Alexander J. Field: The Great Depression Was Good for the Economy
Alexander J. Field, an economist at Santa Clara University, is the author of “A Great Leap Forward,” which argues that the terrible years of the Great Depression actually set the stage for the post-World War II boom. Mr. Field discussed his ideas at a recent book-signing party. The book will be officially released next week.
Our conversation follows.
Q. You make the novel claim that the Great Depression years were good — or at least important — for the American economy. How so?
Mr. Field: In 1941, the U.S. economy produced almost 40 percent more output than it had in 1929, with virtually no increase in labor hours or private-sector capital input. Almost all of the increase in output per hour is attributable to technological and organizational advance. As I said in the title of my 2003 American Economic Review article, the 1930s were indeed the most technologically progressive decade of the century.
The conventional wisdom is that the war somehow magically transformed the doom and gloom of the Depression into the U.S. standing like a colossus astride the world in 1948. My counterargument is that potential output expanded by leaps and bounds between 1929 and 1941, and it was this expansion in capacity that both helped us win the war and established the foundations for postwar prosperity....
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