KEYNES - Explicado para principiantes

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To understand Keynesianism, we must first discuss economic crises and the impact they have on consumption, income, and employment. Economist John Maynard Keynes proposed state intervention as a solution to these crises, which differed from the prevailing ideology of Liberalism. State intervention aimed to increase the money supply and reduce unemployment through measures such as printing more bills, lowering interest rates, and increasing public expenditures. However, Keynesianism also has its weaknesses, including the potential for inflation due to increased liquidity and the long-term consequences of public debt financing.

Understanding Economic Crises

• Economic crises lead to a decrease in consumption, income, and employment.

• This creates an infinite loop where lower employment leads to further decreases in household income and consumption.

• The Great Depression of 1929 highlighted this cycle of economic decline.

Introduction to Keynesianism

• Economist John Maynard Keynes proposed state intervention as a solution to economic crises.

• Liberalism argued that the market could self-regulate through perfect competition and supply-demand dynamics.

• Keynesianism challenged this notion by emphasizing that markets are not perfect and require state interventions for balance.

• The key difference between Keynesianism and Liberalism is their trust in either the state or the market.

State Intervention Objectives

• State intervention aimed to achieve two main objectives:

• Increase the money supply through measures like printing more bills and lowering interest rates.

• This increased liquidity but also had potential consequences such as inflation.

• Reduce unemployment by increasing public expenditures and creating jobs through construction of public works and services.

Financing State Intervention

• Public spending for state intervention was financed through public debts.

• Keynes believed that once the economy returned to normal, the increased purchasing power from more money supply and jobs would enable the repayment of debts.

• Increased household purchasing power leads to higher company earnings, resulting in increased tax revenues used to pay off debts.

Limitations of Keynesianism

• While Keynesianism may provide short-term solutions, it has long-term consequences:

• Printing more banknotes and low-interest rates can lead to inflation and encourage excessive debt accumulation.

• Public spending financed by public debts can result in increased taxes, leading to reduced consumption, income, and employment.

Conclusion

• Keynesianism offers immediate solutions but may have negative long-term effects. However, as John Maynard Keynes famously said, "In the long run we are all dead."