The Commanding Heights: The Battle of Ideas episode explains the economy's change in structure between 1914 and 1970, as well as the functioning of the markets and government during that time. John Maynard Keynes and Friedrich von Hayek both had influential roles on the economy in the 20th century due to their opposing arguments regarding aggregate demand and classical liberalism, respectively. Keynes' "planned economy" idea and Hayek's "market economy" both fought to shape the economy into what they hoped was ideal for modern day society. Between the two, Keynes' argument seemed to have the most success, especially in times of great need, which is why I found his the most compelling.
After World War I, Germany and Austria were forced to pay the costs of the war, which was near impossible for them, until they began to print more money in order to compensate for their lack of funds. Printing more money caused a hyperinflation to occur, where prices skyrocketed and people's savings decreased in value.
Painter Duncan Grant with Keynes.
Ludwig von Mises, Friedrich von Hayek, and Joseph ...
English: GFDL picture of F.A. Hayek to replace fai...By 1929, the market began to crash; banks started closing and millions of people lost all of their money. It was at this time that the government and the economy were in desperate need of a plan that would revive them from this devastating crash.
At this point, John Maynard Keynes came in with his theory in an attempt to save the economy from the Great Depression. He wrote a book explaining why the Great Depression occurred and what the government should do to prevent such an economic downfall from ever happening again. As Robert Skidelsky, a British economist, said, "Concepts we take for granted today, like gross domestic product, the level of unemployment, the rate of inflation, all to do with general features of the economy, were invented by [Keynes]" (Ch.4 Europe, 1931).