It would be impossible to talk about Keynesianism, and the New Deal without first addressing the Great Depression to some extent. And it would be unfair to the millions who suffered to not speak of their plight. The 1920s were a time of artificial prosperity bought on credit. While the focus here will remain in the context of the United States, it is important to note as credit, buying and banking is discussed on a consumer level, similar things were happening abroad. A circle of money forms after World War I, with Germany borrowing from US lenders to pay war debt to the Entente, who in turn used German's reparations to pay back their own war debt. This system was not sustainable unless the money supply was constantly increasing, and so when the US economy collapsed, so did the economy of Europe.
Additionally, laissez-faire is the predominant force in government. Hoover believes strongly that government intervention is not the answer to the Great Depression, and while he forsakes this near the end of his term, his policies reflect trickle-down theory, paying mostly to the wealthy. Not only was this unpopular, but it was ineffective.
People came to rightfully associate laissez-faire with corruption, and rampant business, and for the first time looked to their government for help. Thus the New Deal represents a shift in American's view on what government's role should be.
"...a way to defend the country without destroying it, a way to be part of the world without running it." (Roosevelt)
Additionally, laissez-faire is the predominant force in government. Hoover believes strongly that government intervention is not the answer to the Great Depression, and while he forsakes this near the end of his term, his policies reflect trickle-down theory, paying mostly to the wealthy. Not only was this unpopular, but it was ineffective.
People came to rightfully associate laissez-faire with corruption, and rampant business, and for the first time looked to their government for help. Thus the New Deal represents a shift in American's view on what government's role should be.
"...a way to defend the country without destroying it, a way to be part of the world without running it." (Roosevelt)