Interwar austerity deepened depressions and helped cause the Second World War

Evidence

The interwar period taught us some valuable lessons about why austerity does not work and why its application is a dangerous idea. Building an entire international monetary order with an inherent deflationary bias that can’t work in a democracy is bad idea, number one. Number two, Einstein was right. If doing the same thing over and over again while expecting different results is the definition of madness, then repeated rounds of austerity in country after country was madness. No good came of it. Apart from a few short-term expansions in the early 1920s when countries were not on gold, not only did the application of austerity not work, it made the depression deeper, longer, and, arguably, laid the foundations for the war that would engulf the world in the 1940s. — Mark Blyth, Austerity, 555

Categorization

• XREF: This is the foundational causal claim that Mattei’s work on postwar austerity and the broader literature build on. — connects to: Japanese austerity produced depression, assassination, and militarism. — Mark Blyth, Austerity: The History of a Dangerous…, 544; Interwar austerity policies helped precipitate the 1929 crash. — Clara E. Mattei, The Capital Order: How Economists…, 1619; Austerity in Weimar Germany crippled labor and enabled Nazi takeover — Clara E. Mattei, Escape from Capitalism, 234 (+5 more)
• DEFINE: Flags the interwar gold-standard order as having an ‘inherent deflationary bias’ — a key concept for the austerity literature.

Broader Connections

• Austerity in the 1930s contributed directly to global catastrophe. #corroborates (0.92) — Mark Blyth, Austerity, 69
• Austerity in Weimar Germany crippled labor and enabled Nazi takeover #exemplifies (0.88) — Clara E. Mattei, Escape from Capitalism, 234
• Interwar austerity policies helped precipitate the 1929 crash. #corroborates (0.85) — Clara E. Mattei, The Capital Order, 1619