Aggregate Demand
At the same time, Keynes had become accustomed to the "equilibrium" approach. Thus, Keynes' objective was to "explain" unemployment as a kind of "equilibrium." The key building block of such an "explanation" would be a model of a market "equilibrium" in which unemployment has some predictable positive value. (At least that is the way economists had been "explaining" things since Marshall, and that is the way most economists have understood Keynes).
But since Keynes interpreted "unemployment" as an excess supply of labor, the "equilibrium" in the model could not be an "equilibrium" in the sense that supply is equal to demand. If there is unemployment, and unemployment is an excess supply, then supply is not equal to demand -- supply is greater than demand, at least in the labor market. So Keynes' new model of "equilibrium" would have to be an "equilibrium" in some different sense, not a supply-and-demand "equilibrium." Keynes thought that it would be an "equilibrium" in a more basic sense, we could have "equilibrium" with supply equal to demand sometimes and "equilibrium" with unemployment in different circumstances in the same more model. In this sense, the model would be more "general" than the supply-and-demand model, and so Keynes called his book The General Theory of Employment, Interest and Money.
But economists have continued to debate whether it is really possible to have a theory of "equilibrium" in which there is unemployment, and that is one reason for the continuing controversy over Keynesian economics. The opposition argue that Keynesian theory either is logically contradictory or is not really a model of "equilibrium."
Aggregate Demand
