Politics Capitalism Neoliberalism
The 20th century and two world wars laid bare the limits of classic Liberalism and economic nationalism, the roaring twenties collapsing in to the great depression as under-regulated markets ran amok through monopoly and corporatism. Sound familiar?
After World War II, John Meynard Keynes advocated successfully for governments spending money to bring unemployment to its lowest possible levels via Defecit Spending.
Keynes viewed employment as a function of demand, not supply -- classic liberalism was supply focused in that it believed that "rational workers" would be willing to work for less assuming the supply of jobs would handle them. Keynes and others believed that demand could be stoked by investment, that if the government spent money in times of need, that could generate a demand for workers.
Government spending started with The New Deal in the US and through the World Bank in Europe, known as and for the International Bank for Reconstruction and Development, responsible for providing loans to post-WWI Europe. It developed in to a healthy welfare state and lead to the creation of a middle-class, and ever-growing deficits. High levels of union membership lead to a "golden age of capitalism" with high wages and high employment throughout the "global north" working as hard as they could to fight Communism around the world and at home.
A key aspect of Keynesianism was the realization that the government could, through monetary policy and spending, affect economic affairs.