Planning Against Postwar Depression

Abstract

T HE depression of the thirties was by all odds the worst we had ever known. Even the so-called great depressions of the seventies and nineties were mild setbacks by comparison. In the seventies, for instance, industrial production fell only 7 per cent, and in the nineties 13 per cent, compared with a drop of 50 per cent from 1929 to 1932. The earlier declines were soon followed by renewed expansion which in the space of a few years carried output and employment far beyond their previous peak. In the thirties, on the other hand, the depression dragged on, despite unprecedented efforts to overcome it. In 1939 the volume of production was no higher than in 1929, though productivity had increased greatly in the meantime, while approximately -one-sixth of the country's workers were still unemployed. The war has served to underline the tremendous productive power of our economy. It is no longer possible to argue, as some people were doing in 1939, that production and employment had reached satisfactory levels by the end of the thirties. But, although war has called into action the country's full productive powers, there is still a widespread fear that after the stimulus of war and of reconstruction has subsided the economy will fall back again into the saine sort of depressed condition that existed in the thirties. There is a fear, in other words, that the modern world is faced with a persistent, long-run tendency towards depression. To decide whether or not this fear is justified we must examine the factors on which the general level of economic activity depends.