Introduction
The role of state in economic development has long existed around the world. Due to the economic depression of 1930 the existing economic theories were not able to give any apt explanations for this worldwide economic collapse. This provided a backdrop for a revolution spearheaded by John Maynard Keynes. John Maynard Keynes was an influential policy analyst and economist. His book titled “The General Theory of Employment Interest and Money” was published in 1936 i.e. during the Great Depression and became the basis of modern macroeconomics. Keynes supports government intervention during economic turmoil in the capitalist economy. Keynes believed that it was the role of the state to build a bridge between the economy’s potential and its actual output during any financial crisis. His book “General Theory” was written during the period of great depression and was mainly the product of his prolonged study of unemployment in Britain. The post World War II era witnessed abrupt changes in the area of economic development.
Basis of state intervention in the economy
Keynes pointed out that the state intervention was necessary to deal with the ups and downs in the economy which we called trade cycles or business cycles. He believed that the only way to put demand for goods and services up and running was with the help of government spending so as to put money into the private sectors. The US president Franklin Roosevelt gave this a try in his massive public works