The Great Depression was a tricky situation for people to try and remedy, especially economists (and policy makers, but nobody really cares about them). The shift from classical economics to modern economics allowed for a variety of new theories to develop and I feel as though this process was fostered immensely by the Great Depression. Keynes was one of the individuals who really took advantage, in a sense, of those events. His theories were based on the belief that goods must be purchased in order to help the economy grow and he strongly disagreed and found numerous flaws in Hayekian ideas, which support savings and free markets. Prior to reading this chapter, I would have labeled myself as hoping-to-be-Hayekian as I have faith in the natural tendencies of things. However, I now find myself gravitating towards Keynesian thoughts because they do in fact make sense. If I were to save all of my earnings in some secret stash, that money is being inefficiently removed from the flow. But if I were to spend my money on cool items and whatnot, then I am helping the economy grow and preventing, by at least a small amount, any major wackiness in the market as it is defined in Keynes’ circular flow model.
Keynes created a remarkable display of the intricacies of money flow. While I understand that he was not the first person to stumble upon these ideas, I believe that his model, since it was provided to me in the book, should be applauded. The market, at least to a non-economics savvy individual like myself, is extremely complex and Keynes’ model appears to be a very accurate and concise visualization of it. This is important because it provides a model for how to combat and spot problems within a system such as the issues that led up to and lengthened the Great Depression. Although it would be nice to say Hayek was the victor in putting faith in an “organic” system, it begrudgingly seems to be more fitting to apply Keynes’ model as a fair suggestion if not solution for issues concerning economic blunders.