StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

General Theory of Employment - Essay Example

Comments (0)
Summary
The essay "General Theory of Employment" explores the main features of John Keynes’ General Theory of Employment. When discussing John Keynes’ theories on employment, they must be placed in their historical context. Keynes was looking for a reason for and a way out of the situation of mass unemployment…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.1% of users find it useful
General Theory of Employment
Read TextPreview

Extract of sample "General Theory of Employment"

Download file to see previous pages He stated that "Men are involuntarily unemployed if, in the event of a small rise in the price of wage-goods relatively to the money-wage, both the aggregate supply of labor willing to work for the current money-wage and the aggregate demand for it at that wage would be greater than the existing volume of employment". His definition of involuntary unemployment, based on response to an increase in aggregate demand, led to his definition that full employment is "a situation in which aggregate employment is inelastic in response to an increase in effective demand for its output" (Chapter 3).
In Keynesian theory, capitalism has no machinery to guarantee full employment. Keynes assumes that when aggregate demand is outweighed by aggregate supply, then the output will serve as the self-adjusting mechanism (Furstater, 2001, p. 4). There is "no self-adjusting mechanism which generates a level of effective or aggregate demand sufficient to ensure the full utilization of resources" (Pilling, 1986, p.5). This creates an environment where the possibility of unemployment always exists. This conclusion is repeated by Furstater (p. 10) who states that "capitalism is first and foremost a system that does not employ every person willing and able to work".
According to Keynes, the level of employment is directly related to the level of output which fluctuates based upon the level of effective demand. The two key components of effective demand are consumption and investment. Consumption refers to the money spent by individuals on consumer goods. As income increases, so does our demand for consumer goods, though not quite as much as our income, due to increased taxes and the possibility of our putting the money away in savings, and Keynes referred to this as the marginal propensity to consume. He developed an equation which expressed how much extra will be consumed with each additional unit of additional income:
Marginal propensity to consume = The amount consumption rises / The amount income rises;
mpc (marginal propensity to consume) = dCw / dYw. (Rodda, p. 2). ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF General Theory of Employment

General Systems Theory

...General Theory of Employment... Week 11 First page, conventional problem solving vs SSM? How do they differ? The basic difference between conventional problem solving methodologies in management science and soft systems methodology is in their approaches towards the problem. The conventional systems are oriented on seeking ways to achieve the desired goals which are previously fixed, being within the problem context. Here the problem is predefined and the solving process focuses on ensuring that the objectives of the intervention environment are met. In the case of Soft Systems Methodology, the apparent problem suggested is not taken as the real problem but the designation of the problem situation, the definition of the problem and the set...
12 Pages(3000 words)Essay

General strain theory

...General Theory of Employment... General Theory of Employment... The General Strain theory is in circulation since last few decades during which it was not only seriously attacked academically but wasalso reformulated in order to overcome the different theoretical shortcomings in the original general strain theory. The origin of the strain theory however is based on the combination of different theories most importantly the Cohen’s social control theory and Merton’s Anomie. The social control theory outlines that there may different social structures within the society which can actually induce a person to commit crime. General Strain Theory or GST therefore proved one of the most important and critical theories in criminology providing...
5 Pages(1250 words)Assignment

The General Systems Theory

...General Theory of Employment... General Theory of Employment... The General System’s Theory The General System’s Theory By Kenneth E. Boulding (1956, p 197) General Systems Theory is ‘a name which has come into use to describe a level of theoretical modeling which lies somewhere between the highly generalized constructions of pure mathematics and the specific theories specialized discipline.’ General Systems Theory is not established as a theory of everything, which could replace all the other theories, but it has been established to give content to the generality of the theories and develop a relationship among them wherever it might exist (Boulding, 1956). Here in this paper we will be comparing and contrasting three theories that are related...
4 Pages(1000 words)Essay

General Systems Theory

...General Theory of Employment... General Theory of Employment... General Systems Theory Systems theory promises to assist unify information systems by linking itto other fields. By facilitating trans-disciplinary happenings, systems theory gives legitimacy to the spanning of disciplinary boundaries (Dua & Gangopadhyay 2012). System thinking and systems theory assists the researchers in addressing complex problems. A system can be defined as a set of elements which are interrelated. In the case of information systems, the elements are all the users, computers (both hardware and software) and organizational processes (Dwivedi & Wade 2011). According to Dwivedi and Wade, a process is essentially a set of behaviors that incorporates a system and whose ...
6 Pages(1500 words)Essay

The General Theory of Crime

...General Theory of Employment... General Theory of Employment... General Theory of Crime In terms of crime's general theory of action, Gottfredson and Hirschi (1990) argue that all crimes occur because they are chosen. They say that there is significant variation in the extent to which people choose to act offensively or recklessly based on their underlying "criminality". This criminality or impulsiveness is an individual property characterized by several things: the need for immediate gratification of desires, the utilization of simple means ("money without work, sex without courtship, revenge without court delays"), preferences for exciting, thrilling, or risky activities, little interest in long term interpersonal or economic investments,...
12 Pages(3000 words)Essay

General Systems Theory

...General Theory of Employment... General Theory of Employment... Systems Theory Today it is possible to define at least three directions applying for concept of a metatheory in management. One of them is aGeneral Systems Theory founded by Austrian biologist Ludwig von Bertalanffy (1901-1972) who took care about a so-called "compartmentalization" of science: "The physicist the biologist, the psychologist and the social scientist are, so to speak, encapsulated in a private universe, and it is difficult to get word from one cocoon to another." (Roeckelein, 1998) Bertalanffy stated that definite general ideas could have significance across a wide spectrum of disciplines. Specifically, they try to show that many of the most essential things studied by...
5 Pages(1250 words)Book Report/Review

The General Theory of Employment

...was "The General Theory of Employment, Interest and Money" which was published in the year 1936, in which he elaborated about the employment and the causes of underestimated or overestimated the interest rates and its impact on the economy, which eventually became the yardstick for the future economic thoughts. Due to his great work he was awarded as the 'Most Influential Economist' of Britain which motivated him to join the country's treasury again in 1942. He played a decisive role during the world war which always secures his name as a great economist (Samuelson, 2002). KEYNES WORLD AND HIS THEORY: Keynes put forward the main causes of depression...
8 Pages(2000 words)Case Study

Critical Analysis of The General Theory of Employment by J. M. Keynes

...Outline and critical analysis of “The General Theory of Employment” by J. M. Keynes Number] OutlineThesis: General Theory of Employment determines the factors, which affect the level of employment in any nation. 1) Competency of macroeconomic theory and its principles in employment, income of industrial economics and the reasons of vacillation. 2) Principle of Effective demands 3) Uncertainty of future wealth and neo-classical micro-economics 4) Psychology of society is based on conventional judgement regarding perceptions of present, past or future investment. 5) Consumption and expenditure is the main objective of economics. 6) Re-analysis of rate of interest 7) Equilibrium of proposed saving and investment 8...
4 Pages(1000 words)Article

Criminology: General Strain Theory

...General Theory of Employment... General Theory of Employment... GENERAL STRAIN THEORY Introduction The concept of Strain theory has played a central role in determining criminal trends in the society. Strain theory emphasizes the unmatched opportunities available to individuals and the approved social desirable goals. The case of the US explores this idea where there is one goal of achieving greater economic and social prosperity for all citizens. However, the skewed distribution of resources and institutional discrimination seems to limit access of the African American minority leading to system manipulation among this community hence higher criminology record. 1. Article Summery The article explores the relationship between race and crime ...
4 Pages(1000 words)Essay

The General Theory of Employment Interest and Money

... The General Theory of Employment Interest and Money Abstract This paper is meant to work upon the relationship between the systematic money supply actions and the inflation rate in the context of the United States. For that purpose a simple linear model has been chosen with the CPI Inflation being the dependent variable and both the current and the lagged money supplies (represented by M1) being the independent variables. The result of this study reinforces two major findings of Friedman (1971) and his successors: firstly, the effect of any systematic monetary policy changes on the inflation rate is not instantaneous and it would take at least a year to have any effect on the inflation and secondly, the postulated lagged relationship...
15 Pages(3750 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic General Theory of Employment for FREE!

Contact Us