Markets, Planning and the Moral Economy
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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.
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Chapter 3: The business cycle: moral economy perspectives

Donald R. Stabile and Andrew F. Kozak


As the nineteenth century turned into the twentieth century, the market economy in the US made a transition from production by small firms serving local customers to the greater use of large-scale firms and mass production for a national market. To create these large firms, either from internal growth or by merger and acquisition, business leaders began to use credit and the sale of stock as a source of funds. As a result, a system of financial capital was put into place, a system that has never abated. Under this system banking, credit and the stock market became more important elements of the market economy. The problem of economic crises continued, however, as the economy saw recessions such as the Panic of 1907 that seemingly started on Wall Street. In this chapter we shall review the development of business cycle theory in the early twentieth century. Our focus is on the moral economy perspective of three individuals trained in economics and one politician. All four took the view that business cycles were a part of the market economy and to eliminate them the market economy had to be changed through government programmes that would serve to counteract them. We start with a broad social thinker who saw the potential for the market economy to evolve into a system of national planning that Edward Bellamy desired, and he was one of William Graham Sumner’s former students.

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