A Conservative Case for Keynesianism?

The most serious blow to the world economic system after 1973 was the dismantling of the post-WWII Keynesian system that gave us the golden age of capitalism (1945–1973). This attack on the post-war consensus in economics occurred in the 1970s and 1980s when monetarism and then revived New Classical macroeconomics came to dominate the economics profession and public policy. Of course, conservatives like Reagan and Thatcher were leaders in that neoclassical assault. The post-1979 era has been one of neoliberalism, globalization and neoclassical economics. And look how that era has ended: with world-wide financial meltdown and the globe on the verge of depression. Keynesianism pulled us back from the brink.

By contrast, the previous post-WWII economic system was that of the mixed economy with financial regulation, Keynesian macroeconomic management, and even nationalized industries in some countries. Certain versions of the mixed economy – particularly those in social democratic countries in Europe – have probably been the most successful, efficient and humane economic systems humankind has ever devised, systems that have increased wealth tremendously by delivering high employment and maximal use of resources. 

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