On the Innovation and Limitations of Keynesian Theory of Depressive Economics
Facing the serious problem of unemployment in the capitalist system, John Maynard Keynes took solving the problem of unemployment as his purpose of writing his book The General Theory of Employment, Interest, and Money. Keynes analyzed from inadequate employment to inadequate effective demand, further to inadequate investment and inadequate consumption and even inadequate money, his theories formed the economic theoretical system called as "the system of depressive economics". When the phenomena of inadequate effective demand, economic depression and serious unemployment appeared in the capitalist society, Keynes advocated to adopt active financial policies and directly increase the government's expenditure and public investment in order to stimulate the economic growth and solve the problem of unemployment. He thought that the tendency of consumption was relatively stable in a short term and therefore, to realize adequate employment must be started from increasing the demand for investment. Keynesian economic theories and viewpoints in policy have been still playing their roles in capitalist countries up to now, and they also have some reference value to the macroeconomic regulation in progress in China now.