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Government Control Quickly Established

One of the effects of FDR turning to the social sciences was that it legitimized "Rational Socialism", allowing it to become part of the ongoing political debate. Proof of just how much it had been legitimized could be seen by 1946.  In the late thirties, Roosevelt had rejected a vastly extended economic role for government suggested by British economist John Maynard Keynes.  Well, not 10 years later that same economic role was embraced by Congress.

When America entered into the war in 1941, the Depression ended and attention shifted from economic questions to the war effort.  However, as it gradually became clear that we were going to win the war, attention was again focused on the economy, and the doubts of the thirties returned.  People wondered what was going to happen when the war ended.  Would we slip back into a depression when the demands of the war effort ceased?  To many people, it seemed as if we had not really answered the fundamental question of how much responsibility the government should take for the economy.  Roosevelt had already greatly extended the government's responsibility, yet the role he created had not enough to end the Depression.  Instead it was the massive deficit spending as part of the war effort which had ended the Depression, just as Keynes and other rational socialist economists predicted it would.  To many people this offered proof of the viability of the role they suggested, that "Rational Socialism" was our only chance for the government to control the economy and avoid slipping into another depression.

Toward the end of the war a bill was introduced into Congress suggesting an economic role for government based on Keynes' ideas.  FDR although he had once rejected Keynes' proposals, remained silent neither supporting nor opposing the bill.  Soon after the war ended the bill passed and was signed by President Truman, becoming the Employment act of 1946.

Next: The Economic Role in Looking Backward