The current economic crisis has reignited a debate about Keynesianism that many had thought only of historical interest. This commentary suggests that the revival of Keynesianism undermines a key assumption of almost all accounts of postwar capitalism, namely that it can be fundamentally divided into a "Keynesian" and a "post-Keynesian" period.

Keynesianism is taken here to mean the use by national governments of their taxing and spending power to alter the overall level of economic activity. Across the developed world national governments are pursuing expansionary fiscal policies, and accumulating public deficits, as part of their attempts to limit the recessionary impact of the banking crisis. While there is much debate about the precise shape of such packages, almost all countries have some measures of this character planned or enacted. A few voices have raised concerns about the long-term impact of such packages, but they have been ineffective against the compelling need felt by most governments to be seen to be using all possible instruments to stave off economic collapse.

These events clearly contradict the narrative of economic policy developments which sees Keynesian policies as a product of the middle years of the twentieth century, ideologically challenged and then comprehensively defeated by monetarism and neoliberal economics from the 1970s onwards. For many commentators this ideological shift was in turn rooted in a transformation of the productive character of capitalist economies, so the "end of Keynesianism" reflected not just ideological defeat for the centre-Left, but a profound transformation in the nature of capitalist economies. For this narrative, the revival of Keynesian policies in the early twenty-first century appears incomprehensible. There has been no sustained ideological challenge to the predominance of neoliberalism, nor an identified shift back to the economic structure that is purported to have been the material base for the earlier phase of Keynesianism. Clearly that narrative needs to be revised.

Perhaps the best place to start that revision is to ask the simple question, what are the conditions of existence of Keynesian policies?