Keynes described how savings, in a time of depression, cannot continue to accumulate. Savings actually dry up, reduced to a trickle rather than a flow. When funds are needed for investment to stimulate the economy, there is no savings accumulation available. So the seesaw theory is invalid — replaced by the elevator theory.
The elevator concept maintains that the economy, like an elevator car, can stall at any level. Even worse, a depression is a natural development, with every surge followed by a low. This phenomenon occurs because the economy, to avoid depression, must continually expand. However, capital expansion of any business is restricted by that business' market. So capital expansion does not move at an increasing rise, but in spurts. Understandably, Keynes' book proved as revolutionary as those of Adam Smith and Karl Marx. Keynes turned the classical view that depression is only temporary into the bleak conclusion that depression is inherent in the system itself and can be permanent.
Of course, Keynes' vigorous mind did not halt on a dismal outlook for the future. He provided a cure — government needs to "prime the pump" by deliberately undertaking heavy government investment to stimulate the economy. By absorbing capital goods and spending whenever private enterprise is unable to expand, government can insure a high level of economic movement. Therefore, governments should incorporate judicious spending programs into their permanent plans.
Keynes visited Washington in 1934 and observed President Franklin Roosevelt's New Deal methods to combat depression. This practical demonstration of Keynes' thesis became a defense for such policies. The WPA (Works Progress Administration) and a host of other New Deal projects existed specifically to "prime the pump." Such measures increased the national income by fifty percent and made a large dent in unemployment rolls.
