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72. MAIN PROVISIONS J. KEYNS IN THE "GENERAL THEORY OF EMPLOYMENT, INTEREST AND MONEY"
"The General Theory of Employment, Interest and Money" is the main job J. Keynes.
Basic position general theory of employment is as follows.
J. Keynes He argued that with an increase in employment, national income increases and, consequently, consumption increases. But consumption is growing more slowly than incomes, because as incomes rise, people's "desire to save" intensifies. According to Keynes, the psychology of people is such that an increase in income leads to an increase in savings and a relative reduction in consumption. The latter, in turn, is expressed in a decrease in effective (actually presented, and not potentially possible) demand, and demand affects the size of production and thus the level of employment.
The insufficient development of consumer demand can be compensated by an increase in the cost of new investments, i.e., an increase in production consumption, an increase in demand for means of production.
Total investment plays a decisive role in determining the size of employment. According to J. Keynes, the volume of investment depends on the incentive to invest. The entrepreneur expands investment until the declining "entrepreneurial efficiency" of capital (profitability as measured by the rate of return) falls to the level of interest.
Source of difficulty is that, according to J. Keynes, the return on capital is declining, and the level of interest remains stable. This creates narrow margins for new investment and therefore for employment growth.
Reducing the "marginal efficiency of capital" J. Keynes explained by the increase in the mass of capital, as well as the psychology of capitalist entrepreneurs, their "tendency" to lose faith in future income. According to the theory Keynes total employment is determined not by the movement of wages, but by the level of production of "national income", that is, by the effective aggregate demand for consumer and capital goods. The latter tends to lag behind, to be unbalanced, which makes full employment under capitalism an exceptional phenomenon.
J. Keynes worked hard to prove the fallacy of using wages as a way to cure unemployment.
J. Keynes argues that reducing wages, even if it can be done, cannot reduce unemployment. "Murderous"
output Keynesian theory lies in the fact that under capitalism there is not a single mechanism that would guarantee full employment.
J. Keynes argues that the economy can be balanced, i.e., it can achieve equilibrium in total output with high unemployment and inflation.
J. Keynes acknowledges that unemployment - a phenomenon organically characteristic of capitalism, which “inevitably accompanies modern capitalist individualism” and is determined by the organic shortcomings of the free competition system.
Author: Tatarnikov E.A.
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