Original Keynesian thought basically suggested that the federal government should spend money when the economy is weak; conserve money when the economy is strong.
Palley argues that the current capitalistic regime is balanced too much towards the owners of capital and against the income of those employed under it. He understands that when an economy becomes too imbalanced when there is too much wealth in the hands of the owners, and too little wealth in the hands of the consumers. This imbalance produces a collapse in the economy. There is only so much consuming that households can do with debt, after families funds are exhausted to keep up with effects of the depression.
It is this process that brings the entire economy to come to a pause in the economy, is a "depression.” Debts can be called for, such as foreclosures occur and bank collections. Once, the level of debt is reduced to a level that the economy can resume and function “normally” again.
Palley believes events in the recent years, has provided information to prove his favor of Structural Keynesianism. Palley distinguishes Structural Keynesianism from Economic Naturalism. The two forms have in common the basic propositions that the level of economic activity depends on the level of aggregate demand, and from time to time a capitalist economy will experience a shortfall of aggregate demand that will not be overcome by market forces but requires expansionary macroeconomic policy.
Having witnessed the decline in unionism, and witnessing that unionism is interpreted as slow-down in the economy, rather than a balancing force, Palley