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Store: An Independent Institute Book
14 Figures • 15 Tables
© 2006 |
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DEPRESSION, WAR, AND COLD WAR
Challenging the Myths of Conflict and Prosperity
By
Robert Higgs
Despite much attention to U.S. government policies since the early 1930s, key questions remain unresolved. In Depression, War, and Cold War, the scholarly sequel to his acclaimed classic Crisis and Leviathan, Robert Higgs sheds pioneering light on some of the most important of these questions: What accounts for the extraordinary duration of the Great Depression? What about “wartime prosperity” and whether World War II “got the economy out of the depression”? How did the war alter relations between the government and the leaders of big business? How did the postwar military economy alter the business cycle? What is Congress’s role in the military-industrial-congressional complex? This seminal book answers these and other crucial questions by presenting new insights, evidence, and statistical analyses.
Depression, War, and Cold War offers a powerful, solidly grounded interpretation of U.S. political economy from the early-1930s to the end of the Cold War, and refutes many popular ideas about the Great Depression and New Deal, the World War II economy, and the postwar national-security state still so pervasive today.
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Table of Contents
Introduction
1. Why the Great Depression Lasted So and Why Prosperity Resumed After
2. Private Profit, Public Risk: Institutional Antecedents of the Modern Military Procurement System in the Rearmament Program of 1940–1941
3. Wartime Prosperity? A Reassessment U.S. Economy in the 1940s
4. Wartime Socialization of Investment: Reassessment of U.S. Capital Formation the 1940s
5. From Central Planning to the Market: American Transition, 1945–1947
6. The Cold War Economy: Opportunity Ideology, and the Politics of Crisis
7. Hard Coals Make Bad Law: Congressional Parochialism versus National Defense
8. Airplanes the Pentagon Didn’t Want, Congress Did
9. Profits of U.S. Defense Contractors
10. Public Opinion: A Powerful Predictor Defense Spending
Praise for Depression, War, and Cold War "Outstanding Academic Book for 2007."
—Choice Magazine
"Social Science Book of the Month."
—Society Magazine (January-February 2007)
“Students are routinely taught that Big Government rescued the United States from the Great Depression and then won World War II while simultaneously producing prosperity at home. In Depression, War and Cold War, Higgs presents the most thoughtful and detailed criticism of this view yet undertaken. No serious student of American economic history can afford to ignore Higgs's interpretation.”
—Hugh T. Rockoff, Professor of Economics, Rutgers University
“No American knows more about the link between the growth of Big Government and war than Higgs, whose 1989 classic Crisis and Leviathan documented how each new war or economic crisis ratchets up government's size and power at the expense of individual liberty and a free society. This time, in Depression, War and Cold War, economic historian Higgs asks—and answers—such questions as why the Great Depression lasted so long, how the Cold War altered relations between government and big business and how Congress abetted the growth of the military-industrial complex.”
—Pittsburgh Tribune-Review
“In Depression, War and Cold War, Robert Higgs makes several major points. One example is that, contrary to the general 'wisdom,' the real level of prosperity during World War II was probably lower than during the late 1930's, due to government policies responsible for the unavailability of goods, decay in housing and services, and more dangerous working conditions. Another is that throughout the cold war threat, information was manipulated by political elites to maintain high national security expenditures. These and other findings, and the evidence supporting them, carry new resonance in an era of the national security state's revival.”
—Bruce M. Russett, Dean Acheson Professor of International Relations, Yale University
“In Depression, War and Cold War Higgs offers ten previously published papers covering a wide-range of subjects: from regime uncertainty during the Great Depression to budgetary politics during the Cold War. . . . Higgs uses an effective combination of historical and economic analysis to tell his story. The book’s introduction does an excellent job of highlighting its themes, and most chapters contain a conclusion, which I found well written and useful. The first half of the book—devoted to the depression and war—uses a wide-variety of data and methods to challenge the orthodox perspective. Readers interested in the political economy of the cold war will be especially interested in chapters 6-8. . . . [T]his book offers thoroughly researched and interesting perspectives on some important issues.”
—Journal of Economic Issues
“In Depression, War and Cold War, Robert Higgs gives intriguing answers to questions he raises about the Great Depression, World War II, and the Cold War. For example: Why did the Great Depression last so long? Why did the Great Escape from the Depression occur not during the war, as conventionally assumed, but in 1945-47? Why did the rearmament program of 1940-41 determine the features of the procurement of military supplies to this day? How should one evaluate the actual performance of the economy during the Cold War from 1949 to 1989, given that defense spending has tenuous relations to the well-being of consumers, investors, and the beneficiaries of government purchased civilian goods and services? How the parochialism of members of Congress results in defense spending that the military does not want? Robert Higgs's answers to these and still other questions challenges the unthinking reliance on official measures of prices and real GNP, which do not distinguish between what a command economy and what a competitive economy produces. He makes use of insights from political science to support his interpretations. Readers will find this book enlightening.”
—Anna J. Schwartz, Research Associate, National Bureau of Economic Research
"A reading of the distressingly true facts and arguments in Depression, War and Cold War raises fundamental questions as to what can be done: how to find and apply the necessary correctives to the popular and scholarly willingness top remain emotionally invested in erroneous explanations, and how to avoid responding to social and economic problems by waging destructive war. This most recent addition to Robert Higgs’s body of work is an invaluable guide in that further quest.”
—Journal of American Studies
“Depression, War, and Cold War presents very interesting and important reinterpretations of the role of government in the economy since 1930. All points along the political spectrum will find ideas of considerable value here.”
—Stanley L. Engerman, Munro Professor of Economics, University of Rochester
“Depression, War, and Cold War is an important book. Those interested in the interaction between the domestic economy, war and heavily armed peace, will find it essential reading.”
—Paul Johnson, author, Modern Times and A History of the American People
“Depression, War, and Cold War questions some of the traditional (Keynesian) assumptions, e.g., that Roosevelt’s policies gave a boost to an economy in deep recession and that the war had more or less the same effects, only slightly more so. Recommendable . . . convincing . . . .”
—Economics of Peace and Security Journal
“Depression, War, and Cold War marks Higgs as one of the most important and original political analysts of our time. An intellectual tour de force!”
—Jonathan Bean, Professor of History, Southern Illinois University
“Higgs’s superb and pioneering book, Depression, War, and Cold War, is a real eye opener and bold foray into contemporary political economy.”
—Richard E. Sylla, Henry Kaufman Professor of the History of Financial Institutions and Markets, New York University
"In Depression, War, and Cold War, Robert Higgs has written a brief but superb account of the Great Depression, the economic effects of World War II, and America’s proclivity for unnecessary military spending in the postwar period. This iconoclastic book is a coherent collection of ten essays on the political economy of the federal government’s welfare and warfare policies spanning the crucial decades of the twentieth century. When Higgs’s essays are put side by side, they send a persuasive message that military spending, whatever its international political effects, did not rescue the country from the Great Depression, did not increase standards of living during World War II, and did not provide weapons at competitive prices after the war. In challenging the ‘military-industrial-congressional complex,’ Higgs urges readers to focus not just on any benefits accruing to Dallas for making obsolescent planes or to Wilkes-Barre for stockpiling coal, but to focus on the flow of dollars out of the hands of hard-working taxpayers all over the country—all of whom could have invested or spent their money more wisely and beneficially.”
—The Freeman
“Robert Higgs describes Depression, War, and Cold War as an interim report on work related to his 1987 classic, Crisis and Leviathan. . . . Higgs provides a surprisingly incisive response to the broad range of questions that accompany efforts to explain this very intractable part of our economic history. Without doubt, this is the chief contribution of Depression, War, and Cold War. . . . Higgs’s interpretive framework presents key challenges to both the macromonetary and Keynesian explanations of the American experience in the era of depression and world war.”
—Journal of Markets & Morality
“Depression, War, and Cold War is a collection of ten previously published essays that address some of the most important questions of 20th century America. Robert Higgs provides detailed answers that challenge government propaganda of our past and provides ammunition for present and future policy deliberations. I highly recommend this book for every economist and the general public. The essays are well-written, easily accessible, and to the point. The book will appeal to conservatives, liberals, and libertarians. . . . Higgs’s book is a great anti-state tonic that is a direct challenge to government propaganda where history is shown to conform nicely to economic logic.”
—Quarterly Journal of Austrian Economics
“Robert Higgs is a contrarian and an iconoclast. He believes that economists and historians have misunderstood U.S. economic history during the middle decades of the 20th century. For Higgs, because government activity competes with and distorts markets, the burden of proof is carried by those who promote expanded government activity. And this obligation—whether for civilian or military programs—is rarely fulfilled. In this spirit, Higgs argues that the ‘New Deal prolonged the Great Depression by creating an extraordinarily high degree of uncertainty among investors.’ . . . But the New Deal is only a prelude to the most innovative and provocative claims at the center of Higgs’s effort. On the topic of war, Higgs makes a powerful case that resonates with the most strident of antiwar activists. . . . Relying extensively on Kuznets, Higgs makes the case that all war outlays should be deducted from the GNP. . . . On the basis of his challenges to the orthodox definitions and measurement of the GNP and personal consumption, Higgs calls into question the military Keynesian view of the war. That is, far from ending the Great Depression, the World War II mobilization prolonged it. . . . Sociologists studying war and peace and those concerned with the middle decades of the 20th century would profit from consulting his work.”
—American Journal of Sociology
“On the eve of entering World War II in 1941, America's economy was still quite depressed—as it had been for more than a decade. And as economic historian Robert Higgs shows in his 2006 book, Depression, War, and Cold War, New Deal policies and the prevailing climate of ideas from which they sprang suppressed investment.”
—Pittsburgh Tribune-Review
“By bringing together ten previously published essays in his latest book, Depression, War, and Cold War: Studies in Political Economy, eminent economist Robert Higgs expresses his hope that ‘these trees do add up to a forest, that the individual studies, laid back to back, do tell a coherent overarching tale.’ Higgs, a Senior Fellow in Political Economy at the Independent Institute, need not worry about coherence here because his thesis is clear. It is a convincing testament to the observation made nearly two hundred years ago by German philosopher Friedrich Von Schlegel, ‘Where there is politics or economics, there is no morality. Higgs either wrote or cowrote the ten essays that compose Depression in the time since his previous book, Crisis and Leviathan. By revising and collecting them in one place, Higgs intends to ‘expand and refine the ideas’ that his landmark study originally proposed. . . . Higgs demonstrates the excessive nature of U.S. spending on military facilities had 'little, if any, value for peacetime uses.’ Moreover, he raises a serious challenge to the idea that the American economy peaked between 1943 and 1945. Higgs discerns the psychological ramifications of the ‘command-and-control’ wartime economy by showing that the ‘frenetic activity of war production’ drastically altered the expectations of consumers and producers by reminding them of the nation's vast potential."
—History: Review of New Books
"Depression, War, and Cold War is challenging but essential reading for any who want to truly understand 20th-century economic history, the real causes of the Great Depression, and the relationship between militarism, inflation, taxes, and the expansion of state power."
—New American
"Even though a spontaneous recovery occurred before World War II, it is important to stress that scholarship by Robert Higgs, and other economic historians, shows that—contrary to legend—the New Deal held down the spontaneous recovery and contributed to the 1938-1939 slump. Indeed, Higgs’ evidence demonstrates that investment was depressed by New Deal initiatives because of regime uncertainty—‘a pervasive uncertainty among investors about the security of their property rights in their capital and prospective returns.’ (Robert Higgs, Depression, War and Cold War). In short, investors were afraid to commit funds to new projects because they didn’t know what President Roosevelt and the New Dealers will do next.”
—GlobeAsia
"Depression, War and Cold War . . . is one of those rare offerings that explicates the truth of things related to the inimical conflation of government, the military, and our congressional banditti these past seventy years or so. . . . It is a book that reveals a singular and important element of the derailment of our culture: where human nature has triumphed in an egophanic revolt against the old order."
—Human Events
“I am dying to read Depression, War, and Cold War. . . . This is invigorating for the mind and for understanding. Folks, I do agree that what is being done now by the government is hurting us terribly. . . . This not the last time you will be hearing from Professor Robert Higgs, and his book is Depression, War, and Cold War, which we’ve already ordered. It has answered so many questions.”
—Dennis Prager, author and nationally syndicated talk radio host
"In his new book, Depression, War, and Cold War, Robert Higgs makes a compelling case for the proposition that the U.S. did not really recover during World War II, that in many ways it regressed, and the growth that led to the relative prosperity of the 1950s did not begin until after wartime controls were lifted in 1946. . . . Higgs, who has taught at Oxford, Stanford and the University of Washington, has a rare combination of passion for liberty and the well-being of the American people along with a commitment to deep scholarship and a nuanced, intellectually honest approach to controversial issues. He is a treasure and a resource who deserves a great deal more prominence in our national conversation.”
—Orange County Register About the Author Robert Higgs is Senior Fellow at The Independent Institute, Editor of The Independent Review and author of the path-breaking books, Crisis and Leviathan and Against Leviathan.
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