>But, he has some decidedly heterodox views on the 1930s Depression.
>Basically, he takes the "neoclassical" view that it was, more or less, a
>decade-long outbreak of collective laziness on the part of the working
>class, and has pretty much said as much in this paper:
>
>http://research.mpls.frb.fed.us/research/qr/qr2312.pdf
>
>y'see it's all the fault of the government, which did something, we know
>not what, which removed the incentive to work ...
Except that he can't specify just what happened. What a hilarious conclusion to the paper.
>From the perspective of growth theory, the Great Depression
>is a great decline in steady-state market hours. I think
>this great decline was the unintended consequence of labor
>market institutions and industrial policies designed to improve
>the performance of the economy. Exactly what
>changes in market institutions and industrial policies gave
>rise to the large decline in normal market hours is not
>clear. But, then, neither is it clear why market hours are so
>low in France and Spain today.
>
>The Marxian view is that capitalistic economies are
>inherently unstable and that excessive accumulation of
>capital will lead to increasingly severe economic crises.
>Growth theory, which has proved to be empirically successful,
>says this is not true. The capitalistic economy is
>stable, and absent some change in technology or the rules
>of the economic game, the economy converges to a constant
>growth path with the standard of living doubling
>every 40 years. In the 1930s, there was an important
>change in the rules of the economic game. This change
>lowered the steady-state market hours. The Keynesians had
>it all wrong. In the Great Depression, employment was not
>low because investment was low. Employment and investment
>were low because labor market institutions and
>industrial policies changed in a way that lowered normal
>employment.
Is this the sort of reasoning that made him a giant of the profession?
By the way, I once had a Trot student of Anwar Shaikh explain that the Depression lasted so long because the New Deal prevented wages from being cut sufficiently.
Doug