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From the First World War to the National Recovery Administration (1917-1935) - The Case for Regulated Competition in the United States during the Interwar Period

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  • Thierry Kirat
  • Frédéric Marty

Abstract

The experience of the war economy during the First World War in the United States reinforced the influence of arguments in favour of managed competition. By extending the principles of scientific management to the economy as a whole, this approach aimed to coordinate firms through the exchange of information, which was seen as a necessity both in terms of economic efficiency and response to cyclical fluctuations. Such a stance greatly reduced the application of competition rules. Nevertheless, the proposals that emerged during the 1929 crisis – leading to the reproduction of the war-economy experience in peacetime at the risk of steering the US economy towards the formation of cartels under the supervision of the federal government – were rejected by President Herbert Hoover, despite his defence of a model for regulated competition in the 1920s. The paradox was President Franklin D. Roosevelt’s resumption of these projects within the framework of the First New Deal. This paper deals with the arguments that were put forward to evade competition rules and explains why the Democratic administration ultimately decided to return to a resolute enforcement of the Sherman Act.

Suggested Citation

  • Thierry Kirat & Frédéric Marty, 2020. "From the First World War to the National Recovery Administration (1917-1935) - The Case for Regulated Competition in the United States during the Interwar Period," CIRANO Working Papers 2020s-66, CIRANO.
    • Handle: RePEc:cir:cirwor:2020s-66
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    References listed on IDEAS

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    1. Jean-Luc Gaffard & Michel Quéré, 2007. "What’s the aim for competition policy: Optimizing market structure or encouraging innovative behaviors?," Springer Books, in: Uwe Cantner & Franco Malerba (ed.), Innovation, Industrial Dynamics and Structural Transformation, pages 393-405, Springer.
    2. Allyn A. Young, 1915. "The Sherman Act and the New Anti-Trust Legislation: III," Journal of Political Economy, University of Chicago Press, vol. 23(5), pages 417-417.
    3. Bruce, K. & Nyland, C., 1993. "Scientific Management and Market Stabilisation, 1914-1930," Economics Working Papers wp93-6, School of Economics, University of Wollongong, NSW, Australia.
    4. Allyn A. Young, 1915. "The Sherman Act and the New Anti-Trust Legislation: I," Journal of Political Economy, University of Chicago Press, vol. 23(3), pages 201-201.
    5. Bougette, Patrice & Deschamps, Marc & Marty, Frédéric, 2015. "When Economics Met Antitrust: The Second Chicago School and the Economization of Antitrust Law," Enterprise & Society, Cambridge University Press, vol. 16(2), pages 313-353, June.
    6. Barber,William J., 1989. "From New Era to New Deal," Cambridge Books, Cambridge University Press, number 9780521367370, January.
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    8. Thierry Kirat & Frédéric Marty, 2020. "The Late Emerging Consensus Among American Economists on Antitrust Laws in the Second New Deal (1935-1941) (Revised Version)," CIRANO Working Papers 2020s-46, CIRANO.
    9. Laure Bazzoli & Thierry Kirat, 2018. "L’invention de l’indemnisation du chômage aux États-Unis. Le capitalisme raisonnable, l’emploi et la responsabilité sociale de l’entreprise selon J.R. Commons et l’école du Wisconsin," Revue française de socio-Economie, La découverte, vol. 0(2), pages 165-184.
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    Cited by:

    1. Patrice Bougette & Frédéric Marty, 2020. "Information Exchange among Firms: The Coherence of Justice Brandeis' Regulated Competition Approach," GREDEG Working Papers 2020-56, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France, revised Feb 2021.

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    More about this item

    Keywords

    War Economy; Cartelization; Competition Rules; Scientific Management; Information Exchange;
    All these keywords.

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-

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