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Breaking with orthodoxy: the politics of economic policy responses to the Depression of the 1930s

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  • Gourevitch, Peter Alexis

Abstract

Under the same systemic shock, the collapse of the international economy in 1929, different countries formulated different policy responses. Britain, Germany, the United States, France, and Sweden all began by attempting the orthodoxy of deflation. Soon after, they abandoned deflation, devalued their currencies, erected tariff barriers, and set up corporatistic production and marketing arrangements. A few countries went further, and began experimenting with demand-stimulus fiscal policy. The most successful was Nazi Germany; the Swedish and U.S. efforts were much more limited and less effective, the French attempt crumbled in less than a year, and Britain never tried demand stimulus. Why this divergence in policy? The politics of policy response, the societal basis of different policy coalitions and the way in which they were expressed through different political formulations, suggests an answer. In all countries, labor, agriculture, and certain elements of business became available for revolts against policy orthodoxy. What differed across countries was the specific balance of forces among these interest groups, and the political factors that shaped their combinations. The effect of political leadership, institutions, and other variables on outcomes depended critically on the way specific social forces in each society used and worked through them.

Suggested Citation

  • Gourevitch, Peter Alexis, 1984. "Breaking with orthodoxy: the politics of economic policy responses to the Depression of the 1930s," International Organization, Cambridge University Press, vol. 38(1), pages 95-129, January.
  • Handle: RePEc:cup:intorg:v:38:y:1984:i:01:p:95-129_00
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    Cited by:

    1. Manfred G. Schmidt, 1987. "The Politics of Full Employment in Western Democracies," The ANNALS of the American Academy of Political and Social Science, , vol. 492(1), pages 171-181, July.
    2. David M. Woodruff, 2014. "Governing by Panic: The Politics of the Eurozone Crisis," LEQS – LSE 'Europe in Question' Discussion Paper Series 81, European Institute, LSE.
    3. Focacci, Chiara Natalie & Perez, Carlota, 2022. "The importance of education and training policies in supporting technological revolutions: A comparative and historical analysis of UK, US, Germany, and Sweden (1830–1970)," Technology in Society, Elsevier, vol. 70(C).
    4. Bridji, Slim, 2013. "The French Great Depression: A business cycle accounting analysis," Explorations in Economic History, Elsevier, vol. 50(3), pages 427-445.
    5. David M. Woodruff, 2014. "Governing by Panic: The Politics of the Eurozone Crisis," Europe in Question Discussion Paper Series of the London School of Economics (LEQs) 1, London School of Economics / European Institute.

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