page_title: 2008–2009 Keynesian resurgence
section_title: Keynesian ascendancy 1941–79
hierarchical_section_title: 2008–2009 Keynesian resurgence / Background / Keynesian ascendancy 1941–79
caption_attribution_description: Clement Attlee meeting with King George VI in the grounds of Buckingham Palace, following the Labour victory in the 1945 general election.
context_page_description: Following the global financial crisis of 2007–08, there was a worldwide resurgence of interest in Keynesian economics among prominent economists and policy makers. This included discussions and implementation of economic policies in accordance with the recommendations made by John Maynard Keynes in response to the Great Depression of the 1930s—most especially fiscal stimulus and expansionary monetary policy.
  From the end of the Great Depression until the early 1970s, Keynesian economics provided the main inspiration for economic policy makers in Western industrialized countries. The influence of Keynes's theories waned in the 1970s, due to stagflation and critiques from Friedrich Hayek, Milton Friedman, Robert Lucas, Jr. and other economists, who were less optimistic about the ability of interventionist government policy to positively regulate the economy or otherwise opposed to Keynesian policies. From the early 1980s to 2008, the normative consensus among economists was that attempts at fiscal stimulus would be ineffective even in a recession, and such policies were only occasionally employed by the governments of developed countries.
context_section_description: While working on his General Theory, Keynes wrote to George Bernard Shaw "I believe myself to be writing a book on economic theory which will largely revolutionize, not I suppose at once but in the course of the next ten years – the way the world thinks about economic problems ... I don't merely hope what I say, in my own mind I'm quite sure". Keynes's ideas quickly became established as the new foundations for mainstream economics, and also as a leading inspiration for industrial nations economic policy makers from about 1941 to the midseventies, especially in the English speaking countries. The 1950s and 1960s period, when Keynes's influence was at its peak, to many appeared in retrospect to have been a golden age.
  At that time, in contrast to the decades before WWII, the industrialized world and much of the developing world enjoyed high growth, low unemployment and an exceptionally low frequency of economic crises. In late 1965 Time magazine ran a cover article with the title inspired by Milton Friedman's statement, later associated with Richard Nixon, "We are all Keynesians now". The article described the exceptionally favourable economic conditions then prevailing, and reported that "Washington's economic managers scaled these heights by their adherence to Keynes's central theme: the modern capitalist economy does not automatically work at top efficiency, but can be raised to that level by the intervention and influence of the government." The article also states that Keynes was one of the three most important economists ever, and that his General Theory was more influential than the magna opera of his rivals – Adam Smith's The Wealth of Nations and Karl Marx's Das Kapital.
caption: Prime Minister Clement Attlee (left) with King George VI. Attlee based the British post-World War II economic policy on Keynes' ideas.
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