August, 2009

The Depression and the Failure of Impersonal Trust: What Have We Really Learned from the Great Depression

  • John Nye

    Frederic Bastiat Chair in Political Economy, Mercatus Center
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Large-scale systems of anonymous exchange with millions of strangers, have engendered enormous economic prosperity. However, they have not inspired the kind of devotion that nationality and communal ideology more easily induce. Hence, a severe crisis that affects all economic performance, no matter how narrow the source of the problem, leads to a reconsideration of, and often a loss of faith by the public of the entire political economic system itself. This paper focuses on Great Depression era economic policies and the challenges during that period to the idea of the system of impersonal exchange that made large-scale, uncoordinated cooperation possible, productive, and reliable, while drawing some pertinent lessons for the current crisis.

A slightly different version of this essay will be available as "The Real New Deal" in The American Interest magazine.

Citation:

Nye, John V.C. "The Real New Deal," The American Interest magazine, September/October 2009 Issue.