emphasis on national totals or aggregates stimulated the development of macro-economics, the study of the behaviour of larger groups, which some economists made the basis of social accounting and national planning. Others believe it has limited value as a guide to policy in a democratic society where changes in techniques and tastes are allowed free play and are not foreseeable, so that macro-economics is complementary to or dependent on microeconomics (the study of the behaviour of individuals).

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this site is therefore not a final statement of economic doctrine.

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