Great Depression (The)

The mainstream historical narrative of the great depression is that unregulated capitalism caused the depression and that government intervention was crucial in saving the nation from financial disaster. These included leaving the gold standard, enacting safety net programs and Roosevelt’s "New Deal" which created new jobs.

In recent decades others have argued not only that government intervention prolonged the recovery process - but that the original depression itself was sparked by government action.  Specifically, Federal Reserve monetary policy is often cited as a proximate cause with Smoot -Hawley tariffs deepening it.  It is argued that regulatory uncertainty due to FDR’s unprecedented interventions in the economy extended the depression throughout the 1930s.  Rather than ended by government intervention, these voices emphasize World War II as the real reason the depression ended.

Others on the left (along with many on the right), however, would suggest that the Federal Reserve was not so much a “government” actor as it was a kind of pseudo-public institution primarily designed with private banking interests in mind.

Laying aside whether government expansion was a good thing, everyone agrees that the Great Depression was a key moment where the federal government (or, alternatively, finance capitalist power via the pseudo-public Federal Reserve) expanded its reach considerably into American lives.  

The mainstream narrative, furthermore, is seen by some as defective in that it opposes the actions of government and capitalists, whereas the truth of the matter, they argue, involves rather more crony capitalist collusion between government and the finance capitalist class.

 

Conversation Catalysts: 

Robert Higgs on The Great Depression

Contributors: 

Michael Strong, Arthur M. Peña

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