Oakland, CA—The New Deal economics of Franklin Roosevelt did not end America’s Great Depression and World War II did not create prosperity, according to a new book by renowned economist and historian Robert Higgs. In Depression, War, and Cold War: Studies in Political Economy, Higgs dispels dozens of pivotal misconceptions about the growth of the U.S. government during the 20th century.
“War is the quintessential government activity,” writes Higgs, who observes that no amount of government or politicians pumping money into a depressed economy will bring about genuine economic recovery. Employment figures were stellar during World War II only because 22% of the labor force was drafted into the military at below-market wages, says Higgs. The economy did not actually recover fully until after World War II.
In Depression, War, and Cold War, Higgs proceeds chronologically: He explains how investors' uncertainty about the security of property rights prolonged the Great Depression; how a little-known change in weapons procurement policy in 1940-41 transformed the role of defense contractors in the political economy; how and why the U.S. civilian economy foundered during the Second World War; and how historians and economists have neglected to examine the rapid postwar transition to a U.S. civilian economy.
He then discusses the economics of the Cold War and proceeds through the decades to illustrate:
- The opportunity costs of the Cold War economy, during which the national security elite uses its unique access to information to promote its own interests, including massive political pork and corporate welfare
- Congressional parochialism vs. national defense, and how and why. For example in the 1980’s, the Pentagon purchased anthracite coal it neither needed nor wanted, costing taxpayers more than $20 million per year, just to buy a few votes for a few members of Congress
- From 1970 to 1989, investors in the top defense contractors received a far better total market return than investors in the overall market, speaking to the riskiness of these industries and the protectionism that has resulted from defense contracts.
Depression, War, and Cold War debunks a myriad of central myths and misconceptions about the growth of the U.S. government during the 20th century, and offers a bold theory of the nature and effects of government power and a reassessment of how America has been shaped and misshaped.
“Those interested in the interaction between the domestic economy, war, and heavily armed peace will find this book essential reading.”
—PAUL JOHNSON, author, Modern Times & A History of the American People
“Depression, War, and Cold War marks Higgs as one of the most important and original political analysts of our time. An intellectual tour de force!”
—JONATHAN BEAN, Professor of History, Southern Illinois University
“Depression, War and Cold War gives intriguing answers to questions he raises about the Great Depression, World War II, and the Cold War. Readers will find this book enlightening.”
—ANNA SCHWARTZ, Research Associate, National Bureau of Econ. Research
“Higgs’s superb and pioneering book is a real eye-opener and bold foray into contemporary political economy.”
—RICHARD E. SYLLA, Henry Kaufman Professor of the History of Financial Institutes and Markets, New York University
Dr. Robert Higgs is Senior Fellow at The Independent Institute and Editor of the Institute’s quarterly journal, The Independent Review. He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, and Seattle University. His many books include Crisis and Leviathan; The Transformation of the American Economy 1865-1914; Competition and Coercion; Arms, Politics, and the Economy; Emergence of the Modern Political Economy; and Against Leviathan.
DEPRESSION, WAR, AND COLD WAR: Studies in Political Economy
By Robert Higgs
236 pages, 14 Figures, Index
Cloth, $35.00, ISBN: 0-19-518292-8
Date of Publication: October 2006
Published by The Independent Institute and Oxford University Press
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