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 6: The Progressive push for planning:1920 to 1930

Donald R. Stabile and Andrew F. Kozak


Warren G. Harding ran for president of the US in 1920 on the promise of a return to normalcy. If by normalcy he meant a return to economic prosperity, he delivered. The 1920s were a period of economic growth and prosperity never seen before in the US. The Federal Reserve index of industrial production went from 81 in January 1920 to 114 in July 1929 – a 40.6 per cent increase; real income grew at an average of 4.6 per cent a year from 1920 to 1929 (Parker 2007, p. 2), and 1929 was the best year the US economy had experienced up to that time. Economic recessions were common during the 1920s. The first began in January 1920 and a recovery did not begin until July 1921; other recessions took place from May 1923 to July 1924, October 1926 to November 1927 and the final downturn began in August 1929. These recessions took up 52 months of the ten-year period. In addition to being a decade of economic growth, the 1920s were also a decade of economic transformation, brought about by the development of new technologies in production and in product development. The automobile came of age in the 1920s, and the radio and films launched new industries. A contemporary estimate by Joseph Schumpeter found that 90 per cent of the change in economic activity in the 1920s came from the automobile, chemical and electrical industries (Schumpeter 1964, p. 305). As a result, economic conditions in the US were very good.

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