Keynesian economics

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Keynesian economics

(ECONOMICS) an account of the working of macroeconomic systems first propounded by John Maynard KEYNES, in which it is assumed that the economy is not self-managing and that governments must act to avoid prolonged recessions and secure FULL EMPLOYMENT. Directly at odds with much that had been previously assumed (see NEOCLASSICAL ECONOMICS), Keynes proposed government management of the economy – through monetary as well as fiscal policies – in which government expenditure would be increased at times of recession and reduced at times of FULL EMPLOYMENT and INFLATION, thus controlling aggregate demand within the economy. The adoption of Keynesian policies by governments seemed to be successful until the 1960s, when inflation and lack of economic growth began to emerge as a problem. Since then, while Keynesian economics still has many supporters, other macroeconomic theories, notably MONETARISM, have been in the ascendant.

Collins Dictionary of Sociology, 3rd ed. © HarperCollins Publishers 2000

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