What is the definition of wealth in Keynesean terms?

From what I have read of Keynes (The General Theory of Employment, Interest and Money), national wealth is defined (functionally) as a nation of consumers willing and able to consume -- but I could be wrong. Please help a poor public-educated observer understand what national wealth is by 21st century (post-classical) standards.

Hey - anon24225. What if there is no war to generate government demand and it is left up to the unwilling or timid consumer? Private sector spends money for economic gain. Government spends money for political gain. What if certain sectors of the country cannot benefit from government stimulus?

No. 23. *Exactly.* Thank you for reminding me.

Just look at the failure of Nixon, Carter, and FDR. FDR's stimulus failed, unemployment didn't change much for seven years. We can also look at the failure of the Bush Stimulus!

It doesn't work for one major reason: the money government spends comes from the very source it's trying to fix - the people... Redistribution of wealth doesn't create wealth, it only changes who has the money...

I know that this will bring a firestorm, but if you apply God's economics to our society, you will find that all of man's attempts to deal with social and economic issues, fails miserably. The intrinsic law of loving God and serving each other totally obliterates the ugly traits of a fallen humanity, i.e., hate, greed, lust. Wealth is not a problem, if it is come by honestly, and used to help others. I would rather see a wealthy person give freely to help those in need, rather than the government stealing it from the wealthy to redistribute to those who think that "a welfare state" owes them a comfortable life. It is amazing how quickly you can get a person to work, when their stomach is rubbing against their spine! Those that are incapable of working, need to be assisted; those that refuse to work, ought to suffer hunger pains.

The only problem with "Laissez-faire" is that you must have severe enough consequences for abusing the system, or the system will be abused. Integrity is lost in our society; if a person thinks they can cheat the system, and only pay a small price if they get caught, they will cheat the system! If there are no absolute standards for right and wrong, then who cares about getting caught?

We are a consumer-driven society because sex and violence sells. Planned obsolescence was introduced to force us to continually spend our resources on goods that don't last. Don't save up for a "rainy day", because the government will guarantee that you'll always have sunny days! Yeah, Right!

So let's have a rousing war and get out of this mess... the Government can ration everything and in a few years all will be better.

Your views are just a Keynesian joke ...

Keynesian economic theory is based on the rash assumption that wealth is a fixed quantity. wealth, however, can be created. let me use this anecdote. say there's 2 people. one of them creates something- let's say they're a farmer. they can raise livestock, and grow vegetables.

the other person is not a farmer, and cannot sustain himself without the farmer's help. the farmer requires something to trade for his food. the other person could build a house, or make clothing, etc. and each thing he creates has its own value. money is only symbolic of the value of something else- it holds no value itself, which explains the idea of inflation. if more money is added to the economy without more *value*, measured in goods and services, that money only serves to devalue existing money. taking money from those who have earned it and giving to those who have not (redistribution) causes inflation because no value exists where it's being relocated to. also, it provides less of an incentive to have a large sum of it- because those who do will get it taken from them without receiving anything in return. without a reason to have that position, they will cease to employ others under them, causing unemployment to skyrocket.

keynes suggested that if more demand than supply exists, there should be a tax to decrease demand.

on the other hand, supply side theory proposes a different course. reducing tax on the supplier, increasing potential supply (hence the name supply side).

this allows room for the creation of more wealth, as is natural in laissez faire capitalism. stagnation of wealth only matters if no more wealth is being created by producers- money does not have a circular flow unless the economy has stagnated.

economic regulation should only exist to prevent taking advantage of the government for the purpose of your own personal gain. the intervention of government in the economy is the only reason for any major economic disaster, including the great depression. "robber barons" only existed because they were helped by the government.

and i leave you with a quote from John Maynard Keynes that sums up his position- the polar opposite of mine.

"Capitalism is the extraordinary belief that the nastiest of men, for the nastiest of reasons, will somehow work for the benefit of us all." - John Maynard Keynes

I'm not so confident on the WWII comments, however in world war *one* (where a treaty of Versailles was signed the year after the armistice), the American lending to Germany was really quite like a global stimulus. It basically went (my understanding goes) that by the US giving money to Germany, Germany could afford to pay some nations she owed, who could then pay their own lenders. This created a cycle by which America did eventually end up getting all of its money back, not just from Germany but from other nations also. It really was a clever piece of economics.

Just so you have a few facts straight about WWII. The treaty of Versialles, was written to bankrupt Germany, so that American corporations could come in and purchase the country for nothing. Rockefeller, actually sold the fuel additive needed for the Luftwafer to bomb Britain. Henry Ford adored Hitler and GM sold him engines and technology. Also do not forget that Preston Bush, helped the Thyssen corporation make purchases that otherwise would have been impossible.

So before you start writing, do a little research. Just so you know I am 23 and never went to university but even I have found this info, and this is just a scratch of the surface.

It seems to me that our cash has been spent on goods from "other" countries (imports) without the resulting payment of wages to our labor pool. This reminds me of the old time barber who "bled" people in order to lower fever. We have "bled" our currency to China and to Saudi Arabia. Fix that Mr. Keynes!

If you're looking for "proof" that an economic theory like Keynes' can work, then you'll never find it. Economics cannot be truly tested in a scientific manner - you can never establish a control group - so "proof" is not really forthcoming. Even if the current usage of Keynes' ideas work, it's still not really proof. Economies can be influenced by too many things, sometimes from very obscure sources, and as is typical with economies - chaos abounds.

In today's economy, currency wealth of individual/business consumerism forms the foundation for world economic wealth. The degree of separation between the amounts of currency distributed to each individual is not accounted for in modern economic theory. Some countries have attempted to address the issue of individual distributed monetary inequality with varying results, but there still remains great inequalities in many of these countries. The root of this vexing economic problem lies in assumption that the holders of the pools of currency, which are controlled by major economic institutions e.g large corporations, governments, banks, other financial lending businesses, will operate egaltarily with a minimum of regulation. The assumption of egalitarianism for profit across the full spectrum of the public has never been part of the economic history of the world. But that doesn't mean that we shouldn't try. 21st Century humans are evolutionarily capable of it. Past attempts, such as Sweden, come close, but fails in the long run because taxes limit personal/business accumulation of currency. The current pseudoism that "the market should/will regulate itself" has proven that egalitarianism has been left out of economic action on the marco scale. A true turn to build in egalitarianism into economic policy should be the foundation of any new economic efforts world wide. Large degrees of currency separation between the populace lie at the root of most social problems inflicting our world today. We need a new model, neither Keynesian nor Austrian.

The "pragmatic" redistribution of wealth theory here is insulting and degrading to the poor. It's basically saying the poor are too stupid to save money, so spending it will boost the economy. (That's all fine and good if they were purchasing U.S. made goods). At some point the poor are going to realize how the government views them and why it's important for a segment of our population to remain poor.

No, it was not the spending of military goods during WWII that pulled us out of the Great Depression. Is was the sole fact that the good 'ol USA was the only industrialized nation left untouched by the war in an infrastructure and manufacturing sense.

The world came to us for the recovery because we were the only ones capable at the time to rebuild the world.

The world bought our goods; we enjoyed a great economic boom, built the interstate, the middle class expanded, the Great Society polices created, etc.

Now, the world has caught up in the last twenty years and we must shrink our spending to a degree or be crushed under the budgets and entitlements created in the past. Unfortunately, Obama will not bring that change.

What was WWII? It was a government spending program of a magnitude never seen before. It broke the back of the depression. The country devoted itself to defense and military (paid by the government).

After the war the industries created by the government defense spending converted to consumer goods (cars, appliances, etc.) to meet the pent up demand of the American people giving birth to a golden economic age that crashed and burned with Reaganomics and GWB. Maybe the bailout is not big enough.

Boom/bust was also a feature of the Golden age of Keynes, only less severe than it's malevolent neo-liberal counterpart.

neither explain why crises occur....

I agree that the article is a good and simple brief introductory definition of Keynesian economics.

I do not agree with the oft-repeated nonsense that Roosevelt's programs would not have allowed our citizens to dig themselves out of the Great Depression (--as opposed to what has not been done to date regarding the present Depression, and the mini-depression created by Reagan--) without the advent of WWII. It is clear that FDR's Government WPA, CCC, etc., ignited a rebirth of art, science, theater (also cinema), knowledge of and appreciation of American culture and history--and allowed opportunities (i.e., Hope with Foundation)for many previously excluded economic and ethnic groups in our nation. We would have lost WWII without the abilities developed by these "interventionist" Programs.

A nation requires a government which serves its citizens to survive--and to thrive. Otherwise, we might as well have anarchy--a form of which is the "cycles" cited by academic economists and privileged politicians. It was the greed of the Robber-Barons, Bankers, and the very closed tier of the most wealthy and socially and politically connected individuals who caused the Great Depression in this country and the Depression--and, yes, it is a Depression-which is currently tormenting the working class. I also must point out that Obama and all the rest speak of a middle class that does not exist. Someone who has an income--not including assets other than current, liquid income of $250K plus has no relationship to the median income of around $50K for a family of 4. Nor does it speak to those who make much less than that, i.e., The People.

Capitalism without strict regulation will destroy any nation--including ours--and the real culprit, fundamentally, is that old enemy of any democratic country--COLONIALISM--what we mistakenly call Immigration, Out-sourcing, etc. Economists of any ilk--Keynesian or otherwise--have not faced this fact. If Obama doesn't, our country will not survive with any ghost of our fundamental values and promise. We cut police, fire and we spend tens of millions on Colonialists. Colonialism is the twin of Genocide and no friend to any democratic, regulated capitalistic, just Nation--ours.

Keynesian economics is a joke. The notion that saving money for tomorrow is a bad thing is illogical. If you want to learn about real economics, study Austrian economics.

Keynesian economics have never worked. Never has this theory been able to rescue any foundering economy. Yet its detractors will argue that it "hasn't been tried", or "the Government didn't spend enough". So don't expect its proponents to come up with any success stories.

An utter failure everywhere. And Keynesian economics didn't get us out of the Great Depression. (economics 101) Hitler and Hirohito did. FDR made our economy worse.

24112: Obviously, the people that hoarded the money were the people who had some money to hoard. Elaborate on the idea that about how this theory makes it easier for banks. I fail to see how a bank is a required component of a Keynes transaction.

The Depression caused what is now known as a "liquidity trap", where the price of money is 0% interest and still no demand. GOVERNMENT came in and spent on work projects and then the war....that in turned created demand for goods and services which got up out of the depression: conclusion: Keynesian Economics works! and they can explain the real world conditions of the economy better then classical economics.

Who hoarded money? The banks, it's called interest and credit. Keynesian economics makes the banks hoard money even easier, and hides inflation till the money finally hits the poor.

There is no proof it ever works.

Poor stays poor, rich gets richer, grand idea.

I really like this article on Keynesian economics, it is short and to the point. Exactly what I needed to get a general understanding of the main ideas of this theory. thanx!