Government would manipulate interest rates, the level of prices, and the amount and direction of investment to assure that society had high employment, socially beneficial investment, and general economic stability.
There were critics of Keynesian economics in the 1940s and 1950s, but they were virtually ignored by academic economists and policymakers.
Successful technocratic liberalism would depend on control over the quality as well as quantity of human beings.
Ultimately, in his essay “Economic Possibilities for Our Grandchildren,” Keynes predicted that effective eugenic management would bring about capitalism's end.
The most devastating criticisms were made by a young Austrian economist named Friedrich A. They have begun to take for granted that the Government will intervene to head off recession or choke off inflation, [and] no longer think that deficit spending is immoral.
Hayek, who in a lengthy two-part review demonstrated the logical confusions and theoretical misunderstandings that ran through the entire work. that the free-market economy contained no built-in mechanism to assure full employment.For the next five years Keynes devoted his time to devising a new theory for his argument that a free-market economy was inherently unstable and that only the guiding hand of government could assure full employment in the face of the economic disaster being experienced during the Great Depression of the early 1930s. Now even businessmen, traditionally hostile to Government’s role in the economy, have been won over. The crucial weakness, he said, lies in the relationship between savings and investment.This work finally appeared in February 1936 under the title Except for some of Keynes’s young protégés at Cambridge University, most of the reviewers of the book were highly critical of many of its theoretical “innovations,” as well as its inflationary prescriptions for unemployment. People tend to consume more as their incomes go up, but the increase is not as great as the increase in income.Liberals looked for a system of societal and economic management to engineer an escape from the postwar Malthusian trap.Britain's economic plight, Keynes argued, was rooted in the hereditary weaknesses of its leadership.“Address to the Eugenics Society, 14 February 1946,” JMK/30/PS/7/530, in the Papers of John Maynard Keynes, King's College Archive Centre, Cambridge (hereafter KCAC).He also delivered the Society's Galton Lecture in 1937; see . Keynes, copyright The Provost and Scholars of King's College (Cambridge, 2016).Early in his career, Keynes helped William Bateson, Britain's chief proponent of Mendelian genetics, analyze problems in human heredity.Simultaneously, Keynes publicly opposed the efforts by Francis Galton and Karl Pearson to study inheritance through statistical biometry.Even some economists who later became proponents of Keynes’s “new economics” were initially highly critical of his work. Now Keynes and his ideas, though they still make some people nervous, have been so widely accepted that they constitute both the new orthodoxy in the universities and the touchstone of economic management in Washington. In other words, they also save a portion of their higher income.For example, Alvin Hansen, who was one of the leading advocates of Keynesian economics in the United States in the 1950s and 1960s, wrote in late 1936 that magazine. The problem, he insisted, is that saving is “non-spending” and if people do not spend all the extra income they earn, businessmen may not have the incentive to invest enough to employ all those who want to work at prevailing wages.