He initiated the "Keynesian Revolution" which split economics into two divergent paths; one away from a traditional laissez faire economic system and toward an economic theory that saw the government as an essential player in maintaining growth within a capitalist economy. The following paper will review the economic policies of Keynes. Firstly, a review of his contribution to the USA recovery form the Great Depression shall be given. Secondly, a discussion of Keynes contribution to the global economic recovery following World War II will be presented. Thirdly, the use of Keynesian theory during the Conservative Era in the USA will be outlined. A conclusion will summarize the main points of the paper.
The Great Depression was a global event of economic downturn that was initiated in 1929 and spanned across a decade until 1939. As such it is the longest and most harrowing depression that the industrialized world had known. Beginning in the USA, the Depression resulted in significant reductions in output, widespread unemployment and poverty, and acute deflation worldwide (Romer 3). At the time, the gold standard provided almost a global network of fixed currency exchange rates, and it has been stated that this was a core reason that the economic downturn in the USA swept through other national economies. ...Show more