A Comparative History
Chapter 4: The Great Depression
The Great Depression of the early 1930s was the worst pure economic disaster of the twentieth century. It was a pure economic disaster because it did not happen in wartime and was not caused by events in the natural world. For Ben Bernanke (1995, 1), the quest to ‘understand the Great Depression is the Holy Grail of macroeconomics’, and more than 80 years later there is still no consensus as to its ultimate causes or the policy responses that would have been most effective in dealing with it. Understanding the Great Depression was even more difficult for those, including policy makers, who lived through it (Parker 2002; 2007). They were unsure what to expect next, and they did not know how long the downturn would persist. Their efforts at sensemaking were confused and inconsistent, and at times they lapsed into panic or denial. It does not necessarily follow, however, that they were stupid. Individuals and organizations often struggle to find solutions to complex and pressing challenges, as was the case on a smaller scale at Mann Gulch (see Chapter 1). By using the disaster cycle framework we are able to see the Great Depression from a novel perspective, one that emphasizes parallels with other types of disaster. Although the Great Depression may lose some of its uniqueness, its historical significance is not diminished.
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