Question

Briefly summarise the two lessons learnt by economists and politicians from the inter-war economic experience?

Answer 1

Economists and politicians drew two key lessons from inter-war economic experiences:

1. An industrial society based on mass production cannot survive without mass consumption. However, in order to ensure mass consumption, high and constant income levels were required. Income cannot be stable if employment is unstable. Thus, stable wages necessitated consistent, full employment.
2. The goal of full employment could only be realised if governments had the authority to control the movements of goods, capital, and labour.