Keynes and Financialization: Beyond The General Theory

Abstract

In this essay, John Maynard Keynes’ General Theory of Employment, Interest, and Money is used as a starting point for analyzing financialization, a key issue in contemporary economics. The focus is on chapter twelve of this work, since it deconstructs human behaviour and its precarious relationship with financial markets. This essay argues that Keynes’ conception of financialization remains highly relevant to understanding the capitalist economy, especially over the last forty years. Hence, the more recent theories of privatized Keynesianism and of the Post-Keynesian school are discussed and compared to The General Theory. This essay concludes that the precocity of our financial system can largely be explained by its speculative nature and its exacerbation of humans’ irrational tendencies.