How and why were Keynesian economic policies abandoned in the UK?
Keynesianism was the economic model followed by governments in the UK from the 1950s up until the late 1970s. In the 1950s and 1960s, the name Butskellism was given to Chancellor Butler and Chancellor Gaitskells Keynesian approach to management of the economy, with an overall aim of maintaining full employment by substantial government intervention. Keynes rejected the idea of laissez faire (leave alone) policies that left the market to regulate wages and prices. He said that if the economy were left alone in this way, there would be a recession, meaning more people being laid-off from their jobs and reduced real wages. More unemployment would then result in less consumer confidence and hence a decrease in aggregate demand. Keynes also rejected the socialist idea of the economy being stimulated by the redistribution of wealth to the poor this would destroy the incentive to achieve and so competition would fade, resulting in inferior total output and making recession much more likely. G
