Managing the American Economy, from Roosevelt to Reagan

Managing the American Economy, from Roosevelt to Reagan

Managing the American Economy, from Roosevelt to Reagan

Managing the American Economy, from Roosevelt to Reagan

Excerpt

The purpose of this book is to examine the impact of major economic events on the evolution of economists' thinking about macroeconomic policy and of the influence of this thinking on the policies themselves. The period considered is the half century 1932/33-1984. The assumption of major responsibilities by the federal government in the guidance of the American economy has increased substantially since the Great Depression of the 1930s. The ensuing vast technological, economic, and social transformations during and since that great economic contraction deepened and expanded the multiple obligations of the government in the economic domain. How did professional economists respond to major changes in the period considered? In what measure were their economic theories and interpretation of events, unambiguous and concordant? To what extent were the suggestions formulated on the basis of their theories effective guides to policy? How did the postwar United States presidents respond to the analyses and evaluations of their Council of Economic Advisers? Finally, in what specific ways did the government's use of instruments modify the economy's operations and its institutional framework? These are the questions on which this study focuses.

The book is an essay on economic policy making. I do not propose to present an exhaustive economic historical treatment of the period under review or any of its subperiods, nor to compete with the great merits of the outstanding extant studies that have explored and analyzed various critical problems or all the major issues that arose during the half- century considered. My approach is different. I center my attention on the views of those who were directly immersed in the problems and the economic policies of the time and on the discussions that they then engendered, trying to bring out their views and deliberately avoiding subsequent analyses. Of course, such an approach has its shortcomings as well as its merits. One runs the risk of imposing through this presentist angle one's own selection of facts and ideas and hence, albeit inadvertently, one's own interpretations. But, on the other hand, the advantage of this approach is that one can immediately perceive the interrelations between theories, policies, critiques, and policy course-corrections directly within their specific time frame.

I divide the period under study into five subperiods: the Great Depression (1932/33-1941); World War II (1941-1945); postwar counter- cyclical stabilization (1946-1960); competition with growth-accelerating countries (1961-1974); and the Great Stagflation (1974-1984). As subperiods the Great Depression and the war are, of course, standard; the . . .

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