The Social and Political Economy of Global Turbulence

Depression’, wrote Thorstein Veblen shortly after the end of the Great Depression of 1873–96, ‘is primarily a malady of the affections of the business men. That is the seat of the difficulty. The stagnation of industry and the hardship suffered by the workmen and other classes are of the nature of symptoms and secondary effects’. To be efficacious remedies must, therefore, be such ‘as to reach this emotional seat of the trouble and . . . restore profits to a “reasonable” rate’. Between 1873 and 1896 prices had fallen unevenly but inexorably, in what David Landes has called ‘the most drastic deflation in the memory of man’. Along with prices, the rate of interest had dropped ‘to the point where economic theorists began to conjure with the possibility of capital so abundant as to be a free good. And profits shrank, while what was now recognized as periodic depressions seemed to drag on interminably. The economic system appeared to be running down’.