Keynesianism vs. Reaganism: Professor Richard Wolff Summarizes the Decades-long Struggle & Explains Why It's Important

When it comes to 20^th century American history, there is a very clear-cut break right around 1980, when rightwing conservatism finally broke through to the mainstream and ended the liberal consensus of the New Deal, which had held sway from the 1930s to about 1980. Here was a break between two very different ways of organizing the US economy. Before 1980 our economy was by and large run according to the ideas of Keynesian economics. After 1980 (and also before 1930) it was run primarily according to the ideas of neoclassical economics, most recently known as Reaganism or Reaganomics.

Reaganism (neoclassical economics) is based on the central belief that capitalism is a very well-organized system which is, most of the time, in very good shape, and that when it does run into problems, . .

a) those problems are inherently temporary, and

b) the system will "self-correct."

Keynesian economics was born during the Great Depression of the 1930s, which made a big impression on John Maynard Keynes as he lived through it. To Keynes it was obvious, at that time, that the capitalist system was, to say the least, not working, AND that it would certainly not "self-correct" without an enormous amount of unnecessary destruction and pain. Many millions were unemployed and remained unemployed while huge portions of the country's productive apparatus were sitting idle, producing nothing, providing no jobs. Clearly something was fundamentally wrong and needed to be corrected (through major government intervention) ASAP.

Keynes concluded from all this, and from the recessions and depressions that historically preceded the one he lived through, that whenever you leave a capitalist system to its own devices, you inevitably get periodic downturns which, from time to time, will lead to catastrophic recessions and depressions, and that this inevitably brings:

a) human suffering on a massive scale that is wholly unnecessary,

b) loss of production and product, which also is wholly unnecessary, and

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