Explain The raise and the fall of keynesianism Essay

Explain The raise and the fall of keynesianism - Essay Example This stems from the belief that unemployment is a result of insufficient demand for services and goods. This view was neoclassical and is defined as a ‘demand-side’ theory whose focus is short-run, in which aggregate demand strongly influences economic output especially during economic fluctuations such as recessions. Keynesianism was so much attached to the government policies in its advocacy (Keynes and Krugman, 2007). Keynes asserted that investment is a dynamic factor that determines the height of economic activity by responding to future expectations as well as interest rate variations. In this sense, he maintained that full employment could be fostered through deliberate action by the government. Such direct government influence on goods and services demand could be in terms of changing public expenditures and tax policies. The rise of Keynesian economics took place during later periods of World War II, the Great Depression, as well as the economic expansion after the war that is from around 1945 to 1973. Keynesianism was portrayed as a rational, beneficial, scientific advance in economic management providing a basis for triumphing over the crisis of capitalism and creation of just capitalist societies (Keynes and Krugman, 2007). The theories proposed by Keynes in the course of and after World War II gained worldwide influence and their adoption was an integral part of establishing new patterns of relations between labour and capital. This forms the basis on which the term Keynesianism is used often in broad reference to patterns of economic and political relations, which are associated with those policies and theories. The broad concept of employment, curiosity, and money proved to be a unique contribution that was acceptable to economic and political establishments propagating the spread of Keynes’s policies as well as theoretical ideas. Keynes was keen to oppose his theories to and