ABSTRACT

When on December 31, 1965 Time magazine titled its cover story “The Economy: We Are All Keynesians Now,” it was reflecting the widely held belief that Keynes had revolutionized the way the majority of contemporary economists thought about macroeconomics and especially the role of discretionary fiscal policy in sustaining full employment and stable prices. From the 1970s, however, Keynes fell out of fashion as a neoclassical counter-revolution took hold within the USA and the UK in particular, one that stressed the primacy and inherent efficiency of free markets in contrast to meddlesome and distortionary government intervention.