History, assumptions, criticism and an evaluation from a theoretical perspective
The Great Depression of 1929 has changed the way of economic thinking and the role of state on economy to a great extent. Keynes, at that time, objected to the supply driven classical liberal views and suggested that state must come up with an active economic policy response and intervene when and if there is a market failure. Between 1930s to late 1970s, Keynesian policies (state-led economic growth) and practices (import substitution) became the corner stone of economics. However, by 1970s there were several economic bottlenecks arising from oil shocks, inefficient production (mostly by state owned enterprises) as well as the gold standard. This has led to rise of the new laissez-faire economic thought which has been generally called neoliberalism.