What the entrepreneurial problem reveals about Keynesian macroeconomics

Abstract

The Keynesian story has no room for the entrepreneurial problem of value creation through production, and adding it makes it rather obvious that the Keynesian reasoning is backwards. Aggregate demand, the problem that is the starting point for the Keynesian theory, simply cannot arise in a real market; but this fact is not obvious because entrepreneurship is not to be found anywhere in the theory.Keynesian theory begins with an assumed general deficiency of demand – that is, a general glut – because consumers are unwilling and unable to effectively demand that which is produced and offered in the market. This effectively puts the cart before the horse because it assumes that consumers – primarily workers rather than entrepreneurs and capitalists – lack the wish to demand the products completed and that entrepreneurs will therefore even give up trying to find goods and services to try to sell.