John Nye on the Great Depression, Political Economy, and the Evolution of the State

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🗓️ 14 September 2009

⏱️ 58 minutes

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Summary

John Nye of George Mason University talks with EconTalk host Russ Roberts about the Great Depression, the evolution of the State, and attitudes people have toward free markets. Nye argues that support for modern capitalism is fragile because people have trouble trusting the market process which is based on anonymous exchange with strangers. So when a crisis comes, it leads to demands for a larger role for top-down decision making. Nye sees the Great Depression as part of a larger public disillusionment beginning in World War I.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	another information related to today's conversation. Our email address is mail at econtalk.org. We'd
0:33.6	love to hear from you. Today is September 10th, 2009, and my guest is John Nye, Professor
0:43.2	of Economics here at George Mason University and holder of the Frederick Busch-Jot Chair in
0:48.2	Political Economy at the Mercatus Center. John, welcome back to Econ Talk.
0:52.8	Thanks, Russ. Good to be back. Our topic for today is the Great Depression and a provocative essay
0:57.6	you've written on the subject which we will link to. Let's start with talking about the different
1:02.2	stylized versions of what actually happened, what caused it. Well, I think part of the interest
1:08.5	for me in writing this essay was that I was asked to comment on the influence of the depression
1:14.0	on political economy in the Western world. And to be perfectly frank, I'm not a macroeconomic
1:18.5	specialist, but it was an interesting challenge for me to look at the literature in light particularly
1:23.4	of the received wisdom about the Great Depression. And if you like one of the stylized stories,
1:28.0	is that you have this great crash in 1990. Talk Market Crash, which leads to a huge banking
1:34.6	panic as well as a macroeconomic crash. And one of the stylized facts we have is that, you know,
1:39.3	Herbert Hoover did nothing, and he was then replaced by Franklin Roosevelt in 1933, and Franklin
1:46.5	Roosevelt then institutes a huge policy of expansion of the state, regulatory sense plan in terms
1:54.4	of spending, which then eventually by the time of World War I, World War II, sorry,
2:01.8	solves, or cures the United States of the Depression, or it gets really the depression,
2:06.3	I don't quite know how you want to say it. And I always sort of knew that wasn't quite right,
2:12.9	but I also knew that the Great Depression is quite controversial to this day, nobody quite agrees
	...

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