Keynes’s General Theory reframed economics around aggregate demand

Evidence

The bleakness of Hayek’s and Robbins’s assessment of their prospects was further exacerbated by the arrival of Keynes’s General Theory of Employment, Interest, and Money in 1936. Until that point economics at Cambridge had been impeded by lingering defects in A Treatise on Money that Keynes himself had acknowledged. By abandoning the assumption that total output was given and turning his attention toward the level of aggregate demand, however, he dramatically shifted the framework of discussion and created a much more robust explanation for the problem of stable equilibrium below full employment. — Angus Burgin, The Great Persuasion, 76

Categorization

• XREF: connects to: Keynes held that free-market capitalism usually has deficient effective demand — Clara E. Mattei, The Capital Order: How Economists…, 1690; Keynesian theory holds that idle savings rather than spending retard capital accumulation — Clara E. Mattei, The Capital Order: How Economists…, 1683; Keynesian economics drove Hayek’s school to near extinction by 1941 — Angus Burgin, The Great Persuasion: Reinventing Free…, 82

Broader Connections

• Keynes held that free-market capitalism usually has deficient effective demand #expands (0.92) — Clara E. Mattei, The Capital Order, 1690
• Keynesian theory holds that idle savings rather than spending retard capital accumulation #expands (0.90) — Clara E. Mattei, The Capital Order, 1683