Keynesian Demand Management

The notion of demand management is commonly used in the field of macroeconomics in relation to the adoption of government policies that facilitate the achievement of full employment equilibrium in the economy. The widely known scholar John Maynard Keynes first advocated such intervention in his classic 1936 work General Theory. The British economist was a stark critic of the classical orthodoxy, in particular of the culture of laissez-faire whereby market imbalances are best dealt by natural adjustments of demand and supply, which, under certain conditions, are expected to restore equilibrium prices and quantities. Keynes observed that such imbalances tend to occur cyclically as a consequence of lack of demand, and if left untreated, could degenerate in severe downturns or periods of prolonged recession. Since under ...