Policy in War and Peace: The Recommendations of J. M. Keynes

Over the past decade, Keynesian policies have been subjected to severe attack and there can be no doubt that Keynesianism has lost much ground—if ground can be measured by political and academic support. Today, when Keynesians are thus fighting a defensive action, it must be hard for members of a younger generation to appreciate the immense excitement that followed the publication of The General Theory of Employment, Interest and Money in 1936. It was a time of hope—hope that was to pervade the war-time discussion of post-war policies and was to remain strong for many years thereafter. It is true that, by 1936, a recovery from the worst depths of the Depression had taken place and this recovery owed little to expansionary fiscal policies of a Keynesian type; but it was also an incomplete recovery. Unemployment was still high and, even in 1937, the United States had barely regained its 1929 level of GNP when another downturn took place.