What is Rothbard's Depression?
The term "Rothbard's Depression" refers to the book "America's Great Depression" by author Murray N. Rothbard, who wrote over 25 books on various aspects of economics and how it affects society. The book attempts to explain the economic policies that eventually led the United States into the Great Depression, with most of the blame being placed on the administration of Herbert Hoover. Throughout the years, the book has been required literature in many advanced economics courses.
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History
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Rothbard's "America's Great Depression" has been published a total of five times. The first publication was in 1963, followed by 1972, 1975, 1982 with the latest edition being published in 2000. The first four editions included an introduction by the author, while the fifth edition features an introduction by historian Paul Johnson.
Theory
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One of Rothbard's central theories in the book is the economic belief of the boom-and-bust business cycle. Rothbard believes that the American Great Depression was simply the market correcting itself after the long boom era of the 1920s. Rothbard contends that the Great Depression was not a symbol of the faults of the capitalism model but, instead, just a part of the business cycle. Rothbard believes that government interference by the Herbert Hoover administration helped worsen the depression. Instead of the market being able to right itself, Rothbard contends, the interventionist policies of Hoover, actually further deepened and extended the time frame of the depression.
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Significance
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"America's Great Depression" is regarded as one of the most important books regarding the economics that caused the Great Depression and still taught in economics classes today. The book continues to be thought of as one of the great arguments against Keynesian and socialist economics while being a strong champion of the capitalist society.
Theory
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A main aspect of the book's theory deals with the concept of the Austrian business cycle. In the theory, a country's economic sustainability is first affected by low interest rates, which encourages borrowing. This leads to a business boom due to credit being readily available. However, a correction in credit eventually occurs, leading to a bust (or recession) as the credit is unable to be collected. After a period of time, the market returns to normal and the cycle starts again.
Backgroune
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Murray N. Rothbard was born in 1926. He majored in mathematics and economics at Columbia University. Following school, he was greatly influenced by Ludwig von Mises, an Austrian economist. After publishing his own works, Rothbard became considered, by many. as the leading voice of Austrian economics. Rothbard died in 1995.
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References
- Photo Credit writing book image by AGphotographer from Fotolia.com
