The Classical and Keynesian Macroeconomic Paradigms

This chapter presents some mainstream Keynesian ideas that influence popular macroeconomics discourse. To the right of the Keynesians are the classical economists who believe that the role of the state should primarily be confined to the provision of public goods like street lighting, policing and defence services, education and health where market failure is inevitable. Within the Keynesian paradigm there are sub-schools of thought that are considered mainstream whereas some are kept out of the mainstream. In the context of market capitalism, the two dominant schools of thought driving mainstream macroeconomic discourse are the Keynesian and the classical. Keynes was not in favour of central planning as a substitute for a competitive market system. Many believed that through his theory, Keynes was able to resurrect the market system from its collapse on a grand scale during the Great Depression of the 1930s, which may have, left to its own, been the basis for a communist revolution in the 1930s.