The Hoover-Roosevelt Depression Revisited
This year is the fiftieth anniversary of Murray Rothbard’s America’s Great Depression. In that work, Rothbard masterfully achieves three objectives.
1. He provides a restatement and extension of the Austrian theory of the business cycle (ABCT) while expertly defending the theory against critics;
2. He applies the theory to the inflationary boom of the 1920s and subsequent bust of 1929-30; and
3. He applies microeconomics, with special attention to what economists Richard Vedder and Lowell Gallaway have called the “von Misesian-classical position on labor markets,” to show how government interventions turned what would have otherwise been a bust followed by a brief “garden variety recession,” into a prolonged depression.
Rothbard’s analysis ends with 1933, as the destructive interventions passed from the Hoover New (raw) Deal to the better-known Roosevelt New Deal. A complete Austrian analysis of the Great Depression would include an analysis of all the policy errors and regime uncertainties created by both administrations. This truly was, properly understood, “The Hoover-Roosevelt Depression.”