(Stewart, 1972) Between the two world wars there existed a huge unemployment feature. Keynes had an explanation to this. ‘The ideas of economists and political philosophers,’ he wrote in the General Theory are more powerful than commonly understood. (Harrod, 1951) It is precisely due to those defunct economists’ salves of the 1920s and 30s who call them as practice men, things went badly wrong. This is because the world had changed drastically since their time and following those invalid assumptions was defunct. In order to understand Keynes theory better and to justify his views we need to begin by looking back at what the pre-Keynesian economists had to say on subject of employment. (Robinson, 1947) Economics is not an exact science: controlled experiments cannot be conducted on its subject matter. (Stewart, 1972) Say’s Law stated that supply created its own demand. Ricardo later argued that some shift in demand could result in sudden fall of demand. With the emergence of the 19th century trade and attempts made to
account for it, resulted in qualification of say’s law. Nevertheless say’s law was valid among small periodic appearance of unemployment in capital good industries in large numbers. (Heilbroner, 1969)The unemployment was result of unbalanced production caused by rapid expansion. In principle, the economy would absorb the entire commodity it produced. So an economist then thought that all one could do was to stand back wait and watch. What if the economy never regained was the question. The only solution was to reduce wages in order to get back to full employment. (Hazlitt 1995:21), nevertheless, this theory made many economists including Keynes feel uneasy and refused to advocate the policy measures. (Hazlitt, 1995) Keynes was against this theory and proves it wrong through his work ‘The General Theory’ argues Hazlitt. (Kregel, 1983) The missing piece of theory “demand for the output as a whole” which was explained by Keynes in his theory was his greatest contribution.