Economic Power and the Financial Machine: Competing Conceptions of Market Failure in the Great Depression

40 Pages Posted: 5 May 2015

See all articles by Roger Backhouse

Roger Backhouse

University of Birmingham - Department of Economics; Erasmus University Rotterdam (EUR) - Erasmus Institute for Philosophy and Economics (EIPE)

Date Written: October 2014

Abstract

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

Backhouse, Roger, Economic Power and the Financial Machine: Competing Conceptions of Market Failure in the Great Depression (October 2014). Available at SSRN: https://ssrn.com/abstract=2602710 or http://dx.doi.org/10.2139/ssrn.2602710

Roger Backhouse (Contact Author)

University of Birmingham - Department of Economics ( email )

Economics Department
Birmingham, B15 2TT
United Kingdom

Erasmus University Rotterdam (EUR) - Erasmus Institute for Philosophy and Economics (EIPE) ( email )

P.O. Box 1738
EIPE Office, Room H5-23
3000 Dr Rotterdam
Netherlands

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