The Making of the Keynesianism of Keynes

The basic tenets of economic liberalism is that free enterprise and the free wheeling of the market are the solutions to all the economic problems of society. Laissez-faire, since its establishment as economic doctrine of the state starting from the beginning of the nineteenth century, took many forms, with different degrees of state involvement to provide a buffer for those social problems that the operation of free markets were originating. In Great Britain, for example, during the course of the nineteenth and early twentieth century, the state intervened to set a limit to the working day, regulate the work of children and women, to provide or regulate a minimum social security that, although miserly in comparison with the one established after 1945, was generous in comparison to the social provisions of earlier phases of industrialization (Checkland 1983). Also, as Karl Polanyi (1944) noted, markets did not grow out of a spontaneous process, but were the result of conscious policies and institutions set in place by states. Still, in the conventional wisdom of the time, state interventions represented detours from the main highway leading to prosperity, detours that even the father of economic liberalism, Adam Smith, was willing to acknowledge as an occasional necessity.1 The hard core of the doctrine of economic liberalism preached that in the main highway towards prosperity there ought to be no speed limits, no government regulation, the market had to be sovereign.