“The important thing for Government is not to do things that individuals are doing already, and to do them a little better or a little worse; but to do those things that at present are not done at all.”
John Maynard Keynes (1926), The End of Laissez-Faire
I like this quote from the great economist, but although it may be clear in some instances what is ‘not done at all’ through private initiative, there is still plenty of room for debate about what the state should do.
One must remember that ultimately Keynes worked hard during the latter years of his life to try to save capitalism from itself by remedying its apparent defects, such as mass unemployment and poverty. He lived through two World Wars and the intervening Great Depression of the 1930s. These disasters profoundly shaped his thinking about economics and the role of state intervention in the economy. It is therefore misinformed to decry such intervention as socialist.
The mixed economy of the post-war years in the end outperformed state socialism both materially and socially, although its progress was halted in the 1970s by the crisis of ‘stagflation’ (the novel phenomenon of inflation and unemployment rising together).
I think that Keynes and today’s post-Keynesians are wrong that there is a permanent solution to recession through state intervention, but that despite this, we should not reject the latter which remains vital to the positive evolution of the economy and society.