Mainstream Keynesians were at a loss. They found that their theory no longer did any of the things they had claimed for it. As one Keynesian, Francis Cripps of the Cambridge Economic Policy Review, later put it, they suddenly realised that:
Nobody really understands how the modern economy works. Nobody really knows why we had so much growth in the postwar world . . . how the various mechanisms slotted together.2
Many Keynesians dropped their former ideas overnight and endorsed the "monetarist" theories propagated by Milton Friedman and the Chicago School of economists. These held that the attempts by governments to control economic behaviour had been misconceived. There was, they argued, a "natural non-inflationary rate" of unemployment, and attempts to reduce it by government spending were bound to fail and to merely cause inflation. All states should do, they insisted, was to control the supply of money so that it grew at the same speed as "the real economy"-and take such action as was necessary to break down "unnatural monopolies" by trade unions or nationalised industries, while holding down unemployment benefits so that workers would then be persuaded to accept jobs at lower wages.
The reply of apologists for capitalism to its critics for 30 years had been that it could be made to work with state intervention. Now it was that it could only be made to work if state intervention was scrapped. As the dissident radical Keynesian Joan Robinson summed up the mainstream shift:
The spokesmen of capitalism were saying: Sorry chaps, we made a mistake, we were not offering full employment, but the natural level of unemployment. Of course, they suggested that a little unemployment would be enough to keep prices stable. But now we know that even a lot will not do so.3
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Capitalism in the 20th Century