ABSTRACT
In 1936, Britain announced a large five-year defense build-up, which was bound to have a significant impact on output and employment. The war effort and post-war economic planning would occupy all of John Maynard Keynes’s work time. The inevitability of post-war full-employment planning, which the war period cemented in his mind, seemed clear to Keynes before the war effort was even underway. He believed it would be politically impossible for any party to try to take Britain back to its nineteenth-century economic model. Keynes stressed the importance of creating an institutional structure that can support the new role of investment planning. Keynes lays out a sophisticated view of macro planning. It presumes capital controls and managed trade. It proposes that public investment – not monetary policy – be used to moderate the instability inherent in the capitalist investment process.
