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KEYNES, JOHN MAYNARD (1883–1946) – a British economist, principal theoretician of state intervention (introduced by many countries in the 1930s after the great economic crisis of 1929-1934). In his opinion, the main disadvantages of capitalism, such as crises of overproduction, unemployment, poverty of a part of society, etc., can be overcome within this system by rational, active control by the authorities of the size of investment, on which the level of employment and effective demand depends. To ensure economic balance and thus prevent crises, the state should stimulate private investment and launch public projects financed by government loans. Keynesianism, as an alternative to neoclassical economics, has developed in particular a critique of the “economic anarchy” of laissez-faire capitalism. In The General Theory of Employment, Percentage and Money (1936), K. challenged the classical way of economic thinking and rejected the resulting belief in a self-regulating market. K. argued that the level of economic activity, and hence the unemployment rate, are limited by the total demand in the economy. If wages are cut off, then the purchasing power of the money will decrease, and thus the demand will increase. In times of high unemployment, K. recommended that the government revive the economy by increasing public spending or by lowering taxes. Spending money by the government works as an “injection” of demand to the market. By building a motorway, for example, the government creates jobs for construction workers and demand for building materials. The effects of this action will spread to the entire economy – for example, construction workers will have more money and thus they will be able to buy more goods. K. described this as a multiplier effect. At the same time, tax liabilities are a “withdrawal” of money from the economy, because they reduce global demand and weaken economic activity. The problem of unemployment can be solved not by the invisible hand of capitalism, but by government intervention – in this case by maintaining a budget deficit, which means that the government spends, quite literally, too much. Keynesian demand management gave governments the ability to manipulate employment and growth rates, and as a result to secure general well-being. K. was also the author of the casino theory – he argued that the stock exchange works like a casino because it is dominated by short-term speculative transactions. [J.G. Otto]