the experience of World War II, and the contrast with the Depression that preceded (and produced) it, marked the death of the classical case for expansionary austerity.
"On the average during the twenty years between 1919 and 1939 more than one-tenth of the men and women desiring work were unemployed. In the worst period of the depression well over 25 per cent were left in unproductive idleness. By contrast, during the war no financial or other obstacles have been allowed to prevent the need for extra production being satisfied to the limit of our resources. (Commonwealth of Australia 1945, 1)"
"In sharp contrast with previous wars, the full employment of the war years was maintained after the return of peace. In 1919, the British government of Lloyd George had promised ‘a land fit for heroes’, and had delivered instead the grinding misery of the 1920s. By contrast, under conditions that were far more challenging, the Attlee Labour government elected in 1945 transformed Britain into a modern social democratic nation.
The example of the Attlee government shows the force of Keynes’ observation that ‘the boom, not the slump, is the time for austerity’. The war had destroyed much of Britain’s overseas wealth as well as a substantial portion of the housing stock and left the country heavily indebted to the United States. It was therefore, necessary to adopt tight fiscal policies. Nevertheless, Attlee’s years in office saw the restoration of full employment, strong economic growth and rising living standards. At the same time, inflation was constrained."
"On the average during the twenty years between 1919 and 1939 more than one-tenth of the men and women desiring work were unemployed. In the worst period of the depression well over 25 per cent were left in unproductive idleness. By contrast, during the war no financial or other obstacles have been allowed to prevent the need for extra production being satisfied to the limit of our resources. (Commonwealth of Australia 1945, 1)"
"In sharp contrast with previous wars, the full employment of the war years was maintained after the return of peace. In 1919, the British government of Lloyd George had promised ‘a land fit for heroes’, and had delivered instead the grinding misery of the 1920s. By contrast, under conditions that were far more challenging, the Attlee Labour government elected in 1945 transformed Britain into a modern social democratic nation.
The example of the Attlee government shows the force of Keynes’ observation that ‘the boom, not the slump, is the time for austerity’. The war had destroyed much of Britain’s overseas wealth as well as a substantial portion of the housing stock and left the country heavily indebted to the United States. It was therefore, necessary to adopt tight fiscal policies. Nevertheless, Attlee’s years in office saw the restoration of full employment, strong economic growth and rising living standards. At the same time, inflation was constrained."
