Did Capitalism cause the great depression?
History textbooks take for granted that the Great Depression was caused by some inherent flaw in the free market, and that only wise government management of the economy can steer us clear of similar economic catastrophes in the future. This is the mainstream view, held by everyone from Marxists to run-of-the-mill conservatives: the market economy, whatever its benefits, is inherently unstable and susceptible to devastating downturns unless properly managed by central planners of one stripe or another. The business cycle—the boom and bust of prosperity and collapse—is an unavoidable feature of capitalism that can be mitigated by government action but never entirely eliminated.
One major school of economic thought—the so-called Austrian School, named for the country of origin of its principal founders—rejects this casual mainstream assumption and places the blame for boom and bust elsewhere. Significantly, it was economists of this school, practically alone among economists in the 1920s (the rest of whom insisted to their later embarrassment that an age of permanent prosperity had arrived), who predicted the Great Depression. It was his elaborations on this theory that won F. A. Hayek the Nobel Prize in economics in 1974.
Hayek’s Nobel sparked renewed interest in the Austrian theory of the business cycle, as did the bust that followed the dot-com boom of the 1990s, which was a textbook example of the Austrian theory in action.1 But the theory can also shed light on the Great Depression, one of the most catastrophic and least understood episodes in American economic history.
Copyright. Link Each "Copy & Paste" to It's Source. Only paste a small to medium section of the material. http://books.google.com/books?id=xvE...market&f=false
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Let me know your thoughts
-robbe
History textbooks take for granted that the Great Depression was caused by some inherent flaw in the free market, and that only wise government management of the economy can steer us clear of similar economic catastrophes in the future. This is the mainstream view, held by everyone from Marxists to run-of-the-mill conservatives: the market economy, whatever its benefits, is inherently unstable and susceptible to devastating downturns unless properly managed by central planners of one stripe or another. The business cycle—the boom and bust of prosperity and collapse—is an unavoidable feature of capitalism that can be mitigated by government action but never entirely eliminated.
One major school of economic thought—the so-called Austrian School, named for the country of origin of its principal founders—rejects this casual mainstream assumption and places the blame for boom and bust elsewhere. Significantly, it was economists of this school, practically alone among economists in the 1920s (the rest of whom insisted to their later embarrassment that an age of permanent prosperity had arrived), who predicted the Great Depression. It was his elaborations on this theory that won F. A. Hayek the Nobel Prize in economics in 1974.
Hayek’s Nobel sparked renewed interest in the Austrian theory of the business cycle, as did the bust that followed the dot-com boom of the 1990s, which was a textbook example of the Austrian theory in action.1 But the theory can also shed light on the Great Depression, one of the most catastrophic and least understood episodes in American economic history.
Copyright. Link Each "Copy & Paste" to It's Source. Only paste a small to medium section of the material. http://books.google.com/books?id=xvE...market&f=false
-----
Let me know your thoughts
-robbe
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