09 If you take a walk, they'll tax your feet!

Topics
By the early part of the 20th Century, thinking about economics had passed from classical to neoclassical approaches, both of which centred broadly on the market and supply-demand equilibria. However, a feature of the development of capitalism had been alternating periods of boom and bust - a sign, to Marxian thinkers, of the inherent instability of capitalism as an economic system. One of the most severe of these 'busts' was the Great Depression of the 1930s. As prices dropped, according to then current thinking, economic investment and growth should pick up - restarting the cycle. However, this did not happen. John Maynard Keynes recommended that the state should step in, as consumer of last resort, to the economic cycle and, by managing demand, smooth out the ups and downs of the economic cycle. Thus the state began to become an increasingly significant 'player' in the overall economic game - to which it remains to this day.

Useful reading:
Ch.9 of 'The Worldly Philosophers'

Ch.1 of 'The Commanding Heights' (esp. p.21 - 27)


Fifty Major Economists, entry of 'John Maynard Keynes'