Mises Daily Articles
Know the New Deal Cold
Discussions of the economy, especially during times of crisis, are often framed in terms of lessons we supposedly learned during the Depression of the 1930s. If we are not to endure terrible times like those again, we are told, we must support whatever form of state intervention is currently being peddled. The Depression is supposed to be Exhibit A of the alleged instability of the free market left to its own devices, while the New Deal represents the indispensable corrective power of the state.
That's why it's so essential for those who believe in a free economy and a free society to know this history cold, and to know it better than anyone. Understanding the true causes of the Depression, as well as the real economic record of the United States in the 1930s, is an essential ingredient in anyone's economic and historical education.
Each side of this debate, the free-market one and the interventionist one, has its talking points. In my course for the Mises Academy, "The New Deal: History, Economics, and Law," my aim is to immerse people in this important history and provide the kind of background few Americans have, but all of us need.
We'll start with the economy of the 1920s, the Federal Reserve, and the stock market crash. From there we'll proceed to Herbert Hoover's response to the Depression. Hoover, we're told, let his laissez-faire prejudices get in the way of interventions that would have arrested the crisis. Modern historians are less likely to repeat that version of things, at least not without important caveats, and free-market scholars never believed it in the first place. We'll take a systematic look at the Hoover record.
Then it's on to the New Deal, the series of programs Franklin Roosevelt supported in order to fight the Depression. The New Deal has been described by some scholars as a smashing success and by others as a dismal failure. What's the evidence for these claims? Which side is right? We'll look at all the major New Deal programs and agencies, as well as the relevant economic statistics from the 1930s, to answer these questions.
We'll also take some time to discuss the Supreme Court — both the decisions that initially struck down much of the New Deal, and the later ones that upheld it. You'll do what hardly any undergraduate student ever does and read the text of the decisions themselves.
The course will also cover the economic consequences of World War II. Did the war in fact end the Depression? If not, what were its effects?
Each class session I'll probably speak for about an hour or so — but I'll make it as lively an hour as possible, so the passage of time won't be so obvious — and then take questions for 30 minutes. After that, I'll stick around a little while longer to talk about any other issue, whether course related or not, that people would like to discuss.
We'll read the work of professional historians and economists, as well as the writing of neglected but important contemporaries. All the readings for the course are available for free online.
The course assumes no prior knowledge; we'll begin from ground zero. But by the end you can expect to have, not just a bunch of talking points, but a substantial grounding in perhaps the most important episode in American economic history, whose ideological legacy persists to this day.