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Home About the TEDC The TEDC at Work Commercial Areas Doing Business in Teaneck Real Estate Community Resources In the News Maps & Directions Terms / Conditions / Policies Contact Us SIMPLIFIED Keynes.
The classical theory is well served as an instrument of capitalist reality and understanding as the basis of government economic policy until the first decades of the XX century.
However, after the First World War caused serious economic problems of economic crises and unemployment. These problems became particularly acute at the end of the third decade of the century as a result of the economic crisis of 1929 and the subsequent long and deep depression in which unemployment is extremely high.
Faced with this economic and social tragedy overwhelming majority of scientists of the classical school has continued to declare his faith in the ability of competitive economic system to regulate and still saw in the traditional instruments of anti-crisis policy (maneuvering the rate of interest and level of wages) means economic recovery. However, despite all efforts, many economies have continued to operate at a low level of employment, without giving any signs of significant recovery.
At this point, some governments, motivated by the seriousness of the situation and the need to resort to some form of intervention to alleviate the plight of workers, began to use such non-standard facilities such as public works programs, fixing wages, and subsidies to unemployment. At the same time, some economists have pointed directly to the major obstacles to traditional theoretical explanations of income and employment, and made efforts to create new analytical tools.
The main reason for this sudden success of the analysis of Keynes was no doubt that the English economist, struck the central thesis of the classical theory according to which the competitive mechanism can always make full use of production factors, as well as developed his own theory of employment, an alternative to classical. For several years, the theoretical apparatus of "The General Theory 'Keynes was adopted by the broadest community of scientists and economic policies of almost all Western countries began to focus on the" new economic theory. "