Since capitalism's beginnings, the market economy has been subject to fluctuations, to booms and busts. Capitalist economies are not self-adjusting: market forces might eventually restore an economy of full employment, as Keynes said, but in the long run we are all dead. Keynes proposed clear prescriptions for hard economic times: expansionary monetary and fiscal policy. He thought fiscal policy particularly important in situations where monetary policy was likely to be ineffective.
Since capitalism's beginnings, the market economy has been subject to fluctuations, to booms and busts. Capitalist economies are not self-adjusting: market forces might eventually restore an economy of full employment, as Keynes said, but in the long run we are all dead. Keynes proposed clear prescriptions for hard economic times: expansionary monetary and fiscal policy. He thought fiscal policy particularly important in situations where monetary policy was likely to be ineffective.