Keynesianism is the economic philosophy pioneered by John Maynard Keynes. It was devised in the 1930s while the major Western economies suffered from the effects of the Great Depression. The classical economic precepts, in vogue at the time, counselled non-interference by governments in the economy. Markets were believed to be self-correcting and the best thing governments could do was to stay out of them, the traditional economists believed.
The long duration of the economic downturn in the 1930s, however, inspired Keynes to take a new approach. He argued that governments should make it their business to interfere in the economy to boost economic growth and to lower unemployment.
The exigencies of wartime forced Western governments to embrace this approach anyway as they sought to boost war production. After the war, Keynesianism became the new standard model of economic thought and guided policy-making in the West until the late 1970s when it was challenged by monetarism.
The long duration of the economic downturn in the 1930s, however, inspired Keynes to take a new approach. He argued that governments should make it their business to interfere in the economy to boost economic growth and to lower unemployment.
The exigencies of wartime forced Western governments to embrace this approach anyway as they sought to boost war production. After the war, Keynesianism became the new standard model of economic thought and guided policy-making in the West until the late 1970s when it was challenged by monetarism.