Economics

Explanations

Keynes for the Beginner

Geoff Riley

6th July 2020

Professor Robert Skidelsky is running a series of tweets capturing the essence of Keynesian economic thinking. We'll curate his tweets in this blog entry - there is a lively debate after each of Professor Skidelsky's tweets!

Our own study resources on Keynesian economics can be found here

Keynes for the Beginner, Lesson 1: Being Keynesian doesn’t mean running budget deficits. It means having a theory of the economy which justifies the use of the state budget to balance economic life at full employment.
— Robert Skidelsky (@RSkidelsky) July 3, 2020

Keynes for the Beginner, Lesson 2: Keynes's revolutionary insight was that capitalist market economies have no automatic tendency to full employment. This shocked the economists of his day, whose models taught them that unemployment was impossible if wages were flexible.
— Robert Skidelsky (@RSkidelsky) July 4, 2020

Keynes for the Beginner, Lesson 3: Keynes’s big idea was that because the future is uncertain, private investment depends on confidence, or business psychology, not mathematical calculation of future returns. He called this ‘animal spirits’.
— Robert Skidelsky (@RSkidelsky) July 5, 2020

Keynes for the Beginner, Lesson 4: Why don’t economies quickly bounce back (V-shaped) from collapses? Keynes gave two reasons. The first is that every producer is also a consumer. So cuts in production costs (wages) simultaneously cut the community’s spending power.
— Robert Skidelsky (@RSkidelsky) July 6, 2020

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

@tutor2uGeoff