Markets, Planning and the Moral Economy

Markets, Planning and the Moral Economy

Business Cycles in the Progressive Era and New Deal

Donald R. Stabile and Andrew F. Kozak

Markets, Planning and the Moral Economy examines the rise of the Progressive movement in the United States during the early decades of the 20th century, particularly the trend toward increased government intervention in the market system that culminated in the establishment of President Roosevelt’s New Deal programmes. The authors consult writings from politicians, business leaders, and economists of the time, using a variety of historical perspectives to illuminate the conflicting viewpoints that arose as the country struggled to recover from the worst economic downturn in its history.

Chapter 11: The aftermath of the National Industrial Recovery Act

Donald R. Stabile and Andrew F. Kozak

Subjects: economics and finance, history of economic thought


From 1933 to 1935 the NIRA had a brief but controversial career. We saw in the last two chapters how controversial it was, given the many ways in which it was interpreted – ranging from monopoly and fascism to a programme of cooperation by business, government, labour and consumers. Some of our economists, pundits, politicians and business leaders who advocated for the moral economy saw in it a hope for planning while others saw it as a betrayal of planning, depending on their vision of the moral economy. The friends of the market economy saw it as government blunder- ing in the economy in ways that hindered the recovery from the Great Depression. The controversy over the NIRA abated, to some degree, when the US Supreme Court voided it in 1935 in the Schechter Case. In this chapter we review the efforts that were made to evaluate where the NIRA had worked well and what had gone wrong with it. We start with the Court’s decision to find the NIRA unconstitutional. The US Supreme Court found the NIRA to be unconstitutional in the Schechter Case by a unanimous vote in a decision announced on 27 May 1935. In reviewing the facts of the case, we can see that the Court interpreted the NRA as overly intrusive, with the full weight and power of the federal government brought to bear on a small family business selling chickens. As part of its decision, the Court outlined the facts of the case.

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