The Ideas

The General Theory of Employment, Interest and Money is an exceedingly difficult book, and to this day there is little agreement among economists about its central message, or rather little agreement about the precise specification of the central message, and particularly the route Keynes chose to reach his basic conclusions. The main message of the book is clearly that a modern capitalist economy is constantly plagued by unemployment and that this unemployment is caused by a deficiency of what Keynes called ‘aggregate demand’, the sum total of spending by consumers and investors. There is a constant danger that there won’t be enough total spending to buy back all the output of a fully employed economy; there is a constant threat that some output will go to waste because there is not enough spending to purchase that potential output.