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A Great Leap Forward: 1930s Depression and U.S. Economic Growth (Yale Series in Economic and Financial History) Hardcover – April 26, 2012
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"...masterpiece....one of the best economics books of the last ten years...one of the best books on the Depression...the only economic interpretation of WWII that makes sense... must reads of the year."--Tyler Cowen, Marginal Revolution
" ...an extraordinary new book ..." --James Surowiecki, The New Yorker
“. . . adds new evidence for the productive role of public spending. It also changes our view of what happened in the American economy during the 1930s, when military investment was not a driving force.”—Fred Block, American Prospect (Fred Block American Prospect)
"... an exemplary demonstration of how careful and imaginative use of statistical information can revise deeply entrenched ideas about the past…. this book breaks new ground. Teachers of twentieth-century American history should read Field’s book for its totally convincing demolition of the folklore history idea that World War II was good for the American people because it ended the Great Depression and created the basis for the mass consumer prosperity that followed the war." —Ronald Edsforth, Journal of American History (Ronald Edsforth Journal of American History)
Winner of the 2012 Alice Hanson Jones Biennial Prize, sponsored by the Economic History Association (2012 Alice Hanson Jones Biennial Prize Economic History Association 2012-10-02)
From the Author
Readers may be interested in this book chat I did with David Leonhardt of the New York Times on April 12, 2011. Amazon's system does not allow hyperlinks in this section, but if you copy and paste the url into your browser it will take you to it.
Readers may also be interested in this link to a video of a presentation I made at the book launch event. The video sets forth my central argument, and includes pictures. It's made with a system that allows you to switch between or resize the talking head and the powerpoint windows. Again, you will need to copy and paste the url into your browser to view it.
-- Alex Field
Top customer reviews
In addition to the close analysis of productivty growth in the 1930s, there is a fantastic discussion of economic aspects of WWII. The leading narrative of mainstream economic history credits federal spending on WWII as pulling the US out of the Depression and this book offers a compelling and mainly skeptical perspective on that, arguing that the productivity gains of the 1930 had been well integrated into the economy and strong growth would have occurred had WWII not intervened; reminding us, for example, that unemployment fell from 14% to 9% in the year before Pearl Harbor, even though the military buildup of that period accounted for less than 2% of the economy.
The last third or so of the book seemed a bit disjointed. There was a discussion of the viability of the "general-purpose technology" literature that was interesting on its own but something of a tangent; a couple of chapters on real estate development in the interwar period that were more relevant but not quite as sophisticated as the sections on productivity (the thesis is that land use regulation mitigates the adverse portion of economic cycles, but many believe that land use regulation also drives structure prices up substantially and thus causes the upside in the economic cycle to spike and thus contributes to cyclicality, merely in a different phase, and this offsetting consequence is not discussed at all). An interesting section of railroads shows that industries can adapt and improve their efficiency in a depression and create some "silver lining" effect, but he is clear that the silver lining is not worth the depression in his opinion.
Also, stuck in the middle of the last few chapters is a relatively weak and unoriginal section on the financial crisis of the last few years (he invokes Rajan and Minsky, and blames lax regulation, but there is very little data and independent analysis which is why I say it is relatively weak and unoriginal, regardless of its merits; he also does not reference, and I commend to him, the views developed in Guaranteed To Fail and Engineering the Financial Crisis, that regulation was not merely lax but affirmatively shoved the financial system into overlending against real estate and its derivatives).
As for the reader experience, the book is data intensive, with many charts, tables, graphs, citations and a good deal of discussion of methodology on its own and in contrast with other researchers. It reminded me of the experience of reading This Time Is Different. Both books contain copious amount of data presentation that are beyond the average lay reader's ability to verify or critique. Still, as with that work, the lay reader can follow the text satisfactorily and come away with substantial insights.
To be honest, it's a dry read, written in an academic style, and it assumes some familiarity with the various databases used in the analysis. Since I've poked around the bls.gov and bea.gov a bit, I could follow things, but others may find themselves marooned. It's also properly cautious. Most popular books on economics start with a coin toss landing heads and build an entire edifice about our unbalanced economy on it. This book speaks more moderately, opening avenues for thought and investigation. I enjoyed it a great deal. If you are looking for food for thought and don't mind stretching a bit, you might enjoy it as well.
(If you are used to reading this kind of work, count this as five stars. I had to deduct one as a warning to the otherwise unprepared reader.)
The answer to the question of what the Civil War was "about" isn't just a question of historiography, it's a question of what kind of country America is, and what values that implies. If the Civil War was really about states' rights, then that implies a different set of lessons to be learned about what America is about, and also, implicitly, a different way of thinking about how it should be run in the future. The Great Depression (and by extension, the New Deal programs implemented to try to end it) is another epoch in US history that follows the same sort of explanatory circle: students first learn that the Depression was caused by unchecked capitalism and ended by the social programs of the New Deal; then they learn that it was a business cycle bubble ended by the massive military buildup during World War 2; and then they settle on the explanation that a persistent shortfall in aggregate demand was finally filled by aggressive federal monetary and fiscal policy, with varying roles for different programs and initiatives.
However, while no one but a few isolated neo-Confederates still claims that the Civil War had nothing to do with slavery, recurring episodes of revisionist pseudo-history like Amity Shlaes' or Lee Ohanian's work show that the Depression is still contentious; beliefs about its causes, effects, and cures are inseparable from, and in fact essentially define modern political ideologies. It was a true watershed moment that left very few aspects of our national character unaffected, and so it's a historical event that's too important to be left to mere historians. Is it even possible to have a dispassionate study into our greatest national economic crisis and the changes it caused? What would it look like? Alexander Field has written an extremely interesting book with a very provocative claim about the background behind the laws and political struggles of the Depression: that the dozen years from 1929 to 1941 were, despite being miserable and wrenching years of want, at the same time the most technologically progressive in American history.
Despite the innovations of wartime military research, there were essentially three main reasons that the years from the end of the war to the early Seventies were a unique time of such seemingly perpetual abundance: rapid advances in manufacturing sophistication (i.e. the continued shift from steam to electric power in factories); improvements in transportation that allowed producers, distributors, and consumers to take advantage of better automobiles (and particularly trucks); and changes in the nature of companies from antiquated 19th century businesses practices to the more complex and ordered processes of what we now recognize as the modern corporation. While the array of New Deal programs like the NIRA or Wagner Act had important contributions to the character of the economy, in an important sense they were largely channeling broader improvements in productive potential that resulted from the experiences of people and firms in an era of deprivation and necessity.
To support this thesis, he employs not only careful collection and disaggregation of many statistical measures of productivity and GDP growth (made difficult for any scholar to analyze by the relatively primitive and often semi-reliable data available from this turbulent era), but also thoughtful reflections on the narrative implications of what those changing numbers in each economic sector mean, creating a useful synthesis of two strands of inquiry that check each other's work. It is one thing to compare the proportion of paved roads to dirt roads over time, it is another to explain how that improvement in logistics enabled vast increases in GDP as new economic opportunities became unlocked; similarly, the magnitude of increase in manufacturing capability by replacing bulky and unsafe steam distribution conduits in factories with electrical power becomes much more apparent when the productivity and capital intensity data is shown.
The first part of the book is devoted to technical discussions on why many economists (and most of the public) have previously overlooked the eye-popping increases in "silent" indicators of economic strength in what's universally seen as a decade of stagnation and failure - this inside-baseball section is fairly dry and relies heavily on tables, charts, and regressions - but it is extremely convincing in conveying just how unique that era was. No other time, including the railroad boom of the Gilded Age, the Baby Boomer postwar years, or the IT revolution in the modern era, came close to the Thirties in the advance in what the economy was capable of producing. This is even more interesting when, as the second part of the book discusses, there was no single new "general purpose technology" responsible for this advance.
A GPT is a poorly defined concept roughly corresponding to a "game changer" like the domestication of the horse, the invention of the wheel, or the discovery of agriculture that provides a Promethean spark to a society's technological capabilities. Field makes a fairly persuasive argument that no matter how broadly you define the term GPT, despite the copious amount of invention in the Thirties there was no single unique technology created that would explain its revolutionary nature, merely sustained improvements in infrastructure, broad advances in logistics, transportation, and the way that the loosely structured companies of the time reorganized themselves into more highly regimented and productive entities. As a bonus, he offers a fascinating look into how, despite its seemingly obvious transformative power, the IT boom of the 21st century "shows up everywhere but in the data" of GDP growth. The invention of the computer seems to have touched every aspect of our lives, yet it has not increased our potential economic output by nearly as much, in percentage terms, as the less glamorous factory retooling or dam construction of Roosevelt's day.
But that fact has major implications for the two big takeaways from Field's research that he discusses: first, what did the things that people actually remember from the Depression - the New Deal alphabet agencies and government spending initiatives - have to do with ending it; and then, could our current recession be another period of outward misery yet inward growth waiting to be unleashed in another burst of prosperity? As far as the first is concerned, Field concludes that while much of the advance in the Thirties was more or less insensitive to government policy (in his phrase, "With or without the depression Wallace Carothers would have invented nylon"), and that certain redirections of scientific talent to initiatives like the Manhattan Project did not directly benefit the consumer economy, on balance FDR's fiscal and monetary liberalism played a large role in coordinating and strengthening the private sector's growth in potential. This suggests that comparable use of fiscal and monetary policy by the current administration has prevented a worse recession or a second Depression, though the effects of individual components of larger programs like quantitative easing and the stimulus package are always debatable.
The second question is much harder to answer, both because the difficulty of knowing what the future will consider to be important advances, and because of the possibility that there are simply not many modern equivalents of transformative productive improvements like paving dirt roads or electrifying rural areas. Investments in improvements to America's aging infrastructure would certainly help the economy in the long term, as would proposals like educational reform, health care reform, or reductions in poverty and inequality, but it is difficult to identify where the applications of technological and organizational progress would yield a comparably enduring boom. High-speed rail might certainly be worth the cost, yet it's hard to see how it would have the legacy of the US Route system. Additionally, while it is certainly true that in the long run the Schumpterian "creative destruction" processes of recessions can help make societies leaner and meaner, sometimes it simply makes them meaner. For some people, recessions are just lost years.
And yet, the fact that the US has avoided a large part of the conservative policy mistakes that made the Depression so Great gives room for hope - unemployment, while bad, is nowhere near Depression levels, and even in deeply troubled regions of the world economy like Europe enough of the lessons of the Thirties have been learned to prevent similar catastrophes. The US may not be able to replicate 1941's feat of being able to produce an astonishing 40% more than it had twelve years prior with no additional capital or labor, but the possibility remains that necessity could be the mother of invention yet again. Field's work of cliometrics is one of the clearest looks backward and thought-provoking guides forward in recent years.