The Global Economic Crisis in the Perspective of Keynesian Business Cycle Theory

Abstract

As a starting point, the article reviews Keynesian business cycle theory and identifies the cause of economic crisis to blind investment and lack of demand. The article also indicates that fundamentally, the 1929 Great Depression and current global economic recession are the inevitable outcomes of capitalist mode of production. After that, it demonstrates that the strategy of trying to develop public economy as well as increasing its influences and controls over investment and consumption is the only way to limit vicious expansion of capitalist mode of production and prevent future economic crises. Keywords: Business cycle, Effective demand, Public assets