The Political Economy of the New Deal

Article excerpt

The Political Economy of the New Deal

by Jim F Couch and William R Shughart II

Edward Elgar * 1998 * xvi + 247 pages * $85.00

In this work, Professors Jim Couch (University of North Alabama) and William Shughart (University of Mississippi) employ public-choice theory to provide an insightful look at the New Deal. The authors mix examination of historical evidence and econometric analysis of recently rediscovered data on the spending patterns of New Deal programs to argue that the Roosevelt administration used the massive spending for political purposes. Written in a lively and engaging tone, the book also provides a thorough summary of the extensive literatures on the Depression and the New Deal. Economists will welcome its thorough exploration of the data; noneconomists will appreciate its clear presentation of both the statistical and nonstatistical material.

The first chapter of the book surveys the academic literature on the causes and impact of the Great Depression and the critiques of the New Deal. Concisely summarizing multiple theories about those causes (business cycle, monetary policy, underconsumption, and a range of others), the authors effectively convey the basics of a complex and voluminous literature. Among the most compelling features of this chapter is a chart portraying the growth of the New Deal programs over time. This fascinating diagram makes clear the vast scale of New Deal spending.

The next three chapters offer similarly wellwritten and thorough descriptions of the New Deal programs. Although primarily summarizing prior work on the New Deal, the authors add a market-oriented critique to the literature survey. For example, they make a point of noting that the Roosevelt administration's approach in the "first New Deal" (1933-1935) was built around an "antimarket ideology" that "placed much hope in the central government's ability to produce favorable results" and attributed the Depression to the market. Well-chosen examples of New Deal-era political cartoons enliven these chapters. My favorite, titled "The Sower," shows New Dealer Harry Hopkins scattering cash from a sack labeled "WPA" across a map of the South, remarking to Agriculture Secretary Henry Wallace "Shucks Henry, You've never seen a bumper crop! Wait 'til you get a look at this beauty!" In a sense, the remainder of the book is a thorough analysis in support of the message of that cartoon.

Couch and Shughart provide extensive historical evidence to show that New Deal legislation lacked the checks and balances necessary to restrain political use of the programs. …