The Keynesian Era

Abstract

The 1944 Employment Policy White Paper, which marks the move away from pre-war enthusiasm for the market towards post-war Keynesian intervention, shrugs off the tenets of classical economic theory with condescending disparagement:

It was at one time believed that every trade depression would automatically bring its own corrective, since prices and wages would fall, the fall in prices would bring about an increase in demand, and employment would thus be restored. Experience has shown, however, that... this process of self-recovery, if effective at all, is likely to be extremely prolonged and to be accompanied by widespread distress, particularly in a complex industrial society like our own.

The question steals across the mind whether we are not committing our ... people to tasks beyond their compass, and laying on them burdens beyond their capacity to bear.’—Winston S. Churchill (1943)