Keynesianism

Part of speech: noun

Definitions

1. A school of thought in economics emphasizing that government intervention is necessary to ensure economic stability and full employment
2. An economic theory created by John Maynard Keynes advocating for active policy responses to economic recessions, primarily through fiscal measures
3. A macroeconomic theory proposing that demand-side policies can help stabilize the economy during periods of downturns and mitigate unemployment

Etymology: John Maynard Keynes never called his ideas "Keynesianism," and he would likely have been puzzled by the label. The name was built after his death in 1946, when economists needed a handle for the body of theory his 1936 book "The General Theory of Employment, Interest and Money" had set in motion. The word is a straightforward formation: the adjective "Keynesian," made from the economist's surname with the suffix "-ian," plus "-ism," the common suffix for doctrines and systems of belief, as in "capitalism" or "socialism." The pattern is familiar from many other names of schools of thought, where a founder's surname becomes the root of a doctrine. What makes this case distinctive is that the theory it names is largely about government action. Keynes argued that free markets could settle into prolonged slumps with unemployment, and that governments could counter them by spending and borrowing when private demand fell short. So the "-ism" in this word names a doctrine of state intervention, built on the surname of a man who had himself worked for the British Treasury.

Synonyms: macroeconomics, demand-side economics