Economic Power and the Financial Machine: Competing Conceptions of Market Failure in the Great Depression
40 Pages Posted: 5 May 2015
Date Written: October 2014
In the early years of the Great Depression, many economists explained the disaster by arguing that was the result of competition having broken down and market power becoming too concentrated. This paper show how that view was eventually displaced by a view that attributed mass unemployment to a breakdown in what Roosevelt termed the financial machine which coordinated saving and investment. This offers a new perspective on the Keynesian revolution, though showing that, at least in the United States, the starting point was a view very different from the "classical" economics described in the General Theory.
Keywords: market failure, market power, Keynesian revolution
JEL Classification: B20
Suggested Citation: Suggested Citation