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C -a Keynes Theory

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The French government decided to finance different projects to create the Greater Paris, in order to
generate an economic growth. This principle directly comes from the British economist John Maynard
Keynes (1886-1946). Indeed, Keynes advocated that the government had to finance projects in order
to support the national economy, and demonstrated it in its book “The general theory of employment,
interest and money” which is considered as certainly the reference economic book of the XXth

Indeed in this work, Keynes wanted to discover what would be the factors to determinate the
employment rate, and opposed his beliefs to the classical economics as Ricardo who believed in the
Say’s law. This classical economic theory assumes that the offer is enough to regulate the demand.

Keynes did not believe in the market regulation of the demand by the offer. Indeed he stated that the
employment market rate was depending on the production volume forecasted by the companies, and
shown the employment rate would only be the result of the production needed by the companies (the
“effective demand”)(78). Keynes also explained that the consumption of the population depends on the
“fundamental psychological law” which aimed to explain that people would increase their
consumptions if their revenues increase also. In its theory Keynes demonstrated the “marginal
propensity to consume”(79) (higher revenue for the lowest incomes will impact more the economy than
higher the revenue level of high incomes).

By demonstrating his general theory, Keynes has shown the importance of the state in the economy
because of the multiplier effect(80). Indeed as he did not believe in the market auto-regulation, he
declared “The government should pay people to dig holes in the ground and then fill them up “
According to Pierre Rosanvallon, even if France has lately adopted the Keynesian theory, it is still the
country where the theory has been the most applied. It has been for France a great compromise
between Socialism and Capitalism, and permitted to the country to have a great growth over thirty

Indeed, according to the author the Keynesian theory became more legitimate because of the
perception about the economy. Indeed the increase of the purchasing power or economic growth
became objectives for the governments (which was not possible with the classical perception as the
economic growth is a result of the natural auto-regulation of the market)(82).

This is why in 1945 and 1946 the role of the French government regarding the economy strongly
increased, by becoming the first investor in the country. Indeed because of World War II the
government had to rebuild the nation with a politic of economic recovery.

Over the decades France relied on this economic theory (even if some budget restriction were applied
by Raymond Barre government), and even permitted to François Mitterand to be elected in 1981 with
“Le plan Mauroy” (which was a Keynesian plan). Nevertheless after two years of this plan, the results
were not expected: indeed this plan mainly helped the German exports because of the free-trade within
the EU borders.

78 Keynes J.M., The General Theory of Employment, Interest, and Money, 1936, Chap.3
79 Ibid, 1936, Chap.8
80 Ibid, 1936, Chap.10
81 Rosanvallon Pierre. Histoire des idées keynésiennes en France. In: Revue française d’économie. Volume 2
N°4, 1987. pp. 22-56.
82 Rosanvallon Pierre. Histoire des idées keynésiennes en France. In: Revue française d’économie. Volume 2 N°4,
1987, P.P. 44

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