Globally, providing for billions of individuals with meals everyday, morning and evening, assuring clothing and shelter, and offering heath care are endeavors which present formidable logistical enterprise and challenges. It takes the creation of added value or wealth to meet the needs. To undertake in such enterprise requires enormous energy and resources, enterprise that demands participation in initiatives, planning, and efforts from very large numbers. As nations, groups or individuals, each involvement does not contribute equally to the creation of added-values. Each participant does not necessarily receive return that reflects one’s input. Expectations of one’s contribution’s worth often exceed factual outcomes. Demands do not always meet needs. Individual and social needs do not always harmonize.
The ultimate purpose of economics is to inquire about challenges related to the creation and the distribution of wealth within and among nations. Economics tries to evaluate, understand, and rationalize how much Employment, in conjunction with all other resources, contributes to Gross Domestic Product (investment), how much is the corresponding Gross National Income in terms of money and purchasing power (Money), and how the average household spends its money (Consumption).
The purpose of economics is, thus, the study of Money, Investment, and Consumption The basic hypotheses, the theorizing, and the implications of such study have given rise to different schools of thought, using the same fundamental variables yet arriving at different perspectives on how to assess added value and how to weigh participation and contribution and the distribution of income.
These different perspectives as how to weigh efficiency and fairness, and opt for a well-suited economic and social organizational structure have led to different market models. At one extreme is the tradition of Adam Smith through Hayek, which justifies individualism, laissez-faire, and free market. At the other extreme is the vision of Marx and Marxians, which advocates collectivism and the planned economy. Then there are Keynes and the Keynesians, who believe that, with some institutional setting, for the first, or some direct government intervention, for the latter, it is possible to preserve both free market and public management of economic activity.
This blog focuses on economics from Keynes’ perspective. It is ideas of Keynes himself that serve as the pivotal point from which all other views are weighed.
O.F. Hamouda is professor of economics at York University, Toronto, Canada. As well as having authored numerous publications, he is editor of the Journal of Income Distribution (ISSN: 0926-6437, published by Ad Libros Publications Inc., Cambridge, Massachusetts). Contact author through comments to blog posts.