Keynes made great contributions to economics throughout his life and was once hailed as the "Savior" and the "Father of Post-War Prosperity".

Keynes was born in an era when Say's Law was worshiped as a god. He believed that the economy could be maintained by automatically reaching full employment through the power of market supply and demand. Therefore, he has been committed to studying monetary theory.

His major work "The General Theory of Employment, Interest and Money" published in 1936 caused a revolution in economics.

This work had a profound impact on people's views on economics and the role of political power in social life.

Keynes developed a general theory about levels of production and employment.

Its revolutionary theory is mainly about equilibrium under the condition of involuntary unemployment: when effective demand is at a certain level, unemployment is possible.

Contrary to the classical school of economics, he believed that the simple price mechanism could not solve the unemployment problem.

Introducing instability and expectancy, a monetary theory based on liquidity preference is established: the introduction of the concept of marginal effect of investment overturns Say's law and the causal relationship between deposits and investment.

The Keynesian theoretical system is centered on solving the employment problem, and the logical starting point of employment theory is the principle of effective demand.

The basic point of view is that the amount of employment in society depends on effective demand. The so-called effective demand refers to the total demand when the total supply price and total demand price of commodities reach equilibrium.

When the total demand price is greater than the total supply price, social demand for goods exceeds the supply of goods, and capitalists will hire more workers and expand production; conversely, when the total demand price is less than the total supply price, an oversupply situation will occur, and capitalists will either

They are forced to sell goods at lower prices, or make some goods unsaleable, and lay off employees and shrink production because they cannot achieve their minimum profits.

Therefore, the amount of employment depends on the equilibrium point between aggregate supply and aggregate demand. Since production costs and normal profits do not fluctuate much in the short term, the output that capitalists are willing to supply will not change significantly, and aggregate supply is basically stable.

In this way, the amount of employment actually depends on the aggregate demand, and this aggregate demand that is balanced with the aggregate supply is the effective demand.

Extended information: 1. Biography: Born in Cambridge, England on June 5, 1883, he entered Eton College on a scholarship at the age of 14, majoring in mathematics, and won the Tomline Prize.

After graduation, he entered King's College, Cambridge University with a scholarship in mathematics and classics.

Graduated in 1905 and received a master's degree in literature from Cambridge.

After that, he stayed in Cambridge for a year, studying economics under Marshall and Pigou to prepare for the British Civil Service Examination.

In 1906, he passed the Civil Service Examination with second place and was selected into the Ministry of Indian Affairs.

During his tenure, he did a lot of research and preparation work for his first economic book "Indian Currency and Finance" (Indian Currency and Finance, 1913).

In 1908, he resigned from the Indian Affairs Department and returned to Cambridge as a lecturer in economics until 1915.

In 1909, he was elected as an academician of King's College, Cambridge University for a paper on probability theory, and won the Adam Smith Award for a paper on exponents.

The paper on probability theory was slightly supplemented and published in 1921 under the title "ATreatise on Probability".

2. Dominant Theory The dominant economic theory before Keynes was the laissez-faire economic theory of the neoclassical school represented by Marshall, also known as traditional economics.

This theory is based on the five principles of "free market, free operation, free competition, automatic adjustment, and automatic equilibrium", and its core is the "automatic equilibrium" theory.

It is believed that under conditions of free competition, the economy can automatically reach equilibrium through the price mechanism; commodity price fluctuations can balance commodity supply and demand; capital price-interest rate changes can balance savings and investment; labor price-

The rise and fall of wages can balance supply and demand in the labor market and achieve full employment.

Therefore, all human intervention, especially government intervention, is redundant. A government that does nothing is the best government and should abide by the economic principles of free competition, automatic regulation, and laissez-faire. Government intervention in the economy will only destroy the economy.

This automatic adjustment mechanism instead causes economic turbulence or imbalance.