Impetus
By 1940 depression was finally over. A remarkable burst of economic activity and full employment came during the war years (1941–45). Fears of a postwar depression were widespread, since the massive military spending was ending, the war plants were shutting down, and 12 million soldiers were coming home. Congress, fearful of a return to depression, sought to establish preemptive safeguards against economic downturn.
The White House relied on Keynesian economic theory to develop its strategy. The theory, set forth by economist John Maynard Keynes and his American disciples such as Alvin Hansen at Harvard, contends that unemployment is caused by insufficient aggregate demand relative to the possible aggregate supply generated by full employment. Swings in aggregate demand create a phenomenon known as a business cycle that leads to irregular downsizing and hiring runs, causing fluctuations in unemployment. Keynes argued that the biggest contributor of these shifts in aggregate demand is investment.
Read more about this topic: Employment Act Of 1946
Famous quotes containing the word impetus:
“While the white man keeps the impetus of his own proud, onward march, the dark races will yield and serve, perforce. But let the white man once have a misgiving about his own leadership, and the dark races will at once attack him, to pull him down into the old gulfs.”
—D.H. (David Herbert)