Keynesianism and U.S. Economic Transformation

Institutional Challenges, Policy Limits, and Global Interdependence

Abstract

This paper presents a historically grounded reinterpretation of Keynesianism within the context of U.S. economic development and global capitalist transformations. It traces how Keynesianism has evolved through major crises—the Great Depression, stagflation, the 2008 financial collapse, and the COVID-19 pandemic—engaging critically with competing paradigms such as monetarism, rational expectations, supply-side economics, and computational models of economic behavior. The argument centers on the growing inadequacy of traditional demand management policies to address long-term structural issues, including market concentration, rent extraction, technological displacement, and the erosion of democratic institutions. Drawing on institutional and geopolitical analysis, the paper foregrounds the role of fiscal deficits, debt accumulation, and the international monetary system in shaping U.S. economic policy space. It advocates for a structurally integrated Keynesianism—one that embeds macroeconomic stabilization within a framework of institutional reform, regulatory innovation, and democratic accountability. Rather than treating crises as anomalies, the paper conceptualizes them as catalysts for institutional adaptation and systemic recalibration. This revised Keynesian approach not only enhances the explanatory power of the theory but also expands its normative and practical scope, offering a more comprehensive lens through which to understand and govern economic behavior in an interdependent and volatile global order.