It is wrong to equate the economics of John Maynard Keynes with the so-called Neo-Keynesianism that dominates most of mainstream thinking today. They are very different and failure to understand that leads to muddled thinking and very poor economic policy.
Bodies like the Office for Budget Responsibility and the Treasury use models to formulate policy that are not Keynesian in the true sense, even though they often claim they are. They should really be described as Neo-Classical models because they assume a natural tendency towards a state of general economic equilibrium – which Keynes rejected entirely.
Keynes was a revolutionary thinker who developed a new approach to macro-economics to deal with problems like unemployment and inflation using new tools – especially his Principle of Effective Demand. He expressly rejected classical/neoclassical approaches that are based on microeconomic reasoning and the idea of a self-correcting market equilibrium. All this is set out very clearly in Book One of Keynes’s seminal work “The General Theory of Employment, Interest and Money” published in 1936. He explained that mass unemployment such as in the 1930s was caused by macroeconomic reasons and that purely microeconomic approaches like pay cuts are not only useless to deal with it but would make the problem worse.
Unfortunately the economics of Keynes got forgotten as the economics mainstream has focussed more and more on so called microeconomic foundations.
See this simple explanation of the economics of Keynes by Richard Murphy:
See also (in case anybody says that Keynesian policies failed in the 1970s):
Neo-Keynesianism
On the other hand, Neo-Keynesianism is a very different theory which takes some Keynesian elements and combines them with neoclassical ideas such as general equilibrium, rational expectations, Lucas critique, assuming the economy acts as if there is a single representative agent, infinitely long-lived households, perfect foresight, no bankruptcy and such like, that are not found in Keynes’s writing – and are actually antithetical to it. Adding these relatively new ideas on to the basic Keynes framework does not remove the supposed imitations of Keynes’s 1930s thinking but fundamentally changes and nullifies it.
Against this the Post-Keynesian school rejects most of neoclassical economics and is much closer to genuine Keynesianism.
See: https://www.postkeynesian.net/post-keynesian-economics/
See also: https://www.postkeynesian.net/readinglist/
See also the Real World Economic Review: https://rwer.wordpress.com/category/rwer/
Economics of Keynes, Functional Finance and Modern Monetary Theory
I would add that one of Keynes’ leading disciples, the great British-American economist Abba Lerner took Keynes’ ideas further than the master himself was prepared to do, and proposed the concept of “Functional Finance” whereby the money supply and government fiscal policy could be adjusted to stabilise the economy at full employment with low inflation. As such Abba Lerner, a Keynesian, was a leading influence on Modern Monetary Theory.
See the discussion of the relationship between Keynes and Lerner:
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