What did John Keynes fundamentally change?

John Maynard Keynes fundamentally changed the theory and practice of macroeconomics through his innovative ideas about how economies function, particularly during times of economic downturn. Prior to Keynes, classical economics dominated, which emphasized self-correcting markets and the idea that economies would naturally return to full employment without intervention. Keynes challenged this notion, especially in the context of the Great Depression, arguing that insufficient demand was a primary factor in prolonged economic slumps.

He introduced concepts such as the importance of aggregate demand in driving economic activity and advocated for active government intervention to manage economic cycles. Keynesian economics suggested that during periods of recession, increased government spending could help stimulate demand and pull economies out of downturns. This marked a significant shift in economic thought, laying the groundwork for modern macroeconomic policy and influencing how governments respond to economic crises.

Keynes' work has had lasting implications, shaping policies in the mid-20th century and continuing to impact economic discourse and policy approaches today.