Well, the debate over my post on Keynes on central planning has gone viral all over the place, and I shall make no attempt to link to all of it. However, I do want to comment further on a point raised actually in Facebook debates on this by one of the makers of the video in question, John Papola. This has to do with the accusation that Keynes was (maybe) a supporter of what has been called "military Keynesianism," with the point being made in the video that unlike what lots of Keynesians supposedly said (Samuelson being provided in the debates as an example in 1943, although not Keynes himself), we did not go into a deep depression after WW II, even though there was no massive fiscal stimulus and there was this sharp drop in government spending with the end of the war.
This curiously relates to a matter that has been much argued about previously on various blogs, namely the nature of the short and sharp post-WW-I recession of 1919-20. Some have argued that this shows how wrong Keynes was, because laissez-faire was followed, including letting prices (and some wages) fall sharply in 1921, with the economy bouncing back very nicely, after having the unemployment rate soar from 5% in 1920 to 9% in 1921. Most economic historians have attributed this recession to "postwar adjustment problems."
OTOH, some of those making a big fuss about that recession somehow fail to notice that in fact there was a post-WW-II recession, if also very brief, if sharp. It occurred in 1945 with the sharpest decline in wartime spending, although not much remembered. However, the official stats have US declining in GDP by a whopping -12.7% in that year, although that number must be taken with some grains of salt due to all kinds of measurement issues and restructurings. Some say this exaggerates things as the unemployment rate only went from 1.5% to about 3.6%, a rise, but not all that much to get worked up about.
Two points. The first is that this latter event does not account for the massive decline in female labor force participation that occurred in 1945, from about 38% to about 30%. We all know (or should) that those withdrawing from the labor force do not count in the unemployment rate. That not very large increase in the UR does not disprove that there was a sharp (if short) decline in GDP. (Rosie the Riveter went home to boom out those babies, and to buy houses to be built, given that basically none had been for about 15 years in the US).
The other point, which is perhaps more cogent for the debates here, involves monetary policy. Frightened of rising inflation, the inexperienced Fed raised the discount rate sharply during 1919-20, halting doing so in June, 1920 as it became clear that the economy was plunging into recession. OTOH, the very loose monetary policy of WW II basically continued during the immediate postwar years, only finally ended with the Fed-Treasury Accord of 1951 in the face of rising inflation tied to the Korean War. So, it may well have been that the Fed was listening to Samuelson and was slow to tighten monetary policy, thereby helping to ease that postwar transition and make sure that the one after WW II was not as sharp as the one after WW I, despite the much larger adjustments that were made.
Added: For some strange reason the system is not allowing me to comment. So, I shall reply to some comments here in the main post.
To John Papola.
OK, I grant that you have "Keynes" saying "too bad" about the wartime achievement of full employment and accept that you recognize that he was a pacifist prior to WW II. In the same place he made his statement you quote he expressed optimism that full employment could be achieved after the war with aggregate demand management without interfering with individual decisionmaking.
I am not sure why you cite Higgs on reduced consumption levels due to rationing and so forth in WW II. Everyone knew about that, certainly including Keynes who discussed such matters in his "How to pay for the war," which was all about restraining the excessive aggregate demand associated with the war.
I continue to maintain that one needs to track labor force participation. Womens' participation rose at the beginning of the war above anything previously seen and then fell at the end of the war sharply. Anyone who quotes unemployment rate changes without noticing that is being disingenuous at best. I have no problem at all with tracking employment rates (percent of working age employed) rather than unemployment rates, which have always been known to suffer from these problems.
The recession started in Feb. 1945, but went on for 8 months, with NBER giving the GDP decline as -12.7%, larger than any since, including our most recent recession. Sure, there were measurement issues and index number problems with all that restructuring, but the 2% increase in the official unemployment rate combined with the 8% decline in female labor force participation is consistent with a pretty sharp decline in GDP, if not necessarily a full -12.7%.