Question

In: Economics

In the wake of the financial crash of 2008 and ensuing “Great Recession”, Robert Skidelsky, Keynes’s...

  1. In the wake of the financial crash of 2008 and ensuing “Great Recession”, Robert Skidelsky, Keynes’s biographer published Return of the Master—strongly suggesting that the economics of JM Keynes is still relevant. Would you, or would you not, agree it is still relevant? Why?

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Expert Solution

Yes, I agree to the fact that Keynesian Economics is still relevant. The Keynesian Economics came forth after the great depression of 1929-30. During this great depression , the classicals failed to revive the economy and J.M keynes came to the rescue with his whole new theory of Keynesian Economics. He stated that during depression/recession, govt intervention is necessary rather than depending on automatic adjustment. This is so because during recession, the level of income is low, unemployment is widespread which creates a fear in the minds of pvt players and they have no incentive to invest in the economy. This is the time when govt needs to intervene and undertake spending activities to push money in the economy and provide incentives to the pvt players to invest in the economy. Govt intervention will also help to tackle low production levels and creation of jobs.

In the current time we are witnessing a global shock in form of the pandemic CORONA VIRUS which has led to massive lockdowns all over the world. It has halted the production of the economies and there is a global economic crisis coming our way. The income levels will stoop to low levels, unemployment will rise due to coming depression. So the govt needs to intervene in order to save the day. Due to lack of incentives to the investors , they wont invest. The govt needs to inject money in the market to stabilise the output level,employment and income of people. Therefore, we cxan say that keynesian economics is still relevant and has not lost its sheen yet.


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