J.M. theory
The "Great Depression" of the late 1920s - early 1930s. posed fundamentally new questions to economists, forced them to solve new problems. The inability of microeconomic neoclassical theory to find any acceptable solutions to the problems and contradictions of capitalism of this time led to a deep crisis in economics. It was then that he came out with the book “ General theory employment, interest and money ”by the famous English economist John Maynard Keynes. His work, published in 1936, had such a great impact on Western economic thought, as well as on the economic policies of states, that J.M. Keynes was widely recognized by both his followers and his opponents as the greatest economist of the 20th century. Keynes's book laid the foundation for a new direction of economic thought, named after the founder of Keynesianism.
Keynesianism occupies a special place in the history of economic thought in the 20th century. J.M. Keynes, his students and numerous followers living in different countries and on different continents, for the first time proposed a theoretical basis for economic policy, the practical implementation of which led to the formation of a mixed economic system, combining market and state management of the economy. In particular, the main provisions of Keynesianism were applied in practice during the "New Deal" period of FD Roosevelt. Before considering the main provisions of Keynesianism, let us consider the reasons that led to the emergence of the crisis, and, accordingly, the Keynesian theory.
Sometimes the 20s of the XX century. in history the United States is called the "Roaring Twenties", wanting to convey the spirit and special scope of the commercial initiative, speculative fever and ostentatious optimism that gave a specific color to this period. Speaking about the situation of farming, this definition is suitable in the sense that his protesting voice was especially loud due to the direct and most significant in its scale impoverishment under the blows of the protracted agrarian crisis. The ever-expanding "scissors" between the prices of industrial goods consumed by farmers and agricultural products (the former increased continuously, the latter also decreased continuously) made the majority of small and medium-sized farmers' households chronically unprofitable. The ever-increasing burden of debt and ruin literally drove farmers from the land, which fled to the cities, replenishing the army of the unemployed, low-income groups of the population.
Trapped in the grip of a crisis of overproduction, in vain appealing for help from the government and, perhaps most of all, then interested in government intervention, farming and the agrarian sector of the economy in general were the prototype of the near future of the entire economy. Most surprising of all, however, was the fact that the symptoms of the disease, which were indicative of impending collapse, so clearly declared themselves, did not cause public alarm, and individual sober predictions were drowned in a noisy discord of praise for the economic strategy of big business. Even the cynical revision of the social doctrine of the "progressive era" did not lead to the awakening of the public and did not force it to come out of a state of apathy and serenity. The attacks on Wilsonian liberals for their "expansive" interpretations of the constitution, which allegedly weakened legal protection against socialist encroachments on property, were taken for granted and as the last word in the philosophy of business success. Here, first of all, they meant a certain expansion of the contractual rights of trade unions, allegedly causing exorbitant damage to the proprietary interests of business. The ideology of stagnation, reversal of the movement towards change, refusal to search for new legal forms of social relations, reasonable social policy dictated by changed conditions, life, found their complete expression in the postulate put forward by the chairman The Supreme Court W. Taft in 1921: "It is better to endure evil than resort to destructive innovations, in the course of which these innovations may turn out to be worse than evil" Cit. according to the book: Malkov V.L. Franklin Roosevelt. Problems of domestic policy and diplomacy: Historical and documentary essays. - M., 1988. - S. 15 ..
Having received such an authoritative moral sanction, the "evil" in the form of infringement of the rights of workers, persecution of their organizations, strike and political activities, the unbridled preaching of individualism and racism, contempt for the losers and the disadvantaged took deep roots, giving rise to new evil and creating conditions, as once put it Roosevelt, the return of the era of "new economic feudalism" - the absolute, unlimited arbitrariness of the oligarchic elite of society Ibid. - P. 15 .. In 1929, the working day of the American worker was longer than in other industrialized countries. Systems social insurance unemployment did not exist, while in European states it has long served as a means of protecting (albeit weak) workers from the vicissitudes of the economic conjuncture. The use of child labor, discrimination against blacks and women, put the United States on a par with the world's most backward countries. In America, even during the "prosperity" years, large masses of the population remained at the mercy of blatant poverty and powerlessness, the depth and extent of which were unknown outside the United States.
By the fall of 1929, the capitalist mode of production had rebelled against the mode of exchange, but this time the force of the explosion of all contradictions was unmatched. The United States became the epicenter of the world economic crisis, it was from here that destructive impulses came from, undermining the world economy and exerting a destabilizing effect on the international situation as a whole.
The country was plunged into the whirlpool of the global economic crisis at a time when the passions of the 1928 election campaign had not yet subsided, remembered by the unbridled boasting of the Republicans about the achievements of the "new era", the promises of their leader Herbert Clark Hoover to make Americans "even richer" and the strained efforts Democrats convince voters that they can do all the same, only better and rather than the "great old party."
An avalanche of bankruptcies, a drop in production (to its lowest point in 1932), multi-million dollar unemployment washed away the blush of "prosperity" and exposed all the contradictions of the capitalist economy and the depth social inequality in the country. In a flashy form, the insecurity of the widest strata of the population, the illusory, illusory nature of their well-being was manifested. A society accustomed to judging itself by colorful billboards has discovered how little the availability and cheapness of certain consumer values express the strength of the foundation, which allows it not only to develop harmoniously, but also to simply exist. Instantly hundreds of thousands of families, who yesterday enjoyed the benefits of a highly industrialized civilization, with the loss of their breadwinner, found themselves alone with poverty and hunger, without any support and, worst of all, without the right to receive such support.
The worst consequence of the prevailing socio-economic doctrine was the utter insecurity of working America from the devastating blows of unemployment. Society turned its back on its fellow citizens, who are in distress and ask for help and participation, but are faced with indifference and suspicion. According to Roosevelt's aide G. Hopkins, "there was a tendency to accuse the unemployed of lack of patriotism, of trying to live at someone else's expense." - P. 17 .. Meanwhile, the US state policy on the issue of social insurance for unemployment for many decades was expressed in the unswerving adherence to the formula of "firm individualism." Translated into ordinary language, this meant that the care of the millions of Americans who were victims of the crisis was their personal matter or, in extreme cases, the prerogative of local authorities and private charitable foundations... According to the same Hopkins, there was no excuse for this "social blindness". “We have faced significant unemployment,” he said, “for 40 years, but until very recently nothing was done officially to solve this problem, except that it was stubbornly ignored.” Ibid. - S. 17 ..
Under these conditions, it became clear that the existing economic theory is not able to find ways to solve problems, market relations should be regulated by a single mechanism. Under the conditions of those years, only the state could become such a mechanism, but it was not ready for this unusual task. In addition, most manufacturers still believed that all problems could be solved by the usual methods, and did not want to submit to any regulation "from above". Meanwhile, the crisis continued, the standard of living fell catastrophically, the scale of unemployment exceeded all conceivable limits, and many governments, not without reason, feared a powerful social explosion.
In these conditions, one of the most optimal ways out of the crisis was proposed in the mid-30s. XX century English economist J. Keynes. He has developed a wide range of measures state regulation economy by changing budget expenditures in accordance with the economic and market conditions.
Keynes's theory heralded a new approach to the question of role and place public finance in the process of reproduction. The most important provision of this theory is the assertion that the economy is not a self-regulating independently developing system and for its progressive development it needs active state intervention. Keynesians argue that there is no mechanism under capitalism that can provide full employment, and they believe that the automatic relationship between the rate credit interest, the ratio of prices and wages is absent.
In support of their position, they cite such an argument as a weak relationship between the level of savings of the population and the size of the interest rate on deposits, since in a household the decision to save some amounts is made under the influence of such motives as saving money in case of losing a job or making a major purchase. In addition, decisions about savings and investments are made by different people, and when making investment decision size of cost borrowed money is only one, and not a determining factor, since for a potential investor, the more weighty arguments are the rate of net profit, the presence of political stability in the recipient country, the state stock markets, the presence of effective demand, a set of risks, etc. As a result, as Keynes noted, the size of household savings and entrepreneurial investment can only coincide by chance.
J.M. Keynes formulated the postulate that market system has never been competitive. On the basis of this position and analysis of the realities of the economy of the first third of the XX century, he concluded that the existence of monopoly producers hinders the practical application of the provisions of the classical theory on the elasticity of prices and wages. In addition, the existence of organized trade unions, political factors and the factor of the election of government bodies will not give a practical opportunity to implement the course for a large-scale reduction in wages.
The adherents of this theory especially emphasized the mistake of the representatives of the classics, who believed that a decrease in prices and wages would not lead to an increase in unemployment. Indeed, since wage is the main source of income of the population, then its decrease will cause a drop in incomes of the overwhelming majority of the population and a subsequent collapse in demand for products. In these conditions, entrepreneurs will not only limit the number of new employees, but, most likely, will reduce the number of employees at the enterprise. Developing his theory, Keynes proved the fact of the instability of aggregate demand, the need for a general impact on the economy through active state economic policy, especially in the field of finance and monetary regulation. Fiscal policy was of great importance. In this regard, Keynes wrote that "the state will have to exercise its governing influence on the propensity to consume partly through an appropriate system of taxes, partly by fixing the rate of interest, and partly, perhaps also in other ways."
As Keynesians believed, the amount of goods and services produced, that is, the volume of production, and, accordingly, the total employment, is in direct proportion to the amount of total costs for the acquisition of the above-mentioned goods and services. Therefore, the primary task of the state is to regulate the amount of total expenditures in order to mitigate the cyclical nature of economic development and stimulate economic growth.
In this theory, four elements of total expenditures are distinguished: consumption, investment, net export costs (net of imports), government spending.
Obviously, the value of the net income of an economic entity, i.e. income remaining after taxes (since investment costs are influenced by tax rates and the interest rate, which is largely is determined by the policy of the central bank, exports and imports also depend on the level of taxation and customs duties). Finally, government spending, which represents a significant part of aggregate demand and directly affects production, employment and price levels, depends on the size government revenues which are provided by tax revenues. Consequently, Keynesians concluded, government spending also depends on the level of taxation and the size of tax rates.
Keynesian theory assigned the most important place in the system of government regulation to government spending. They were supposed to be financed through loans and the emission of money, deliberately allowing a budget deficit. However, when public spending is financed through loans, there is an increase in public debt, which has a number of negative consequences for the economy. First, the growth of public debt also leads to an increase in the costs associated with servicing it. The consequence of this situation will be an inevitable increase in the tax burden, which can offset the desire for investment, entrepreneurship in general. This situation, in particular, demonstrates how the existence of large public debt can undermine economic growth.
Of course, the state can use refinancing methods and partially shift the real economic burden of its debt onto the shoulders of the future generation. However, in this case, there will inevitably be a significant "crowding out effect", which means that the state's entry into the loan capital market as a large borrower will inevitably cause an increase in interest rates in the capital market. Such an increase in rates will inevitably reduce investment potential, since an increase in interest rates narrows the opportunities for private firms and the public to use borrowed capital. Accordingly, there is every reason to believe that an increase in the cost of borrowing in the credit market leads to a reduction in investment and therefore reduces the size of funds remaining for future generations.
The influence of the state on economic entities, according to Keynes's theory, is subdivided into fiscal policy, monetary and combined. Considering the importance of finance in the state regulation of the economy, Keynesians paid attention to taxes not so much as a fiscal instrument, but as an element of economic policy regulation, which has an important stabilization value.
Keynes was the first to introduce the concept of tax stabilizers and created a whole concept of built-in tax stabilizers of the economy, which became very widespread. According to this concept, the role of stabilizers is intended to be played by the progressive system of taxation and social payments the state.
The task of the state is to smooth out the effects of economic cycles and promote economic stability, because, as Keynes noted, during an economic recovery, taxable income grows faster than tax revenues, and in a crisis, tax revenues decrease faster than incomes fall, and so by the same token, a relative balance in society is achieved. In other words, the volume of tax revenues of the budget depends not only on the size of the tax rate, but also on changes in the amount of income taxed according to the progressive tax scale. Fluctuations occur automatically and are more significant in tax revenue than income. Reducing (due to changes tax rate, tax incentives), the size of the tax burden contributes to the growth of incomes, which stimulates the "propensity to consume", that is, demand. In addition, Keynesians considered it necessary to exempt from income tax low-income citizens in parallel with the application of progressive income taxation for the wealthy strata of the population, justifying this not only by evidence of the stimulating role of such measures, but also by the fact that such a system is socially fair.
It should be noted that Keynesian theory was "spawned" by the Great Depression. Today, as a reaction to the modern world financial crisis, this theory is gaining a second wind and, with certain exceptions, is reflected in the modern financial policies of many states.
The post-war contradiction of protectionism and the trends of the incipient globalization of the world economy, a sharp acceleration of scientific and technological progress, the collapse of the Bretton Woods monetary system, growing inflation and a general decline in the level of control of national governments over the processes taking place in the world economy, again increased the urgency of searching for a new macroeconomic model for regulating the economy ...
Keynesianism emerged during the Great Depression. In the 30s of the XX century, a massive economic recession was observed in America and Western Europe, and the problem of unemployment arose. Economists studied the causes of the crisis in order to find a way out of it. Some theorists assumed that all the evil was in oversaturated demand, their colleagues objected that demand was minimal, and others believed that the problem was in the banking regulation system.
Keynes believed that the way out of the depression lay through a system of public works, which would be secured by government subsidies and loans. If the government will go on increasing costs for the launch of production and housing construction, the crisis will come to an end. Keynes showed how fluctuations in income lead to instability of commodity and money market, bond market and labor. It is worth noting that along with innovative ideas, John Maynard introduced many terms and definitions into economic theory.
a brief description of
Keynes's anti-crisis theory includes the following tools:
- flexible monetary policy to address wage inelasticity;
- stabilization of fiscal policy, which is achieved by increasing the tax rate;
- financing unprofitable enterprises to reduce unemployment.
The Keynesian economic model is distinguished by the following features:
- high share of national income;
- redistribution of income through the state budget;
- growth in the number of state-owned enterprises.
The principle of effective demand, the theory of employment and unemployment
Keynesians believed that effective demand is the equality of aggregated demand with aggregated supply. It determines the real national income and may be less than what is needed for full employment.
The amount of employment does not depend on the willingness of the unemployed to get jobs, even with a low wages, and from the planned consumption costs, as well as from future capital investments... In this case, neither supply nor price changes are critical.
A decrease in wages only leads to a redistribution of income. A decline in demand on the part of one part of the population cannot be compensated for by a rise in another part. On the contrary, an increase in income among a population group will entail a decrease in their propensity to consume. Keynes advocated a fixed wage and a focus of economic policy on the growth of employment in the national economy.
Determination of price and inflation
According to Keynes, the guarantee of economic growth is effective demand, and the main thing in economic policy is its stimulation. Keynes considered an active fiscal public policy... Stimulating investment, maintaining consumer demand should be achieved through government spending. As a consequence, there is an increase in the money supply, which does not lead to an increase in prices, as classical economists believed, but to an increase in the degree of use of available resources under the condition of underemployment. If supply rises, prices, wages, production and employment rise in part.
Consumption theory
Keynes noted that consumption expenditures are not growing to the same extent as income and demand are increasing. Not all of the cost of a product should be spent on purchasing food, he argued. According to psychological laws, the population will be more inclined to save if their incomes grow.
Investment multiplier
The investment multiplier concept derives from Keynes's theory of consumption. This economist paid great attention to investments and their importance in the economy. National income depends on the level of investment, and this relationship Keynes called the income multiplier. Its formula should take into account the level of functioning means of production and labor. This concept justifies instability market economy... Even small fluctuations in the level of investment can provoke a noticeable drop in production and employment.
It is investment that determines savings. And investments depend on the planned profitability and interest rate. The first indicator means the maximum capital efficiency, which cannot be predicted. The second indicator determines the minimum return on investment.
Interest and money theory
Percentage, as Keynesians understand it, is not the interaction of savings and investments, but the process of functioning of money, which is the most liquid durable asset.
The interest rate is the ratio between the supply of money and that demand for it. The first indicator controls central bank, and the second depends on several motives:
- transactional motive;
- a precautionary motive;
- speculative motive.
The main directions of neo-Keynesianism
Keynes's concept was modified after a few years and turned into neo-Keynesianism. Among the main innovations are the theory of economic growth and cyclical development.
The main drawback of Keynes's theory is the impossibility of using it on a long-term scale. She meets the requirements of her time, but does not fit others economic models... Keynes did not pay much attention to the strategy of economic growth or dynamics, he was solving the problem of employment.
The US economy was gaining momentum and needed to be strengthened. Neo-Keynesians were N.R. Harrod, E. Domar and A. Hansen, and N. Kaldor and D. Robenson. It was they who founded a new concept that considers the problem of economic dynamics.
The main idea of Keynesianism, which became a pillar in neo-Keynesianism, is about the need for state regulation of the capitalist economy. The adherents of this theory were in favor of active government intervention in the market economy. The methods of the theory are distinguished by the national economic approach to reproduction and use.
Neo-Keynesianism, in contrast to Keynesianism, does not abstract when defining productive forces and introduces specific indicators of the development of production. Terms such as capital ratio and capital intensity emerge. Keynes' followers define the capital ratio as the ratio of total capital to national income over a period of time.
The question of the types of progress arose sharply, a definition of technical progress appeared, which allows saving living labor and the labor of capital. In addition to the multiplier, an accelerator appears. According to his theory, the expansion of capitalist reproduction is a technical and economic process. Neo-Keynesians explain the cyclical fluctuations of the economy, which depends on investments, purchases, investments in construction, government spending on social needs.
Monetary policy is carried out by a complex transmission mechanism. Interest rates are designed to regulate the business cycle. It also notes the strengthening of the legal regulation of the market economy by the state, especially in terms of recruitment, pricing and antimonopoly policy. The methods of planning and programming the economy are growing in popularity.
Initially, neo-Keynesianism used more Keynesian theories, but later they ceased to achieve their goals due to the growth of bureaucracy and a decrease in the effectiveness of the state apparatus. The budget deficit began to grow, and inflation picked up pace. Due to the tight control of the state, private enterprises could not develop, and social benefits prevented the stimulation of labor activity among the population.
Send your good work in the knowledge base is simple. Use the form below
Students, graduate students, young scientists who use the knowledge base in their studies and work will be very grateful to you.
Posted on http://www.allbest.ru/
Introduction
Chapter 1. Keynesian model of state regulation of the economy in theory
1.1 Historical background of the emergence of Keynesianism
1.2 J.M. Keynes and his theory of state regulation of the economy
1.3 Economic program of J.M. Keynes
Chapter 2: Using the Keynesian Model in Practice
2.1 Use of Keynesian concepts during the Great Depression in the United States
2.2 Keynesian economic policy in the twentieth century
2.2.1 Application of Keynesian Concepts in the United States
2.2.2 Application of Keynesianism in the UK
2.2.3 Application of Keynesianism in France
2.3 The Crisis of Keynesianism
Conclusion
Bibliography
Introduction
Economic theory is one of the most important sciences. The life and well-being of citizens depends on the correctness of the economic policy of the state. And this applies directly to every citizen.
In modern Western economic literature and in the practice of state regulation of the economy, the Keynesian direction retains a certain influence, although its supporters are pushed aside to secondary positions and criticism does not stop.
Until the mid-1970s, Keynesianism was the theoretical basis for state regulation of the economy in most developed countries. J. Keynes (1883-1946) developed the macroeconomic theory of effective demand, which formed the basis of his theory of government regulation. Considering one of the most important tasks of such regulation of the economy to achieve "full employment", he focused on the formation and movement of national income, considering all economic processes through the prism of implementation, ensuring effective demand. Many theoretical positions of J. Keynes were accepted by numerous followers, underwent a certain evolution and are used to this day.
J.M. Keynes's recipes have found application in practice, in economic programs, in practical measures and actions of economic policy. Keynesian recommendations were applied not only in England and the USA, but also in other Western countries. Conclusions and provisions of this economics school to a certain extent useful for us. In the 1930s, when the General Theory of Employment, Interest and Money was developed and published by J.M. Keynes, the problem was to find methods that would provide a way out of the deep crisis, create conditions for the growth of production and overcome the mass unemployment.
Therefore, this topic is very relevant in our time.
The object of the course work is the Keynesian model of state regulation of the economy.
The subject of the work is to consider the main directions of Keynes's theory and its application in practice.
When considering the topic, an analytical research method was used.
The purpose of this work is to consider the basic concepts of Keynesian theory. The goal made it possible to formulate the tasks that will be solved in this work:
1. Consider the concept of Keynesianism;
2. Analyze the application of Keynes's theory in various foreign countries.
3. Highlight the positive and negative sides of Keynesianism.
The work consists of: introduction, two parts, conclusion, list of used literature. The introduction substantiates the choice of the research topic, its relevance, the goals and objectives of the work are indicated. The first chapter reveals theoretical basis Keynesianism. The second chapter presents an analysis of the application of Keynesianism in practice in the 20th century. The conclusion is the result of the work, which reflects the main findings.
Chapter1. Keynesianmodelstateregulationthe economyvtheory
1.1 HistoricalprerequisitesemergenceKeynesianism
Until the early 1930s, neoclassicism remained the dominant trend in Western economic theory. Most economists during this period were of the opinion that equilibrium is established and maintained in the economy with the help of the free pricing mechanism. However, reality refuted the neoclassical illusions about the ability of the market mechanism to automatically ensure market equilibrium. A clear evidence of this was the cyclical nature of the development of the capitalist economy with constant recurrence and intensification of crises. At that time, economic science discovered the inability to give a correct explanation of the phenomena of accompanying crises, and even more so to indicate the ways of overcoming crises.
The process of destruction of the mechanisms of automatic market self-regulation has accelerated sharply in the conditions of the establishment of the dominance of monopolies in the economies of the leading capitalist countries. But the most acute inability of the capitalist economy to continuous development was revealed during the years of the world economic crisis of 1929-1933. and the subsequent depression of the 30s. years. The way out of this protracted crisis was so long and painful that even in 1938 the level of production in many countries did not reach the indicators of 1929. VA Avtonomov "History of Economic Thought". - M: INFA-M, 2014
The "Great Depression" demonstrated a clear discrepancy between the high level of development of productive forces and the lack of accuracy of spontaneous market processes. The high level of socialization of production and the complication of the economic mechanism insistently demanded the planned regulation of the economy on a national scale, i.e. strengthening the role of the state in the economy. The theoretical platform of such an economic policy was formed by a new direction in political economy, which proved the impossibility of self-regulation of the capitalist economy at the macro level and the need for state intervention in economic processes. This trend got its name - Keynesianism on behalf of its founder, the English economist J.M. Keynes.
1.2 J.M. Keynesandhistheorystateregulationthe economy
John Maynard Keynes (1883-1946) was an English economist and politician. His main economic work is the book "The General Theory of Employment, Interest and Money", published in 1936. Wikipedia is a free encyclopedia: [Electronic resource] .URL: https://ru.wikipedia.org (Date of access 06.11.2016). This book was immediately heralded by the supporters of its author as the "Bible of Keynesianism", which marked the beginning of the "Keynesian revolution" in economic theory, designed to overthrow neoclassicism and Marxism.
Keynes's theoretical system was a kind of reaction to marginalism and the neoclassical trend in economic theory, which adhered to the principles of economic liberalism. Keynes recognized that from the point of view of neoclassical theory, his views are heretical. Unlike the neoclassicists, he declared the inability of capitalism to cope with crises and unemployment with its own internal forces. In his opinion, government intervention is necessary to solve these problems. He actually struck a blow at the favorite principles of the neoclassical school - the theory of marginal utility and the thesis of limited resources.
Keynes declared the subject of research in economic theory to be quantitative functional dependencies of the process of capitalist production, natural quantitative relationships of aggregate national economic values. Public relations the production remains unchanged. Keynes JM General theory of employment, interest and money. M .: Progress, 1978
The research method used by Keynes is directly dependent on the subject of economic theory formulated by Keynes. It is characterized by:
1) rejection of the causal (cause-and-effect) method, and research economic phenomena and the use of the functional method in their analysis;
2) consideration of economic processes as a reflection of the psychology of economic entities, but not individual, but social;
3) Keynes entered the history of economics as the first scientist to develop a fully substantiated theory of macroeconomic analysis.
In contrast to the theorists of the neoclassical direction, Keynes came to the conclusion that all the vital problems of a capitalist society should be sought not in the sphere of supply of resources, but in the sphere of demand, ensuring their realization. Keynes JM General theory of employment, interest and money. M .: Progress, 1978 The main problem of reproduction, in his opinion, is the market capacity and its expansion in accordance with the growth of supply. But it doesn't automatically increase demand. It can get ahead of him. In this situation, demand will not be able to ensure the sale of goods and profits, i.e. will be ineffective, which will inevitably lead to a reduction in employment, an increase in unemployment and the onset of a crisis.
According to Keynes's concept, effective demand consists of two components - consumer demand and production demand.
Keynes made the first component of effective demand - consumer demand dependent on the so-called "basic psychological law of society", according to which people tend to increase their consumption with increasing income, but not to the extent that income increases.
As a result, savings increase and consumption decreases relatively, which, in turn, leads to a decrease in demand for consumer goods, and this affects the size of production.
The second component of effective demand - production demand, according to Keynes, is an indicator of the desire of capitalists to invest their capital. The real amount of investment depends on two quantities: the expected return on capital investment or the marginal efficiency of capital (the profitability of the last invested unit of capital) and the rate of interest. The process of investing capital continues as long as the marginal efficiency of capital investment is above the rate of interest. Otherwise, the capitalists prefer to save their capital in the most liquid form, in the form bank deposits.
A necessary condition for the development of the economy and the achievement of its equilibrium state, according to Keynes, is a reduction in savings created by the action of the "basic psychological law" and an increase in investment costs designed to absorb their increasing volume. In other words: investment should be equal to savings.
Keynes attached the main importance to the investment component of effective demand in determining the level of national income and employment. He wrote: "... for a given value of the indicator, which we will call the propensity of society to consume, the equilibrium level of employment ... will depend on the amount of current investment."
An important component of the problem of effective demand is the concept of the multiplier, which forms the basis of the central link of Keynesian theory - the establishment of the relationship between investment, consumption and national income. According to this concept, there is a certain, stable relationship between the increase in investment and the increase in national income, based on the fact that each investment expense turns into primary income, some of which, when spent, turns into secondary income, etc. Both employment and production are increasing at the same time. The magnitude of the multiplier depends on the proportion in which income is divided into consumed and saved parts.
The multiplier theory linked the increase in national income with the increase in personal consumption generated by spending-investments or government spending.
The macroeconomic model developed by Keynes, in which the above-discussed functional relationship between investment, employment, consumption and income was established, had as its purpose to prove the possibility of stabilizing the capitalist economy, overcoming crises and unemployment in it, moreover, in a conservative way.
An important role in Keynes's macroeconomic model was assigned to the state. It should do everything possible to increase the marginal efficiency of capital investments through all kinds of subsidies, government procurement of surplus goods, etc. In turn, the Central Bank should lower the lending rate and conduct moderate inflation, which should ensure a systematic rise in prices, which, in turn, will stimulate the growth of investment. As a result, new jobs will be created, which will ensure the achievement of full employment.
Keynes placed his main stake in increasing aggregate demand on increasing investment demand and productive consumption. Insufficient personal consumption, he proposed to compensate for the increase in productive consumption.
But Keynes did not ignore personal consumption either. Consumer demand, he believed, also needs "pumping", for example, through consumer credit, which should apply to the widest sections of the population.
Concluding a brief description of the economic views of J.M. Keynes, it should be noted that, in contrast to the representatives of the neoclassical direction, who focused their attention on the factors of economic growth that lie on the supply side of resources, Keynes focused on the factors of economic growth that lie on the the demand side, while destroying the notion prevailing in economics about the automatic achievement of equilibrium between aggregate demand and aggregate supply... Thus, he undermined faith in the internal restorative forces of the market mechanism and justified the need for state intervention in economic processes.
1.3 EconomicprogramJ.M.Keynes
In the concept of J. Keynes economic forces are divided into independent and dependent. Keynes includes the propensity to consume, the marginal efficiency of capital, and the rate of interest as independent factors, which he calls independent variables. It is they who determine the size of effective demand. Dependent factors, or dependent variables, include the volume of employment and national income. Keynes sees the task of government intervention in the influence on the independent variables, and through them, on employment and national income.
In other words, the tasks of the state are to increase effective demand and reduce the severity of implementation problems. As is known, Keynes considered investments to be the decisive component of effective demand, giving priority to their stimulation. In his work, he recommends two main methods of increasing investment: fiscal and monetary policy.
The first involves active financing, lending to private entrepreneurs from state budget... Keynes called this policy the socialization of investment. In order to increase the volume of resources required to increase private investment, the budgetary policy also provided for the organization of public procurement of goods and services.
Also, to revive the economic situation, Keynes recommended an increase in public investment, which would play the role of an “ignition key” that triggers the multiplier mechanism. Since private investment in a depression is sharply reduced due to pessimistic views about the prospects for profit, the decision to stimulate investment should be taken by the state.
At the same time, the main success criterion for the state stabilization fiscal policy, according to Keynes, is an increase in effective demand, even if the government’s spending of money is apparently useless. Keynes JM General theory of employment, interest and money. M .: Progress, 1978. Moreover, government spending on unproductive purposes is preferable, since they are not accompanied by an increase in the supply of goods, but nevertheless provide a multiplier effect.
Such a channel for pumping effective demand as consumption is subordinate in the practical recommendations of J. Keynes. Keynes considered the organization of public works, as well as the consumption of civil servants, to be the main factor influencing the growth of propensity to consume.
Keynes repeatedly in his work expresses the idea of the advisability of reducing property inequality, redistribution of part of income in favor of groups with the greatest propensity to consume. These groups include persons in hired labor, especially persons with low income... These recommendations should not come as a surprise, since, according to Keynes's basic psychological law, the propensity to consume is higher with low income, and hence the efficiency. state support population will be felt stronger.
With regard to credit monetary policy, then it, according to Keynes, should consist in an all-round lowering of the interest rate. This will reduce the lower bound on the efficiency of future investments and make them more attractive. Thus, the state must provide such an amount of money in circulation that would allow the interest rate to be lowered (the so-called cheap money policy).
Let us note once again that J. Keynes actually asserts the admissibility of inflation, considering that inflation is a lesser evil than unemployment. It can even be beneficial as it reduces the preference for liquidity.
However, monetary policy alone, Keynes pointed out, is inadequate in a deep downturn because it does not adequately restore confidence in the business environment. In addition, the effectiveness of monetary policy is limited by the fact that beyond a certain threshold the economy may find itself in a so-called liquidity trap, in which the inflation of the money supply practically does not reduce the rate of interest.
Keynes considered it necessary to reconsider the attitude to foreign economic policy.
Let us recall that for the classical school the only possible course in foreign trade was free trade (freedom of trade). Without denying its positive aspects, Keynes argued that if a country restricts imports of cheaper foreign goods in order to provide employment for “its” workers, even if the national industry is not efficient enough, then the actions of this country should be recognized as economically expedient.
Keynes is the founder of the concept of deficit financing, or artificially pumping money into the economy, the creation of "new money", which is in addition to the general flow of costs and, thereby, compensates for insufficient demand, employment and accelerates the increase in national income.
So, Keynesianism is a macroeconomic trend that developed as a reaction of economic theory to the Great Depression in the United States. The seminal work was John Maynard Keynes's General Theory of Employment, Interest and Money, published in 1936.
Keynes raised the question of the need for government intervention in the economy in order to correct its shortcomings, which were generally denied before Keynes: most bourgeois economists before Keynes considered crises to be random phenomena.
Unlike his predecessors, who studied the problems of increasing the production of goods, Keynes brought to the fore the question of “effective demand,” that is, consumption and accumulation, which make up effective demand. He put forward a macroeconomic research method, that is, a study of dependencies and proportions between macroeconomic values - national income and savings.
Chapter2. UsageKeynesianmodelonpractice
2. 1 UsageKeynesianconceptsintimeThe greatdepressionvUSA
Keynesianism was widespread. Until the 70s. XX century, the economic policy of Western countries was based on Keynesian principles, ensuring economic growth. But Keynes's concept was first applied in practice in the United States during the Great Depression by President F.D. Roosevelt, therefore one cannot but consider what events it was presented and what results it led.
In the first quarter of the XX century. The United States was among the leading states in the world and the most economically prosperous country. With the transition of industrial capitalism to a monopoly, the center of the world economic development moved from Europe to North America. The USA developed the fastest and produced the most. The position of the United States strengthened even more after the First World War, in particular due to significant profits from the supply of arms and ammunition to the Entente countries. Industrial production grew rapidly, fixed capital expanded rapidly, and exports increased. Economic successes served as the birth of the theory of "prosperity" - the eternal prosperity of this state. However, it turned out to be a “great illusion”. Reality overturned these hopes. In 1929, the world economic crisis, which lasted until 1933, inclusively, and struck the United States the most. Stolyarov I.I. "State regulation of the market economy" Moscow, 2015
The crisis began in New York with a collapse on stock exchange... It covered the banking system, industry, Agriculture... By its nature, it was a cyclical crisis of overproduction, when, due to the insufficient purchasing power of the population, the mass of goods produced did not find sale and turned out to be unrealized. As a result, the process of social reproduction was disrupted, many trade and industrial enterprises, transport companies, banks were ruined. By 1932, U.S. industrial production had declined by 46% overall, and by certain types there are much more products: pig iron production - by 79%, steel - by 76%. For 1929-1933 135 thousand trading, industrial and financial firms collapsed, 5760 banks went bankrupt. Magazine club Intelros: [Electronic resource]. URL: http://www.intelros.ru (Date of treatment 11/05/2016).
In the United States during this period, the philosophy of "American individualism" was established, which does not recognize state regulation of the economy, its interference in the affairs of private business, although it was applied during the First World War. Herbert Hoover (1874-1964), who assumed the presidency in 1929, initially limited himself to the introduction of trade protectionism, believing that the crisis would be overcome automatically and the country would cope with it in 60 days. However, the situation in the country worsened, and by the time Franklin Delano Roosevelt was elected president of the United States, the situation in the country was emergency. The Roosevelt government carried out large-scale reforms that went down in history under the name “ New Deal Roosevelt ”.
Keynes' teachings became the theoretical basis of the New Deal. Based on this, we can conclude that Roosevelt recognized the inconsistency of the liberal doctrine, the denial of the thesis about the automatism of the market process and, consequently, the need for active government intervention in the sphere of economic relations.
Consider the main activities of the New Deal:
1. Events in the banking and financial sector.
First of all, the rescue of the banking and financial systems began. For their recovery, the export of gold abroad was prohibited, the deception of banknotes for gold was stopped. All banks in the United States were closed. Despite the fact that many public figures and politicians demanded the nationalization of banks, Roosevelt did not go for it. The unanimously adopted Emergency Banking Law provided for the resumption of functions and the receipt of government credits (loans) from the federal reserve system, although this was allowed only to the prosperous, i.e. the largest banks. By the end of March 1933, 4/5 of the banks - members of the Federal Reserve System were reopened, but 2 thousand banks did not receive permission for this. Bartenev S.A. "History of Economic Thought". - M: Yurist, 2015.
The Reconstruction Corporation, created under President Hoover, expanded its operations - in the first two years of the New Deal, the amount of loans issued by it exceeded $ 6 billion. As a result, the concentration of the banking system increased - the number of banks decreased from 25 thousand to 15 thousand. Pole G .M. "History of the World Economy". - M: UNITY, 2015
To increase the financial resources of the state and expand its regulatory functions during this period, the United States abandoned the gold standard, removed gold from circulation and devalued the dollar. In January 1934, the gold content of the dollar decreased by 41%. Office of Economics and Statistics (USA): [Electronic resource] .URL: http://www.esa.doc.gov (Date of treatment 11/05/2016)
The devaluation of the dollar was hampered by an active trade and payments balance. Embark on the path of mass issuance of unsecured gold paper money Roosevelt did not consider it possible. Therefore, he found an original way of inflationary development. The United States has made large-scale purchases of gold at prices above the dollar against gold. Until the end of 1933, gold was purchased for $ 187.8 million. This artificially lowered the dollar exchange rate. Ostapenko Yu.M. "Labor Economics" Moscow, 2014
The devaluation of the dollar shifted the distribution of income in favor of industrial rather than loan capital. Thus, massive bankruptcies in the credit sector were averted, the debt of the monopolies to the government decreased, and the export opportunities of the United States increased. To stimulate small shareholders and depositors (private funds), a bank deposit insurance corporation was created, and measures were taken to protect deposits from the risk of stock market speculation. The introduction of state insurance of deposits (deposits) contributed to the prevention of bankruptcies, increased the confidence of depositors.
2. Events in the industrial sector.
A law was passed on the restoration of industry, which introduced a system of state regulation of this division of the economy. To conduct it, the National Reconstruction Administration was created, which included representatives of the financial oligarchy (from the Chamber of Commerce, from General Motors, Standard Oil, from the Morgan group and other concerns), as well as economists, leaders of the American Federation of Labor.
The Industrial Restoration Act introduced a system of state regulation of this division of the economy. It included three sections. The first section provided measures to help revive the economy and bring it out of a disastrous situation. The main focus was on “codes of fair competition,” which set out the rules for competition, employment and recruitment.
The Association of Entrepreneurs divided the entire industry into 17 groups, each of which was obliged to develop such a code. Codes for each enterprise established the volume of production, the level of wages, the duration of the working week, markets for products, a single price policy. Each code necessarily stipulated the conditions of employment and employment. In hiring, discrimination of union members was not allowed, workers were given the right to organize them, the lowest wage limit (minimum) and the maximum allowed working week were determined. If the president approved the code, it became law, and the antitrust laws were suspended. In all, across all industries, the Roosevelt administration authorized 746 codes, covering 99% of American industry and commerce. Timoshina T.M. " Economic history foreign countries ”. - M: Justicinform, 2014.
In the second and third sections of the law, the forms of taxation and the public works fund were determined, indicating the procedure for using the funds of this fund. To help the unemployed, Congress created the Public Works Administration, headed by the Minister of the Interior G. Ickes. For the organization of public works, 3.3 billion dollars were allocated, an amount unprecedented at that time. Among other measures to combat unemployment were the creation of labor camps for unemployed youth aged 18-25. They were provided with free meals, housing, uniforms, they were paid $ 1 a day. The number of youth in the camps reached 250 thousand people. Given the popularity of this measure, by 1935 the camps were doubled, and before the Second World War, they were visited by 3 million people. Young people cleared forests, carried out land reclamation, reforested, repaired roads. The Emergency Relief Administration, led by presidential adviser G. Hopkins (1890-1946), gave subsidies to states to help the unemployed. The scale of public works organized by the American government should be recognized as significant - by January 1934, they employed 5 million people. Benefits were received by 20 million Americans. Agapova I.I. "History of Economic Thought". - M: Yurist, 2015
In 1933, the Tennessee River Valley Authority was created, which was entrusted with the development of this most backward area. Here, the construction of hydroelectric power plants was carried out, reforestation and soil erosion control were carried out, the industry supplied by the Tennessee power plant was controlled. Works were provided by 40 thousand people. For the employment of the unemployed in the south of the United States, a modern infrastructure was created - highways, airfields, bridges, harbors, etc. were built.
The law on the restoration of the national industry was introduced for two years. He provided for liberal reforms in the field of labor relations. Initially, the law was based on a compromise between capital and workers. For entrepreneurs, the abolition of antitrust legislation mattered. At the same time, trade unions received the right to collective protection. In order to achieve “class peace”, to put an end to competition at the expense of workers, paragraph 7a of the Code of Fair Competition recognized workers not only the right to form trade unions, but also to conclude collective agreements with entrepreneurs. Thus, the workers refrained from the revolutionary struggle. At the same time, the American monopolies did not forget about their interests: they prescribed in the codes to fix the level of wages to the minimum, and the length of the working week - to the maximum. After the introduction of such codes, the overall level of wages fell. The implementation of this law strengthened the position of large monopolies, since in the final analysis they determined the conditions of production and marketing; less powerful companies were pushed out.
A law was also passed on the regulation of agriculture. In order to overcome the agrarian crisis, it provided for a reduction in acreage and livestock, while compensation and bonuses for each unseeded hectare of land. Thus, we managed to maintain prices and improve the situation in the agricultural sector.
In the second phase of the New Deal, a system of old-age pensions and unemployment benefits was introduced. Pensions were established from the age of 65, assistance was provided to the sick and disabled. Pension funds formed from contributions of workers and enterprises. Pension norms were set uniform for the whole country. The range of beneficiaries, the amount and timing of payments were determined by state law. However, the law extended to workers of large industrial enterprises and did not cover workers and employees of trade, the service sector.
As a result, an active policy of government intervention allowed the United States to overcome the economic crisis.
Despite the fact that the New Deal was not a premeditated system of reforms, but was rather of an empirical nature (this is confirmed, in particular, by the fact that the theoretical substantiation of anti-crisis policy measures in the form of the fundamental work of J. Keynes “General theory of employment, interest and money ”came out only in 1936), he was very effective. After it was held, the number of supporters of Keynesianism in the United States increased significantly.
2. 2 CaseyanskayaeconomicpoliticsvXXcentury
2.2. 1 ApplicationKeynesianconceptsvUSA
After the end of World War II, the economies of many countries found themselves in a very difficult situation. Perhaps the United States is the only country in the world whose economy emerged from the Second World War significantly stronger. Moreover, during the war years, the country's national income has doubled. Polyak G.M. "History of the World Economy". - M: UNITY, 2015.
In the second half of the 50s. the US economy was greatly influenced by the scientific and technological revolution. The components of scientific and technological revolution were the automation of production, the use of computers, the intensification and concentration of production. As a consequence of this, there is an accelerated development of production and an improvement in the quality of life, on the one hand, an increase in unemployment, and a decrease in economic growth, on the other hand.
New tasks facing the state were reflected in the New Frontiers program of J. Kennedy in the early 60s. The program was developed by a group of neoliberal economists. They envisioned a consistent course of maintaining a balance between the supply of goods and services and aggregate demand in order to ensure continuous balanced economic growth with a high level of employment and the need for price stability. The program was based on the Keynesian idea of scarcity financing. In 1962-1963. activities were carried out in the field of social programs. Concessions were made to representatives of big business.
On the whole, the New Frontiers policy has yielded positive results. The industrial production index in 1964 exceeded the 1961 level by 20%. US share in gross domestic product decreased from 44% in 1960 to 27% in 1980, in industrial production - from 35.4 to 32.9%. The share of the United States in world capitalist exports has noticeably decreased: from 18% to 12% over the same period. Department of Economics and Statistics (USA): [Electronic resource] .URL: http://www.esa.doc.gov (Date of treatment 11/05/2016)
2. 2.2 ApplicationKeynesianismvGreat Britain
In July 1945, the first post-war parliamentary elections were held in England. The victory was won by the Labor Party, led by Clement Attlee, who in 1945-1951. headed the government of the country. The Laborites went to the polls with a program of economic revival called "Face the Future", which proclaimed the creation of the "socialist commonwealth of Great Britain."
And the gradual formation of a "mixed economy", where, along with private property, a large role was assigned to the public sector.
It is known that even during the war years, the British government began to actively intervene in the economy by subsidizing the construction of private enterprises and the construction of factories at the expense of the state budget, which were later sold to private hands. The government bought scarce raw materials, carried out compulsory cartels.
Agriculture in England experienced great difficulties, which, as before the war, developed under conditions of strong government intervention. Since during this period England could no longer import large quantities of food and raw materials from its former colonies, the government began to pay more attention to domestic production.
In 1947, a four-year program for the development of agricultural production was adopted. Under this program, large farmers could receive government subsidies and soft loans for the purchase of machinery, fertilizers, they were awarded prizes for increasing the yield and productivity of animal husbandry. Guaranteed purchase prices were established, which was a good incentive for the development of production.
It should be noted the great changes that took place in social sphere post-war England. The Labor government, headed by K. Attlee, abolished a number of laws introduced in the 1920s and 1930s (in particular, the 1927 trade union law) and restricting the right to strike and strike. The government encouraged employers to accept union demands to expand the social insurance system; his funds now had to be replenished from three sources: contributions from workers, deductions from the profits of entrepreneurs and receipts from the state budget. Eliseev A.S. "Economics", Moscow, 2015
The size of benefits for unemployment, sickness and disability, due to the birth of children, has noticeably increased. Received further development pension system, the category of people receiving free medical care, etc. has expanded. Due to the introduction of broad social programs, real wages have increased, which has led to a noticeable increase in consumption and an improvement in its structure: the share of durable goods, cars, etc. has increased.
government regulation economics Keynesian
2.2. 3 ApplicationKeynesianisminFrance
During the first post-war years in France, important changes took place in the field of social relations. A 40-hour workweek was restored, and overtime work had to be paid at higher rates. Two-week holidays for workers and three weeks for employees were again established. Nominal wages and pensions have risen markedly. A single state system social insurance, which extended to all employees, except agricultural. The funds for this system consisted of both workers 'contributions (6% of wages) and employers' contributions (10% of the payroll). The retirement age for old age and disability was established from 65 years. To improve the demographic situation and stimulate the birth rate, allowances for parents with children were introduced. Kulikov L.M. "Fundamentals of Economic Theory" M .: Finance and Statistics, 2014
A massive nationalization was carried out (1945-1947), during which the enterprises of the coal, gas, aviation, automobile industries, the engineering plants of the Renault company, as well as the enterprises of maritime shipping, air transport, etc. were transferred into the hands of the state.
To manage the nationalized enterprises, administrative councils were created with the participation of workers. Strengthened the rights of trade unions in dealing with issues of hiring and dismissal from work, wage growth, the provision of pensions and housing.
On the whole, by the spring of 1947, it was possible to reach the pre-war level in industry, and soon the process of restoring the national economy was completed.
2.3 A crisisKeynesianism
In the 70s. XX century world capitalism is faced with powerful factors of inhibition. In 1971, the United States finally abandoned the rigid pegging of the dollar to a fixed gold parity (1 dollar - 31 troy ounces of gold), economic growth stalled everywhere (except for Japan), and unemployment grew. L.P. Kurakov "Economic Theory" Moscow 2015 The oil crisis as a result of the Arab-Israeli war in 1973 created additional difficulties for the capitalist countries, complicating the production process (a sudden rise in the cost of all factors of production). In 1976 in Lome at the international financial conference many constructions of the international financial system capitalist world, approved at Bretton Woods in 1945 (the IMF and the World Bank found themselves helpless in regulating the international financial system). The instability attacked the world capitalist centers more and more alarmingly. All these years, when the difficulties and contradictions of economic development in the group of developed countries multiplied, all Keynesian levers of influence on crisis situations were used, but they either had a short-term effect or did not give a positive result at all. McConnell C.R., Bruce S.L. "Economic Theory", Moscow, 2015. It became obvious that Keynesianism faced new problems, for which it is no longer adequate to solve. It was necessary to reconstruct both the very foundations of Keynesianism, including the issues of the economic role of the state, and the problems associated with the powerful strengthening of the positions of European corporate capitalism, which was dissatisfied with the excessive growth of the public sector. In addition, the significantly expanded public sector of the economy began to have a depressing effect on competitive mechanisms, narrowed the scope of activities of private firms, and led to bureaucratization of public administration and waste. Khudokormov A.G. "Economic theory" , Moscow, 2015 Another circumstance: by the end of the 70s. the European corporate private sector of the economy was seriously strengthened (with the help of the state), which was already quite coping with the national market, throwing in huge volumes of goods and services - it did not need the (previously necessary) direct forms of state regulation. Accordingly, it was necessary to strengthen (expand, diversify) the arsenal of indirect instruments, primarily monetary, financial - that is, monetary levers for regulating supply and demand in order to dynamize market forces and mechanisms, and reduce (but not eliminate) the state sector of the economy. It was in such an environment that the finest hour of monetarism came, which offered easy solutions: to privatize the public sector, remove all barriers to the expansion of corporations and banks, reduce taxes on them, etc. the developed countries from the beginning of the 80s, abandoning Keynesianism as a methodology of economic policy. Monetarism certainly gave additional features to strengthen large banks and corporations, it is a fact. But he also became the destroyer of the middle class and the state of "general prosperity". Nikolaeva L.A. "Economic Theory", Moscow, 2014. He greatly contributed to the differentiation of Western societies, led to the degradation of spiritual and moral values, replacing them with substitutes for consumption and the endless pursuit of monetary success; contributed to the lag developing countries from the developed centers of capitalism. And on the whole, he brought world capitalism to a dangerous line, destroying the equilibrium of the system.
From the point of view of the current situation, the following conclusions of Keynes seem to be important: first, he proved that the Great Depression ended forever the era of free and uncontrolled development of the capitalist economy - the free market can no longer cope with the tasks of reproduction. In order not to perish, the entire economic system must rely on the state. Secondly, the state should actively influence all economic processes in order to prevent further powerful crisis recessions and depressions that destroy the results of the activities of a whole generation of people in different countries (degradation of productive forces). This is due to the organic advantages of the state, since only it is capable, unlike a single private investor, to neglect the considerations of the rate of return and its relationship with the rate of interest. The state is able to be guided by the principle of social rather than economic (market) expediency, that is, by what is an impermissible luxury for a single entity (individual entrepreneur and individual consumer). For example, in a depression (crisis), an entrepreneur will not engage in additional investment - he is simply afraid of losing money. Therefore, he will not risk his money. But, however, with such an approach, stagnation will develop into a national catastrophe. The only alternative can be the state - and this is the only way out to ensure successful development.
As you can see, the Keynesian concept was successfully applied in practice in many countries in the twentieth century. The policy of state intervention in the economy, socio-economic reforms aimed at increasing wages and raising the standard of living of the population, and therefore effective demand, ensured stable economic growth for a number of years.
Conclusion
Thus, we note that Keynes proposed a new approach, developed a new theory of regulation of production and employment. He showed that in modern conditions automatic restoration of the disturbed proportions between the main parameters of the reproductive process does not occur; market regulators are unable to ensure equilibrium.
Keynes drew attention to the fact that as social wealth increases, the problem of maintaining effective demand becomes more complex and urgent. People tend to save more and more of their income. The identification of saving with accumulation does not correspond to real practice. The money saved does not automatically pass into the accumulated part of the social product. Savings and investments should be considered separately. If savings are less than investment, then this will restrain growth rates; if savings are greater than investments, then the result will obviously be different.
In Keynes's theory, a decrease in wages is a factor in a decrease in aggregate demand, including such a component as investment demand. Considering that in his model of economic development it is the size of effective demand that determines the level and rate of growth of the gross national product, Keynes advocated rigid wages and an economic policy aimed at achieving high employment in the national economy.
J.M. Keynes was a supporter of the presence of a large amount of money in circulation, despite the increase in product prices under this condition, since an increase in the money supply will contribute, among other things, to the growth of wages and employment. Budget deficit, the growth of the money supply and inflation, in his opinion, are quite an acceptable price for maintaining a high level of employment and a stable increase in the level of national income.
Keynes is the founder of the concept of deficit financing, or artificially pumping money into the economy, the creation of "new money", which is in addition to the general flow of costs and, thereby, compensates for insufficient demand, employment and accelerates the increase in national income.
The main strategic direction of the state's economic policy, according to Keynes, should be to support investment activities, to promote the maximum transformation of savings into investments. To overcome the main weakness of the capitalist economy - insufficient propensity to invest - the state must not only create the most favorable conditions for investment activities of entrepreneurs (lower interest rates, deficit financing of inflationary price increases, etc.), but also take on the functions of a direct investor.
Keynes also calls the fiscal policy, which regulates the amount of net taxes and government purchases, the most important measures that can compensate for the lag in demand and activate the “propensity to consume”.
The theoretical significance of Keynesian developments lies in the fact that the ideas and provisions expressed by Keynes, his terminology, methodological approaches and analysis of macroprocesses entered the arsenal modern science and continue to be refined, deepened by supporters of the Keynesian school, challenged and transformed by its opponents.
Keynesian teachings have had an undeniable and powerful influence on economic policy. In the countries of modern capitalism, the state intervenes in the economy in various forms, including using Keynesian recipes to maintain employment and economic growth.
Keynesian theory dominated from the second half of the 1930s to the early 1970s. The changed economic situation, aggravation of inflationary processes in combination with stagnation of production required the search for new instruments and methods of economic regulation.
Despite the strengthening of criticism of Keynesian theory, it is still relevant, helps to formulate effective policies, without relying on the action of some “natural” forces.
Listliterature
Trainingliterature:
1. Avtonomov V.A. History of economic doctrines [Text]. - M: INFA-M, 2014.-321 p.
2. Agapova I.I. History of economic doctrines [Text]. - M: Jurist, 2015.-475 p.
3. Bartenev S.A. History of economic doctrines [Text]. - M: Jurist, 2015.-286 p.
4. Pole G.M. History of the World Economy [Text]. - M: UNITI, 2015.-420 p.
5. Timoshina T.M. Economic history of foreign countries [Text]. - M: Justicinform, 2014.-358 p.
6. Keynes JM General theory of employment, interest and money. M .: Progress, 1978
7. Eliseev A.S. Economics [Text] .- M: Yustitsinform, 2015.-290 p.
8. Kulikov L.M. Fundamentals of economic theory [Text] .- M .: Finance and statistics, 2014.-368 p.
9. Kurakov L.P. Economic Theory [Text] .- Moscow, 2015 - 436 p.
10. McConnell K.R., Bru S.L. Economic theory [Text] .- M .: Finance and statistics, 2015.-405 p.
11. Nikolaeva L.A. Economic theory [Text] .- M .: Finance and statistics, 2014.-410 p.
12. Nosova S.S. Economic theory for bachelors [Text] .- M .: Finance and statistics, 2015.-389 p.
...Similar documents
Features of the process of the emergence of evolution, struggle and change of economic theories, the purpose of macroeconomic regulation, the essence of economic views and concepts. Preconditions and factors for the emergence of Keynesian theory, its development and crisis.
test, added 12/02/2010
Characteristics of the methodology of J.M. Keynes as the creator of the theory of macroeconomics. Study of the main postulates of the general theory of employment, interest and money. Keynesian model state regulation of the economy. The concept of the economic role of the state.
term paper added 02/06/2010
Economic theory D.M. Keynes - the concept of the "General theory of employment, interest and money". Formation of Keynesianism as a theoretical doctrine. Features of the development of neo- and post-Keynesian theory. Keynesian theory and practice in the second half of the twentieth century.
term paper, added 03/30/2008
The concept and main instruments of macroeconomic regulation, its types and main tasks for successful functioning national economy... Leading factors in the emergence of Keynesian theory of economic regulation, its development and the causes of the crisis.
test, added 04/30/2009
Keynesian Employment Theory Toolkit. The role of investment in Keynes's economic theory. Alternative concepts of state regulation of the economy. The interdependence of income - consumption and income - savings. Investment demand curve.
term paper added 01/06/2011
Theories of state regulation of the economy. Economic doctrine J.M. Keynes. The novelty of the main idea of the "General Theory". The subject and method of study by J.M. Keynes. Measures of state regulation of the economy. The period of dominance of Keynesian theory.
term paper, added 12/18/2009
Preconditions and stages of the Keynesian concept, its evolution and methodology. Exploring the essence macroeconomic equilibrium in Keynesian theory and the role of the autonomous spending multiplier. The main directions of neo-Keynesianism and post-Keynesianism.
term paper, added 11/09/2010
The economic doctrine of J.M. Keynes. Concepts of the economic role of the state. The main content of the Keynesian revolution. The neo-Keynesian concept of "economic growth". Keynesian currents and a model of state regulation of the economy of the twentieth century.
term paper added 01/21/2014
Demand efficiency theory. Keyesian equilibrium in part-time employment. The basic equation of Keynesian theory. The theory of employment and unemployment. Price and inflation in Keynes's theory. Keynes' economic program.
abstract added on 12/13/2002
Methodological concepts of the English economist J.M. Keynes, his doctrine of unemployment and state regulation of the economy. Basic principles of labor "General theory of employment, interest and money." The study of Keynesian theory at the present stage.
J.M. Keynes. Fundamentals of methodology
1 John Maynard Keynes (1883-1946) - English economist, statesman. Born into the family of a professor of economics. Graduated from King's College, Cambridge University and entered civil service on business in India. In 1909 his book "Index Method" was published.
Since 1913, J. Keynes - Secretary of the Royal Economic Society, and then a member of the Royal Commission on Finance and money circulation India. In 1919, J. Keynes participated in the Paris Peace Conference, after which his work "The Economic Consequences of the Versailles Peace Treaty" was published, which brought the author world fame.
Since 1940, J. Keynes became an advisor to the British Treasury, and in 1942 - a member of the House of Lords and received the title of baronet.
J. Keynes developed the foundations of post-war financial relations, which were adopted by the Bretton Woods conference and led to the creation of the International Monetary Fund and the International Bank for Reconstruction and Development.
J. Keynes research methodology is as follows:
The scientist created the foundations of short-term macroeconomic analysis -
presented economic behavior as a function with a small number of basic variables; while he limited himself to two units of measurement - the monetary unit and the unit of labor;
He introduced into the theory of economic science mathematical models based on the relationship of a small number of variables; at the same time, the equilibrium of the economy was reduced to the equilibrium of the commodity market, the money market, the bond market, etc .;
He created a new language of economic theory - this language is faced with a small number of aggregated values that do not change much in a short period of time; with its help, the entire economy is reduced to the functioning of four interconnected markets (market valuable papers and services, labor market, money market and securities market);
J. Keynes considered the role of supply to be central in the economic process; he argued that when the expectation of an increase in prices and economic life conforms to this, then this is quite enough to cause a rise in prices for a while, and when the expectation is justified, the increase in prices is even more intense;
Introduced the concept of marginal efficiency of capital, as the ratio of the expected income from capital property to the supply price of this property; the latter is understood as the lowest price sufficient to induce the manufacturer to release a new additional unit of this property. In other words, the marginal efficiency of capital is the ratio of profit per unit of newly commissioned capital property (fixed capital) to the replacement cost of this unit.
In the background in Keynes's system is also qualitative social analysis. When he has to give an interpretation of economic phenomena from the point of view of their social essence, he often considers them as objectification of psychological motives. This is, for example, his interpretation of the "basic psychological law." In explaining the source of interest, Keynes refers to the psychological motive of "preference for liquidity" (the desire of economic entities to keep their wealth in the most liquid, monetary form, for refusing liquidity, the subject has the right to receive compensation, which is interest).
In contrast to Say and the neoclassicists, who believed that the problem of demand (that is, the realization of a social product) is not essential and is resolved by itself, Keynes placed it at the center of his research, made it the starting point of macroanalysis. It is no coincidence that Keynes's theory is called economic theory demand. Keynesian demand-side factors are decisive in explaining total employment. Explaining his own position on this issue, Keynes argues with a follower of the Cambridge school, Professor A. Pigou, the author of the book The Theory of Unemployment (1933).
J. Keynes set the task of achieving economic proportions between national income, savings, investment and aggregate demand. The starting point is the belief that the dynamics of national income production and the level of employment are determined by the factors of demand that ensure the implementation of these resources. In the theory of J. Keynes, the sum of consumer spending and investment is called "effective demand".
Effective demand Is the aggregate effective demand, which determines the volume of employment. The main components effective demand are consumption and investments.
The increase in the amount of funds used for personal consumption, Keynes considered sustainable income growth function.
Moreover, if C is the volume of consumption, and Y is income, then the ratio (the marginal propensity to consume, which determines the slope of the consumption function) is greater than zero, but less than one, and as Y increases, it gradually decreases. In other words, as income rises, consumption absolutely grows, but to a lesser extent than income. Keynes associated this character of the consumption function with the so-called "The basic psychological law", according to which, with an increase in income, the propensity to consume falls, and the propensity to save increases.
Keynes's "basic psychological law" reflects the real circumstance that with an increase in income spent on consumption, an increasing part of it is spent on the purchase of expensive durable goods and, therefore, must accumulate for some time. After a certain threshold of income growth, the individual moves away from the position of an employee who spends most of his income on personal consumption, and approaches the position of a capitalist, public function which is the accumulation of capital.
It follows from Case's "basic psychological law" that with an increase in income, the share of effective demand provided by personal consumption decreases all the time and therefore the expanding volume of savings must be constantly absorbed by the growing demand for investment. Keynes considered the size of investment to be the main factor in effective demand, and through his intermediation - the main factor in employment and national progress. Ensuring the normal size of the investment runs up against the problem of converting all savings into real investment. From this comes the widely known Keynesian formula: investment must equal savings (I-S).
Employment and national income, according to J. Keynes, is determined by the dynamics of effective demand.
A decrease in wages will not lead to an increase in employment, but to a redistribution of income in favor of entrepreneurs. With a decrease in real wages, the employed do not quit their jobs, and the unemployed do not reduce the supply of labor - therefore, wages depend on the demand for labor. The excess of labor supply over demand gives rise to forced unemployment.
Full employment occurs when the level of consumption and the level of investment are in some correspondence. By pushing a part of the economically active population into the ranks of the unemployed, equilibrium is achieved in economic system... Thus, in the theory of J. Keynes, it is possible to achieve equilibrium even with part-time employment.
J. Keynes put forward a new category - investment multiplier... The mechanism of the "investment multiplier" is as follows. Investment in any industry causes the expansion of production and employment in this industry. As a result, there is an additional expansion of demand for consumer goods, which causes an expansion of their production in the relevant sectors. The latter will present additional demand for means of production, etc. Thus, through investment, there is an increase in aggregate demand, employment and income.
Multiplier value depends on the marginal propensity to consume. The more consumed part of the income increase, the more energetic and longer the multiplier effect lasts. Therefore, a multiplier formula is applied, reflecting the turnover of income in related industries. Let A be the initial increase in income (equal to the initial increase in investment), k - the marginal propensity to consume, that is, the consumed share of this increase. In this case, we obtain (by the formula of an infinitely decreasing geometric progression) the following expression for income increments in related industries:
where is the multiplier, i.e.
The concept of the multiplier, establishing a stable constant dependence between investment, on the one hand, and national income, on the other, also led to the idea of the need for government influence on economic dynamics by stimulating investment demand.
The state must influence the economy if the volume of aggregate demand is insufficient. As tools state regulation J. Keynes singled out monetary and budgetary policies. Monetary policy affects the increase in demand by lowering the interest rate, while facilitating the investment process. The impact of fiscal policy is clear.
J. Keynes developed principles of organization of the international financial system, which served as the basis for the creation of the International Monetary Fund. The ideas are as follows:
Creation of a clearing union between states, which, according to Keynes, "must ensure that money received from the sale of goods from one country can be used to purchase goods in any other country";
Creation of an international quasi-currency - opening accounts for everyone central banks allied countries to cover their external deficits; the value of the quasi-currency depends on the size of the country's quota in foreign trade.
- How to get a Metro Cash & Carry card for an individual - getting a card and a list of documents Metro card registration
- An example of registration of an act of reconciliation of mutual settlements
- How to withdraw money from YouTube (YouTube) and Google Adsense (Google Adsense) to a Sberbank card: A Complete Guide
- Active income: types and creation of sources