In a dramatic and well-argued challenge to the prevailing wisdom, Prosperity and Public Spending, first published in 1988, contends that the failure of Keynesian economics has been due to its timidity. Far from contracting, the government must expand its powers and activities, in order to achieve and maintain economic prosperity. The need for such expansion arises from the fact that the system has developed from a craft-based economy to a mass-production network with sophisticated international finance. This "transformational growth" brings about irreversible and sometimes devastating changes, requiring government action. Professor Nell argues that a lack of government action in the decade prior to the book’s initial publication was responsible for the stagnation of the economy and he asserts that this could only be overcome by a determined policy intervention and the political will to achieve dominance over private capital.
Part 1: The Retreat from Prosperity 1. The Slowdown of the 1970s 2. The Breakup of Keynesian Consensus 3. The Impact of Government Deficits Part 2: From Kinship Capitalism to Corporate Industry 4. The Traditional Craft System: Family Firms to Family Farms 5. Corporate Industry: Demand-Determined Production 6. The State and the Corporate Economy 7. Transformational Growth and the Slowdown Part 3: Free Markets or Planned Prosperity 8. Inflation and the World Economy 9. Government and the Free-Market Consensus 10. Public Spending in a Demand-Constrained Economy 11. Postscript: The British Experience Geoff Hodgson.