A New Study of the Political Economy of the Great Depression and World War II
Over the years, I have undertaken a series of studies of the political economy of the Great Depression and World War II. Some of the more important ones appear in revised form as chapters 1-5 in my book Depression, War, and Cold War (2006).
I have recently made another brief study along these lines, and it has been published in a new on-line journal called Libertarian Papers. The article is titled “A Revealing Window on the U.S. Economy in Depression and War: Hours Worked, 1929-1950,” and it may be found online here. An abstract of this article reads as follows:
Interpretation of macroeconomic events in the 1930s and 1940s is complicated by the era’s institutional peculiarities, especially the massive work-relief programs during the Depression and the displacement of market-based pricing and resource allocation during the war. These difficulties can be avoided to some extent by examining hours worked, rather than such standard indicators as estimated real GDP and the rate of unemployment.
From such an examination, we may conclude that (1) the depression had a flat trough in 1932, 1933, and 1934; (2) civilian government hours accounted for three-eighths of the increase in total hours worked between 1932 and 1936; (3) as late as 1939, private nonfarm hours were 16 percent below their 1929 level and 21 percent below the trend high-employment level for 1939; (4) the tremendous mismatch between the increase in private hours worked and the estimated increase in real GDP from 1940 to 1944 calls into serious question the accuracy of the estimated increase in real output; and (5) substitution of lower-productivity workers for the higher-productivity workers being drained into the armed forces from 1940 to 1944 only adds to doubts about the reality of the estimated increase in real output during that period.