The General Theory of Employment, Interest and Money is a book by
English economist John Maynard Keynes and is generally considered to be
Keynes' magnum opus, and is largely credited with creating the
terminology and shape of modern macroeconomics. The General Theory of
Employment, Interest and Money had equally powerful consequences in
economic policy, being interpreted as providing theoretical support for
government spending in general, and for budgetary deficits, monetary
intervention and counter-cyclical policies in particular. It is pervaded
with an air of mistrust for the rationality of free-market decision
making. Keynes denied that an economy would automatically adapt to
provide full employment even in equilibrium, and believed that the
volatile and ungovernable psychology of markets would lead to periodic
booms and crises. The General Theory is a sustained attack on the
classical economics orthodoxy of its time. It introduced the concepts of
the consumption function, the principle of effective demand and
liquidity preference, and gave new prominence to the multiplier and the
marginal efficiency of capital.