13 - Welfare quandaries and productivity concerns

Summary

The early debates over the role of government in economic life, at least during the era of industrialization, took the form of a contest between laissez-faire and thoroughgoing socialism. In Western Europe and North America, however, the movement away from individualism followed a much less radical course, which John Maynard Keynes was one of the first to define. His famous lectures in the mid-1920s on The End of Laissez-Faire carried the following passage:

… a time may be coming when we shall get clearer than we are at present as to when we are talking about Capitalism as an efficient or inefficient technique, and when we are talking about it as desirable or objectionable in itself. For my part, I think that Capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative yet in sight, but that in itself it is in many ways extremely objectionable. Our problem is to work out a social organization which shall be as efficient as possible without offending our notions of a satisfactory way of life.

[p. 53, emphasis added]

Keynes, as we can now see, was among the first writers to form a definite vision of the kind of system under which we have come to live during the last half century, the system we now call the Mixed Economy or Welfare Capitalism or the Middle Way.