http://en.wikipedia.org/wiki/History_of_socialism
"Sweden
The Swedish Socialists formed a government in 1932. They broke with economic orthodoxy during the depression and carried out extensive public works financed from government borrowing. They emphasised large-scale intervention and the high unemployment they had inherited was eliminated by 1938. Their success encouraged the adoption of Keynesian policies of deficit financing pursued by almost all Western countries after World War II."
http://en.wikipedia.org/wiki/Keynesian_economics
"Two aspects of Keynes's model has implications for policy:
First, there is the "Keynesian multiplier", first developed by Richard F. Kahn in 1931. Exogenous increases in spending, such as an increase in government outlays, increases total spending by a multiple of that increase. A government could stimulate a great deal of new production with a modest outlay if:
The people who receive this money then spend most on consumption goods and save the rest.
This extra spending allows businesses to hire more people and pay them, which in turn allows a further increase in consumer spending.
This process continues. At each step, the increase in spending is smaller than in the previous step, so that the multiplier process tapers off and allows the attainment of an equilibrium. This story is modified and moderated if we move beyond a "closed economy" and bring in the role of taxation: The rise in imports and tax payments at each step reduces the amount of induced consumer spending and the size of the multiplier effect.
Second, Keynes re-analyzed the effect of the interest rate on investment..."
