Keynesian Revolution: Difference between revisions

The '''Keynesian Revolution''' was a fundamental reworking of economic theory concerning the factors determining employment levels in the overall economy.{{citationCitation needed|date=February 2012}} The revolution was set against the then orthodox economic framework: [[Neoclassical economics]].{{citationCitation needed|date=February 2012}}

The early stage of the Keynesian Revolution took place in the years following the publication of Keynes's ''General Theory'' in 1936. It saw the neoclassical understanding of [[employment]] replaced with Keynes's view that demand, and not supply, is the driving factor determining levels of employment. This provided Keynes and his supporters with a theoretical basis to argue that governments should intervene to alleviate severe unemployment. With Keynes unable to take much part in theoretical debate after 1937, a process swiftly got under way to reconcile his work with the old system to form [[Neo-Keynesian economics]], a mixture of neoclassical economics and [[Keynesian economics]]. The process of mixing these schools is referred to as the [[neoclassical synthesis]], and Neo-Keynesian economics can be summarized as "Keynesian in macroeconomics, neoclassical in microeconomics".{{citationCitation needed|date=February 2012}}