In The General Theory of Employment, Interest and Money (1936), the British economist John Maynard Keynes argued that the overall level of output and employment is set by aggregate demand, and that economies can settle at persistently high unemployment. He maintained that governments could and should stabilise demand through fiscal spending, taxation and monetary policy, especially during slumps. The book broke with the prevailing belief that markets would automatically return to full employment.
It legitimised active state management of the economy and the large-scale public investment that funded postwar reconstruction, welfare states, housing programmes and infrastructure across the industrialised world.