America's Great Depression
by Murray N. Rothbard
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Book Summary Information
Author: Murray N. RothbardEdition: Hardcover
Audio: English (Unknown); English (Original Language); English (Published)
Published: 2009-04-03
ISBN: 1607961105
Number of pages: 376
Publisher: www.bnpublishing.net
Product features:
- ISBN13: 9781607961109
- Condition: New
- Notes: BRAND NEW FROM PUBLISHER! 100% Satisfaction Guarantee. Tracking provided on most orders. Buy with Confidence! Millions of books sold!
Book Reviews of America's Great Depression
Book Review: A bold iconoclastic view of the Great Depression
Summary: 5 Stars
Published in 1963, this book remains extraordinarily radical. In it, libertarian economist Murray Rothbard attacks our entire understanding of the Great Depression. The consensus view of the Great Depression is fairly simple. When the Crash of 1929 occurred, Republican President Herbert Hoover was stubbornly committed to the laissez-faire policy of doing nothing. As a result, the depression became extremely severe and prolonged. What he should have done (says Keynesians such as Paul Krugman) is to embark on a vast campaign of public spending. What he should have done (says the Chicago school through Milton Friedman) is to greatly expand the money supply. Since he did neither (says both) nothing useful was done until FDR become President, and started the modern world through his New Deal policies. (Perhaps the best statement of this perspective is that of Paul Krugman in The Return of Depression Economics and The Conscience of a Liberal.)
A crack, however, has appeared in the consensus view. At this point, most people admit that FDR, in fact, did not end the Great Depression, that the downturn continued until World War Two. The lesson that most economists draw from this, however, is that FDR had the right general policies, but he did not pursue them hard enough. Had he spent in a truly huge manner, as we did when fighting Hitler, the Depression would have been ended years sooner. The problem, in short, is that FDR was not Keynesian enough (or sufficiently committed to monetary expansion, if one is a monetarist). Another problem with the consensus view is that they do not explain why the Great Depression was so severe and prolonged. After all, the business cycle has been a persistent feature of our system since at least the early 19th century. Many downturns occurred. Why was this one so severe and prolonged?
Rothbard attacks this entire view of the Depression. As he sees it, the entire debacle was caused by unwise government meddling in the economy. His explanation is split into two stages. First, he explains the original downturn as being an inevitable byproduct of the boom of the 1920s. In the first part of the book, he sets out the Austrian theory of the business cycle. The government and the banking system artificially expand the money supply (meaning, not just currency, but all currency substitutes such as bank deposits and so forth). This caused a boom, but like the boom we just went through, an artificial and unsustainable boom. This boom inevitably collapsed, with the Crash of 1929.
Had the government done little or nothing, as it did in most prior downturns, the free market would rapidly have cleared up the problem. It would have done so by pushing prices and wages down, and driving unsound investments to be liquidated. As Rothbard points out with great force, there had been a sharp downturn in 1921. The government did nothing. Prices fell, wages fell and prosperity was restored after about a year.
Hoover, however, was not a laissez-faire free market believer. On the contrary, as Rothbard documents at length, Hoover was committed to an entirely new view of the role of government in the economy. As Rothbard shows, Hoover was deeply committed to an activist government approach. Above all, Hoover wanted wages not to fall. He also wanted farm prices not to fall. As Rothbard shows, Hoover used all of his power as President to try and hold up wages, and he was very successful in this endeavor. Wages did NOT fall during the Depression. Since sales and profits had fallen, and since wages were not falling, the inevitable result was mass unemployment. Hoover, Rothbard argued, prevented the free market from working. As a result, the downturn did not pass, but became virtually permanent. The fault, he argues, was entirely that of Hoover and the government. And, he argues, Hoover was not laissez-faire, but instead started virtually all of the programs later associated with FDR and the New Deal.
This is a re-interpretation of American history that is breath-taking in its scope. Rothbard is not only anti-FDR, he is against the historical pro-business program of the Republican Party. Rothbard calls himself a follower of the Austrian school economics and particularly of Ludwig Von Mises. In American terms, however, he is a follower of a very old, and almost entirely forgotten school, that of Thomas Jefferson, Andrew Jackson and the 19th century hard money opponents of the Federalists, Whigs and Republicans.
Rothbard makes a very good, sustained argument for this extremely unfashionable point of view. Personally, I am wrestling with what he says, and thinking through the degree to which I agree with him. I suggest that anyone interested in fundamental economic and political issues should read Rothbard. Whether you agree with him or not, he makes a very strong case that will really make you think.
Summary of America's Great Depression
Rothbard opens with a theoretical treatment of business cycle theory, showing how an expansive monetary policy generates imbalances between investment and consumption. He proceeds to examine the Fed's policies of the 1920s, demonstrating that it was quite inflationary even if the effects did not show up in the price of goods and services. He showed that the stock market correction was merely one symptom of the investment boom that led inevitably to a bust. The Great Depression was not a crisis for capitalism but merely an example of the downturn part of the business cycle, which in turn was generated by government intervention in the economy. Had the book appeared in the 1940s, it might have spared the world much grief. Even so, its appearance in 1963 meant that free-market advocates had their first full-scale treatment of this crucial subject. The damage to the intellectual world inflicted by Keynesian- and socialist-style treatments would be limited from that day forward.About the Author
Murray N. Rothbard, the author of 25 books and thousands of articles, was a historian, philosopher, and dean of the Austrian School of economics. The S.J. Hall Distinguished Professor of Economics at the University of Nevada, Las Vegas, he was also Academic Vice President of the Ludwig von Mises Institute in Auburn, Ala.
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