Lessons from the Great Depression: The Lionel Robbins Lectures for 1989 [Hardcover]

Peter Temin (Author)

Book Description

Series: The Lionel Robbins lectures | Publication Date: January 1990

Do events of the 1930s carry a message for the 1990s? If there is one key lesson to be learned, Peter Temin points out, it is that political ideology drives economic events. The Great Depression was caused by politicians and policymakers following the wrong economic ideology, not by a mechanical breakdown of the system. "Lessons from the Great Depression "provides an integrated view of the depression, covering the experience in Britain France, Germany, and the United States. It describes the causes of the depression, why it was so widespread and prolonged, and what brought about eventual recovery. Temin finds parallels today in the relentless deflationary course followed by the VS. Federal Reserve Board and the British government in the early 1980s, and in the dogged adherence by the Reagan administration to policies generated by a discredited economic theory - supply side economics. Throughout this informative and highly readable account, Temin searches for and identifies guidelines for the economic and political decisions to be made in the final decade of this century. He considers the proper role of economic and political models and ideologies in the fashioning of economic policy, the advantages and disadvantages of international economic cooperation and long term versus short term focus in the making of economic policy Peter Temin is Professor of Economics at MIT. "Lessons from the Great Depression "is included in the Lionel Robbins Lecture Series.

Editorial Reviews

Review

"Peter Temin's lucid discussion rescues the history of the great world economic crisis from the fatalistic conservatism that has become so fashionable in recent years. The analysis is instructive both for those with little formal training in economics and for those with a sophisticated grasp of theory." Charles Maier , Harvard University

--This text refers to the Paperback edition.

About the Author

Peter Temin is Elisha Gray II Professor of Economics at MIT. --This text refers to the Paperback edition.

Product Details

• Hardcover: 212 pages
• Publisher: Mit Pr (January 1990)
• Language: English
• ISBN-10: 0262200732
• ISBN-13: 978-0262200738
• Product Dimensions: 8.5 x 5.8 x 0.8 inches
• Shipping Weight: 13.6 ounces
• Average Customer Review: 4.0 out of 5 stars  See all reviews (4 customer reviews)
• Amazon Best Sellers Rank: #1,183,819 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

25 of 26 people found the following review helpful:

4.0 out of 5 stars Taking the long view, June 1, 2001

By 

M. Mcfarland - See all my reviews
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This review is from: Lessons from the Great Depression (Lionel Robbins Lectures) (Paperback)

Temin's account of the Great Depression differs in almost every from the standard texts. Austrian business cycles, monetary tightness etc. are all passed over as the author goes for the big picture....the long view of political history in Europe.

The Great Depression was the direct result, he says, of the breakdown of peace in the first decade of the twentieth century. The international spirit of co-operation that had existed throughout most of the second half of the 19th century evaporated with the European struggles for empire. So when crisis loomed in the late 1920s all the lifeboats were full of holes. Franco-German rivallry, the demise of the British Empire and isolationism in the United States all produced paralysis when leadership was needed most.

When leadership finally did arrive, it came in the form of social democracy and labour market rigidities which put a floor under the markets but extended the depression in ways not dissimilar to Japan in the 1990s.

If you like your economics filled with Keynes and history this is for you. If Friedman or Schumpeter is more to your taste, then this is worth reading just to see what the other side thinks.

Great stuff.

10 of 10 people found the following review helpful:

5.0 out of 5 stars The key to prosperity is peace, December 29, 2008

By 

Luc REYNAERT (Beernem, Belgium) - See all my reviews
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This review is from: Lessons from the Great Depression (Lionel Robbins Lectures) (Paperback)

In the middle of today's panic economics with a new massive depression lurking at the corner, we should read again the works of Peter Temin, the eminent specialist of the cataclysmic Great Depression of the 1930s in the Western World.

Initial shock
Building on his previous book (Did monetary forces cause the Great Depression?) where he brilliantly attacked Milton Friedman's analysis, he presents in these `Lionel Robbins Lectures' his overall view of the catastrophic event: the initial shock, the causes of the depression and the (too) late recovery.
What changed fundamentally the Western world politically and economically was the First World War. It changed completely existing demographics, agricultural and industrial production and capital movements.

Gold standard
But, after the war, political leaders returned to the `gold standard' ideology to resolve international commercial and financial problems. This regime imposed fixed values of national currencies in terms of gold. Balance of payments deficits had to be adjusted by deflation (a change in the domestic price level), not by devaluations (a change in the exchange rate).
When in 1929 a severe economic downturn arrived, the wrong medicine was administered: deflation and contractionary monetary policies (tight credit) which accentuated the downturn and, in fact, discouraged economic activity. The outcome was a massive Depression.

Recovery
The decline was halted by clairvoyant political leaders and economists who understood that governmental intervention (like public works) and easy credit were needed as countercyclical measures. They adopted `socialist' measures: public regulation or ownership of the basic economic activities (utilities, banking), wage fixing and the introduction of the welfare State (a safety for everyone).

M. Friedman, B. Bernanke, Smoot-Hawley tariff
Peter Temin criticizes M. Friedman's (the Depression was not caused by banking panics) and B. Bernanke's (banking failures did not decrease aggregate demand) analyses as well as those who see the Smoot-Hawley tariff as the main culprit (the fall in export demand was only a small part of the story).

Today, the political leaders have learned their lessons. By massive capital injections by the State and easy credit (zero interest rates) together with public investments, they try to avoid a monstrous depression (up to a fall of 30 % in certain industries).

This book is a must read for all economists and for all those interested in the history of mankind.

7 of 10 people found the following review helpful:

5.0 out of 5 stars A Compelling Study of the Great Depression: The Gold Standard is Largely to Blame, July 11, 2007

By 

T. Carlsen - See all my reviews
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This review is from: Lessons from the Great Depression (Lionel Robbins Lectures) (Paperback)

Peter Temin rigorously explains the economics of the Great Depression and the lessons to be learned from the economics of the Great Depression. He explains convincingly that the gold standard and subsequent contraction of the money supply were largely to blame for the Great Depression. An economic downturn + sharp contraction of the money supply (due to the design of the gold standard) = economic disaster. This book is for economists or general readers with a strong interest in the period. Peter Temin established himself as one of the greatest economists of the Great Depression. Read his other economics books about the Great depression.

By the way, the countries that left the gold standard quickly, such as Great Britain, recovered the soonest from the Great Depression. The countries that stayed on the gold standard longest recovered the latest. The countries that were not on the gold standard in the first place avoided the Great Depression! FDR departed from Republican policy and removed US from the constrictive gold standard and then pursued a policy of reinflation, and recovery ensued.

Read Essays on the Great Depression by Ben Bernanke, Chairman of the Federal Reserve and a scholar of the Great Depression.