American economists saw depressions as regular, self-correcting features of capitalism

Evidence

American economists of this period did not see depressions as accidents amenable to treatment. They saw them as a part of the nature of capitalism itself: regular, cyclical, and expected occurrences. The basic model drew upon what was called “modern business cycle theory,” which was cut from broadly similar cloth as the Austrian ideas described above. A particularly clear expression of this theory can be found in publications of the 1923 President’s Conference on Unemployment, which Hoover had created as commerce secretary under President Coolidge. The lead author of the report, Columbia University economist Wesley Mitchell, argued that “a period of depression produces after some time certain conditions which favor an increase of business activity … [that paradoxically] also cause the accumulation of stresses within the balanced system of business, stresses which ultimately undermine the conditions upon which prosperity rests.” — Mark Blyth, Austerity, 321

Categorization

• XREF: Mitchell’s business cycle theory prefigures the ‘self-correcting market’ doctrine that Keynes would dismantle and that Mattei’s austerity critique engages directly. — connects to: Free-market economists saw themselves as doomed defenders of a dying creed. — Angus Burgin, The Great Persuasion: Reinventing Free…, 41; Housing industry backwardness was blamed for economic depressions and slow recovery — Adam Rome, The Bulldozer in the Countryside:…, 116

Broader Connections

• Free-market economists saw themselves as doomed defenders of a dying creed. #corroborates (0.78) — Angus Burgin, The Great Persuasion, 41