Planning Against Postwar Depression
| Date | 01 November 1942 |
| Author | Alan R. Sweezy |
| DOI | 10.1177/000271624222400128 |
| Published date | 01 November 1942 |
| Subject Matter | Articles |
175
Planning
Against
Postwar
Depression
By
ALAN
R.
SWEEZY
HE
depression
of
the
thirties
was
T by
all
odds
the
worst
we
had
ever
known.
Even
the
so-called
&dquo;great&dquo;
de-
pressions
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
un-
precedented
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
ac-
tion
the
country’s
full
productive
pow-
ers,
there
is
still
a
widespread
fear
that
after
the
stimulus
of
war
and
of
recon-
struction
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.
CAPITAL
GOODS
EXPENDITURE
Most
economists
today
agree
that
in
a
capitalist
economy
the
rate
of
con-
struction
of
new
capital
goods
plays
a
key
role
in
determining
the
general
level
of
production
and
employment.
Not
only
are
people
employed
directly
in
building
the
capital
goods,
but
other
people
are
also
employed
indirectly
in
making
the
consumption
goods
which
the
capital
goods
workers
are
enabled
to
buy.
Once
an
economy
becomes
ad-
justed
to
a
relatively
high
rate
of
capi-
tal
goods
construction
(&dquo;investment&dquo;
in
current
economic
terminology)
it
is
likely
to
be
dependent
on
the
continu-
ance
of
that
rate
of
construction
for
its
prosperity.
It
is
theoretically
possible,
of
course,
that
a
decline
in
expenditure
on
capital
goods
might
be
offset
by
a
simultaneous
increase
in
expenditure
on
consumption
goods.
People
who
had
been
saving
part
of
their
incomes
might
reduce
their
saving
and
increase
their
consumption
spending.
The
result
would
be
a
shift
of
labor
and
other
resources
from
the
capital
goods
to
the
consumer
goods
industries
but
no
change
in
the
total
employment
of
resources.
Such
a
compensating shift
is,
how-
ever,
highly
unlikely.
The
community’s
saving
habits
tend
to
remain
stable
over
long
periods
of
time.
When
investment
falls
off,
people
go
on
trying
to
save
as
much
as
before,
with
the
result
that
the
total
demand
for
goods
and
services
de-
creases.
As
demand
declines,
produc-
tion
is
curtailed
and
people
are
thrown
out
of
work.
The
decline
in
incomes,
production,
and
employment
continues
until
the
community
is
sufficiently
im-
poverished
to
reduce
its
saving
to
equal-
ity
with
the
smaller
volume
of
invest-
ment.
To
discover
why
income
has
been
low
and
large
numbers
of
people
unem-
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