ABSTRACT
The great Depression of the 1930s was so traumatic that the economic thinking of the whole capitalist world underwent a fundamental metamorphosis under its impact. The orthodox economics preached that the best economic policy for the crisis was to leave it to market forces to cure the situation. John Maynard Keynes provided a theoretical apparatus to salvage the foundations of capitalism and the ground for government intervention in the economic activity. The Keynesian revolution gained a wide acceptance in the economic profession and provided a badly needed justification for extensive governmental intervention. The general feeling is that price control can only work in exceptional periods like wars, but in general it is wasteful, very costly and could endanger freedom and democracy. The proposed reduction in public spending was a compromise between the demands of the right-wing conservatives and the partisans of liberal thought, thought with a definite bent to the right.
