According to John Maynard Keynes, employment depends upon

According to John Maynard Keynes, the level of employment in an economy is determined by 'effective demand' [1]. In his seminal work, 'The General Theory of Employment, Interest and Money', Keynes challenged the classical Say's Law, which posited that supply creates its own demand [1]. Instead, he argued that the equilibrium level of employment is found at the point where the aggregate demand function intersects with the aggregate supply function; this specific point is defined as effective demand. Under the effective demand principle, aggregate output and employment are determined solely by the level of demand in the economy. If effective demand is insufficient, the economy can settle into an equilibrium at less than full employment, leading to involuntary unemployment. Thus, the 'substance of the General Theory' is that employment depends on the total spending (effective demand) expected by entrepreneurs.

Sources

1. [1] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 1: Introduction > 1.1 EMERGENCE OF MACROECONOMICS > p. 5