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Video Keynesianism and the Post War Boom

Marxist Theory · 2026-05-13

Core Argument

The central thesis is that the post-war boom (1945–1970) was not a vindication of Keynesian economics, but a historically contingent recovery phase of the capitalist cycle, made possible by a unique set of material conditions that have now been exhausted. James Kilby argues that Keynesianism was never a solution to capitalism's internal contradictions — it merely managed their expression temporarily. The claim is that the left's continued attachment to Keynesian demand-management, including figures like Jeremy Corbyn, represents a misunderstanding of both the nature of the post-war period and the structural limits of state intervention under capitalism. The boom ended not because policymakers abandoned Keynes, but because the underlying conditions that made it possible — a massive destruction of capital during the war, a pent-up consumer demand, and a temporary suppression of class struggle — were one-off historical circumstances that could not be reproduced.

Theoretical Grounding

The analysis draws on Marx's theory of the tendency of the rate of profit to fall as the fundamental driver of capitalist crisis, positioning Keynesianism as a superficial intervention that addresses symptoms (insufficient aggregate demand) rather than causes (the falling rate of profit and overaccumulation). Kilby situates Keynes within the Marxist tradition's critique of bourgeois economics: Keynes recognised capitalism's instability but refused to trace it to the social relations of production, instead treating it as a technical malfunction correctable by state management. The argument sits within the broader Marxist tradition's analysis of state monopoly capitalism and the critique of reformism — the idea that the capitalist state cannot, in the long run, override the law of value. It also draws on the Marxist theory of cycles, particularly the distinction between the "long wave" of expansion (1945–1970) and the subsequent long wave of stagnation, a framework associated with Ernest Mandel and later developed by the International Marxist Tendency (now RCI).

Conjunctural Relevance

The article was produced in 2016 and published in 2019, a period when Corbynism was at its height in Britain and left-Keynesian economic programmes — including nationalisation, public investment, and deficit spending — were being proposed as alternatives to austerity. Kilby directly addresses this conjuncture: he argues that the conditions that made Keynesianism appear to work in the 1950s and 1960s no longer exist. The global economy in 2016–2019 was characterised by low growth, low interest rates, high levels of private and public debt, and a long-term decline in the rate of profit across advanced capitalist economies. The article implicitly argues that any attempt to repeat Keynesian stimulus in this context would either be inflationary (as seen in the 1970s) or would be rapidly reversed by capital flight and bond market discipline — a prediction borne out by the fate of the Corbyn project and the rapid abandonment of even modest Keynesian measures by the Starmer leadership. The conjuncture also includes the aftermath of the 2008 financial crisis, which the article treats not as a temporary crash but as the latest expression of capitalism's secular crisis.

Where the Argument Continues

This video is part of a broader educational series on Marxist economics produced by Socialist Appeal (now the RCI's British section). The argument about Keynesianism is developed further in several directions. First, the relationship between Keynesian demand management and the falling rate of profit is explored in greater theoretical depth in written articles on marxist.com, particularly those dealing with the work of Marx in Capital Volume III. Second, the critique of left-Keynesian politics is extended in analyses of Corbynism, Syriza, and Bernie Sanders — all of which are treated as reformist projects that misunderstand the limits of state intervention under capitalism. Third, the historical analysis of the post-war boom is connected to the theory of "permanent arms economy" and the role of military spending in absorbing surplus capital, a theme taken up in other IDOM articles on the military-industrial complex. Fourth, the question of what replaces Keynesianism in the current period — i.e., the turn to austerity, quantitative easing, and direct state support for finance — is examined in articles on "fictitious capital" and the 2008 crisis. The argument also continues in Against the Stream episodes that discuss the political economy of the current conjuncture, particularly the tension between central bank intervention and the underlying crisis of profitability.

Connections

This article connects to several key texts and thinkers. Within the Marxist tradition, it sits alongside Ernest Mandel's Late Capitalism and his theory of long waves, which provides the periodisation of the post-war boom and its subsequent stagnation. It also connects to Paul Mattick's Marx and Keynes, which offers a more detailed theoretical critique of Keynes from within the Marxist tradition. The analysis of the post-war boom as a recovery phase, not a new stage of capitalism, echoes Trotsky's writings on the "temporary stabilisation of capitalism" in the 1920s. For readers wanting to go deeper, the article should be read alongside Marx's own discussion of the tendency of the rate of profit to fall in Capital Volume III, and alongside the RCI's own theoretical documents on the nature of the current epoch — particularly the analysis of the 2008 crisis as a structural, not cyclical, event. The critique of left-Keynesianism also connects to broader Marxist debates on reformism, including Rosa Luxemburg's Reform or Revolution and Lenin's State and Revolution.

Key Quotes

  1. "Keynesianism was not the cause of the post-war boom. The post-war boom was the result of a massive destruction of capital during the Second World War, which created the conditions for a new wave of accumulation."

  2. "Keynesian policies can only work in a period when the rate of profit is already high and rising. When the rate of profit is falling, as it has been since the late 1960s, Keynesian stimulus simply leads to inflation and debt, not to sustained growth."

  3. "The left's attachment to Keynesianism is not a technical error — it is a political error. It reflects a refusal to recognise that capitalism cannot be reformed from within, and that the only solution to its crises is the revolutionary overthrow of the system itself."

  4. "The post-war boom was a temporary respite, not a new normal. It was based on conditions that cannot be recreated: a massive destruction of capital, a pent-up consumer demand, and a working class that had been demoralised and divided by the war."

  5. "Keynesianism treats the symptoms of capitalist crisis — insufficient demand — but ignores the cause: the falling rate of profit. It is a form of economic management that tries to make capitalism work better, but it cannot overcome capitalism's fundamental contradictions."

  6. "The modern left, from Corbyn to Sanders, promises a return to the post-war boom through Keynesian policies. But this is a fantasy. The conditions that made Keynesianism possible no longer exist, and any attempt to revive them will end in failure."