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MECHANISM OF INVESTMENT BEHAVIOR WITHIN THE FRAMEWORK OF
THE KEYNESIAN CONCEPT
Salamov Farrukh Fattoevich
Acting Professor of the Department of Economic Theory at the
Samarkand Institute of Economics and Service.
E-mail:
Abstract:
the article is devoted to the behavior of economic entities in the investment process in
the theory of J. M. Keynes
Key words:
aggregations , macroeconomic subject, investment, economic behavior of subjects,
transformation of savings into investments, market interest rate.
A fundamentally different position in his works is occupied by J. M. Keynes , who is rightfully
considered the founder of the macroeconomic approach to the system of social reproduction. A
distinctive feature of his research is the widespread use of the aggregation method, which he
extends not only to quantitative parameters, but also to the functional characteristics of
economic entities. J. M. Keynes identifies four key macroeconomic entities, which include
households, firms, states, and the foreign trade sector, which have different motives for
investing and saving. In a closed economy free from government intervention, the equilibrium
of savings and investment is ensured by only two aggregates : households and firms, whose
behavior is subject to strictly regulated parameters and can be characterized by specific types of
economic activity. Without denying the methodology of general equilibrium analysis, Keynes
considers the conclusions of the neoclassicists to be only a special case of his concept. Their
key thesis regarding the equality of savings and investments, which are equalized by the interest
rate, he considers insufficient to explain equilibrium in the economy
. The money market is
unable to transform all savings into investments, since macroeconomic actors such as
households and firms have different motives for their implementation. The economic behavior
of households and firms does not correspond to neoclassical ideas
about the single-factor
function of maximizing utility or profit, since participants in the investment process are guided
by different ideas about the possibilities, methods of investment and the factors that determine
it.
The analysis of savings motivations and motivations of investment demand is an innovation of
Keynesian theory. Revealing the systemic interrelations between aggregate variables J. M.
Keynes demonstrates how the economic behavior of subjects affects the final results of the
transformation of savings into investments. In contrast to the views of the classics and
neoclassicists, for whom an economic actor is an optimizer of his own benefit, for Keynes it is a
living person, with certain psychological characteristics, with the possibility of irrational
behavior, which affects his investment decisions. In his opinion, it is necessary to carry out not
a quantitative analysis of the savings accumulation process, but a qualitative analysis associated
with identifying the reasons for the choice, accompanied by the refusal of households from
current consumption, which will allow detailing the structure of savings. It is important to
understand that the supply of resources (savings) is not automatically capable of generating
1
M.M.Mukhammedov . , N.A.Kamilova // Economic theory / textbook. Samarkand 2023 pp. 288-289.
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ISSN: 2692-5206, Impact Factor: 12,23
American Academic publishers, volume 05, issue 06,2025
Journal:
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page 1719
investment demand, savings will turn into investments only if many factors coincide, since the
processes of saving and investing proceed differently in space and time.
J. Keynes examines investments in the real sector of production, the key motive is the
expectation of business regarding the future return on investment, which he calls the marginal
efficiency of capital
. He notes that the future is uncertain, however, he does not associate
uncertainty with the concept of risk, meaning only that it is conventional , and, therefore, there
is no automatic mechanism guaranteeing profit. He studies the investment process in dynamics.
While neoclassicists consider household savings to be the source of investment, that is, the
share of income that they are going to capitalize, Keynesian theory assumes a different system
of interaction between economic entities. Savings do not lead to an automatic increase in the
level of investment, on the contrary, it is investments that cause changes in income. Then the
following chain is observed: the tendency to increase income leads to an increase in savings.
The desire to consume part of their increased income will stimulate the expansion of production.
The limit of such expansion is determined by the possibilities for accumulating savings from
current income, the amount of which must correspond to the increased volume of investment.
Conclusion:
The model of investment behavior of economic entities proposed by J. Keynes is
dynamic in nature and is considered in most detail within the framework of the multiplier
theory
. The multiplier mechanism shows how the increase in investment in individual sectors
of the economy is reflected in the increase in the total volume of national income.
At the same time, the growth of wealth contributes to the growth of investment demand, that is,
Keynes studies not only autonomous but also induced investments, doing this through the prism
of the business cycle. It should be noted that within the framework of the neoclassical approach,
questions of the formation of macroeconomic investment models are beginning to be raised (the
theory of general equilibrium of L. Walras, the social optimum according to V. Pareto, the
theory of cash balances of A. Pigou , etc.), but they are based on microeconomic analysis. The
authors, using the method of analogy, transfer the ordinal functions of utility and productivity to
the macroeconomic level, completely depriving it of specific patterns
.
Bibliographic list:
1. M.M.Mukhammedov . , N.A.Kamilova // Economic theory / textbook. Samarkand 2023 pp.
288-289.
2. Becker G.S. Family // Economic Theory / Edited by J. Eatwell , M. Milgate , P. Newman .
– M.: INFRA-M, 2004.
2
Keynes , J. M. The General Theory of Employment, Interest and Money / Translated from English. - M.: Progress,
1978. - P. 281.
3
The theory of the multiplier is connected with the implementation of the investment process in the real sector of
the economy. The popularity of the Keynesian theory is due to the fact that among the scientists of the 20th century,
it was Keynes who dealt with the problems of social reproduction. At the same time, the fact that Keynes is also
known for his thinking in the area of portfolio investing, as expressed in his theory of liquidity preference.
However , Keynes never succeeded in linking the various sources of investment into a single concept of the
investment process.
4
Thus, according to J. B. Clark, the natural distribution of income inherent to economic entities at the micro level
can also be used to substantiate conclusions of a social nature. Clark introduces two categories: "social capital" and
"social labor", which are the total functions of the marginal productivity of these factors of each economic entity.
A set of such functions on a plane form an "indifference zone", which characterizes the state of equilibrium in the
economy (Clark J. B. Distribution of wealth / M.: Helios ARV, 2000. pp. 345-380.), which is similar to the
reasoning of F. Edgeworth when describing a transaction between economic actors at the micro level.
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ISSN: 2692-5206, Impact Factor: 12,23
American Academic publishers, volume 05, issue 06,2025
Journal:
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3. John J. Murphy Technical Analysis of Futures Markets: Theory and Practice. Moscow
2011. 610 p.
4. Ermilina D.A. Investments in the light of economic theory. [Text] / D.A. Ermilina //-
Regional problems of economic transformation. Makhachkala - 2013 - No. 1 - pp. 239-246
5. Lyachenkov Yu.N., Konovalova M.E. Development of investment theory in the process of
transformation of the socio-economic system . [ Text] / Yu.N.Lyachenkov ,
