Keynesianism is a economic theory that opposes liberalism, as it defends the intervention of the State in the control of the national economy, in order to make the country reach full employment.
This political-economic doctrine was created by the English economist John Maynard Keynes (1883 - 1946) as an alternative to the liberalist model, which reached its peak at the end of the second decade of the 20th century, when the famous 1929 crisis.
The United States, during Roosevelt's presidency, used the Keynesian model in an attempt to save the country from the great crisis of the 29th. This economic doctrine was the basis for the famous plan New Deal, which aimed to get the US out of the "Great Depression".
The Keynesian theory was officially presented by Keynes in the work "General Theory of Employment, Interest and Currency" (General Theory of Employment, Interest and Money), published in 1936. In fact, this book became the basis and reference for new studies on Economics and Administration.
Many people think that Keynes defended the nationalization of the economy, as socialist countries followed on the basis of Marxist theory, but he was a defender of the capitalist model. However, this economist also believed that the State should be responsible for controlling certain factors, such as the guarantee of social benefits to workers so that they had a minimum standard of living.
For this reason, Keynesianism was also known as the "Welfare State".
See also:meaning of capitalism.
Characteristics of Keynesianism
Some of the main defining characteristics of Keynesianism are:
- Development of political actions for economic protectionism;
- State intervention in areas of the economy where private companies cannot or wish to act;
- Opposition to liberalism and neoliberalism;
- Social benefits to the population (minimum wage, unemployment insurance, health insurance, etc.);
- Lower interest rates;
- Guarantee of full employment;
- Balance between production and demand.
Keynesianism and Neoliberalism
Keynesianism is the opposite of neoliberalism. The latter, like classical liberalism, defends the state's low participation in the economy, while the first provides for State intervention in matters that private companies neglect.
According to the ideas of Adam Smith, precursor of liberalism, capitalism itself contained mechanisms that served as socioeconomic self-regulators of society. Thus, for liberals, the state should only guarantee private property.
With the Crisis of 29, the so-called "Invisible Hand" of capitalism proved to be ineffective as the only alternative to keep the economy balanced.
It was from this uncertainty that Keynesianism had space, stating that the State should interfere in society and the economy to ensure that all citizens have a life with a minimum of dignity.
Learn more about neoliberalism.