Keynesianism

According to some, there is only one way to alleviate the pain felt by the current recession: spending. The most ardent defenders of government spending can be referred to as Keynesians. Keynesians can be frequently heard blaming Capitalism and government inaction for the recession and argue that boom-bust cycles are not necessary. Keynesians stipulate that the only way correct an economic contraction is through government spending. Keynesians argue that government spending can lift an economy up and sustain full employment while reducing the negative effects of the business cycle. And you can rest assured that Keynesian thought is popular now more than ever, with a the passing of a nearly $800 billion spending bill in February and talk of a second stimulus bill.

Many followers of the free-market do not follow the Keynesian logic. They feel that the Keynesian model is built of wishful thinking and that in order for an economy to function properly the business cycle must be left alone. Many of the Keynesian ideas that call for higher spending end up leading to inflation and misdirected investment. The resources below explore the dark side of Keynesianism and why the Free Market is necessary to complete the business cycle.

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