Keynes

Term 2 Coursework on the Question:

To what extent can the post-war boom be attributed to Keynesianism?

Word Count: 1997

Date: March 20th 2015

The post-war boom is commonly viewed as a Keynesian triumph, however to what extent can the boom be attributed to Keynesianism?Is it even possible to isolate policies as strictly Keynesian in a multi-faceted, complex web of political and economic decision making? This essay will seek to explore these questions to shed light on the degree to which Keynes and his ideas created the ‘golden age’. An introduction to Keynesianism will provide the theoretical thread to weave through the analysis of the emergence of an international economic order, the structural characteristics of key capitalist economies and the element of expectations at play during the era. Finally, some conclusive points will be made regarding the methodological challenges presented by this question. “The length, steadiness, speed and spread of the post-war boom are revealed to be so exceptional in the history of capitalism as to suggest that an explanation for its occurrence must be found in a unique economic regime rather than in a chance set of particularly favorable economic circumstances” (Glyn et al, 40). Indeed, this Keynesian economic regime was propagated in favorable circumstances, and many of the propelling factors to boom were endogenous to Keynes’s theoretical policy implications, nevertheless, it was a boom that would not have been sustained as long, or as strongly if it weren’t for the juggernaut of Keynesianism.

Keynesianism emerged as a response to classical understandings of the economy: such as business cycles as a natural phenomenon that if, interfered with, would result in corrupting dislocations in the economy. Keynes, more cynical about the ability of the market to self-stabilize, proposed that states needed to employ monetary and fiscal policy to ensure stability. A reduction in interest rates for example and investment in...