Pksimon2007
Member
- May 2, 2015
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Keynes may be the most misquoted, misunderstood economist of all time - partly because his name was hijacked by neoclassical economists who believed themselves to be Keynesian, without ever actually reading what Keynes wrote. They adopted some of his words, ignored most of his concepts, and most of what people think of today as Keynesian economics.....isn't.
Nothing is more basic a "Keynesian" concept than aggregate demand. It is generally described as being the willingness and ability of consumers to spend money on stuff. Conservatives whine that demand is not a driver of anything. However, they basically miss the entire concept of aggregate demand.
To understand Keynes, one has to understand that he believed that entrepreneurship drove economic production, and that consumers responded by validating or invalidating the guesses that entrepreneurs made about what would sell.
To Keynes, everything is about a guessing game in which humans, who have no certain knowledge of the future, make decisions now based on their guesses about what will happen in the future. Humans are individuals, and we have no idea what any individual will decide to do, or how they look at things. We can look in the rear view mirror and see what happened, but are hard-pressed to figure out what will happen next. The future is not a mirror of the past. The past and the present give us clues, but the future is as murky for us, always, as it is for the entrepreneurs and consumers which we think about when we do economics.
So for your viewing pleasure, without further ado, the driver of economic activity, aggregate demand, live, and in person:
"let D be the proceeds which entrepreneurs expect to receive from the employment of N men, the relationship between D and N being written D = f(N), which can be called the Aggregate Demand Function."
Aggregate demand is "the proceeds which entrepreneurs expect to receive from the employment of N men".
It's an expectation held by entrepreneurs, not a willingness of consumers to buy stuff.
Nothing is more basic a "Keynesian" concept than aggregate demand. It is generally described as being the willingness and ability of consumers to spend money on stuff. Conservatives whine that demand is not a driver of anything. However, they basically miss the entire concept of aggregate demand.
To understand Keynes, one has to understand that he believed that entrepreneurship drove economic production, and that consumers responded by validating or invalidating the guesses that entrepreneurs made about what would sell.
To Keynes, everything is about a guessing game in which humans, who have no certain knowledge of the future, make decisions now based on their guesses about what will happen in the future. Humans are individuals, and we have no idea what any individual will decide to do, or how they look at things. We can look in the rear view mirror and see what happened, but are hard-pressed to figure out what will happen next. The future is not a mirror of the past. The past and the present give us clues, but the future is as murky for us, always, as it is for the entrepreneurs and consumers which we think about when we do economics.
So for your viewing pleasure, without further ado, the driver of economic activity, aggregate demand, live, and in person:
"let D be the proceeds which entrepreneurs expect to receive from the employment of N men, the relationship between D and N being written D = f(N), which can be called the Aggregate Demand Function."
Aggregate demand is "the proceeds which entrepreneurs expect to receive from the employment of N men".
It's an expectation held by entrepreneurs, not a willingness of consumers to buy stuff.