Denis Gildea reviews End this Depression Now! by Paul Krugman. W.W. Norton and Co, New York and London 2012. Hbk. 192 pages. £14.99.
I am proud of my generation in the West, who grew up between the wars. As children we were conscious of the sadness and depression of the memory of the Great War to end wars, in which uncles and cousins had been slaughtered. And we lived through the SLUMP or Great Depression of 1929–37, when our fathers were often unemployed, and wondering how to feed us. And then it was our turn to be conscripted for the Second World War.
So we had a certain idealism. No more wars, no more slumps. We must unite to build a better world of prosperity and social justice. So we had the Marshall Plan to secure European Co-operation, and the United Nations was founded. Full Employment was a main slogan. After a bit, Imperialism turned into Overseas Development.
When I eventually became a student, my recently appointed tutor (Asa Briggs) started by teaching me Keynesian economics, and leaving the classical wisdom till later. There followed what Eric Hobsbawm called the Thirty Golden Years, when we had increasing prosperity, and the main worry was inflation.
These values ended with the advent of Milton Friedman, the monetarist Economist from Chicago, President Ronald Reagan, and Margaret Thatcher. Money reverted to its traditional importance as the measure of all things. We had almost a dogma of the infallibility of market forces, and we all had to compete to maximise profits or income. Inequality increased, and speculation speeded up with the Big Bang of computerising everything.
Paul Krugman is a highly distinguished American economist, with a Nobel Prize for economics. In this book we have a detailed account of how these changes took place between academic economists, on both sides of the Atlantic. First he attacks our denial of the seriousness of our position, and that we are making it worse. He attacks many popular illusions, such as that you cannot deal with debt by more borrowing to invest. He records some controversies between American economists about the U.S. economy, but there is plenty to follow about Europe.
It is a big and thorough book, and perhaps a bit tiring to read straight through. Great fun for a good academic economist, or an amateur who has been conscientious at keeping up to date. But if you like chatting about current political problems, you can use it as reference book to find a put down argument if you are advocating recovery, happiness, fairness, or progress towards equality among friends. It is all there, very convincingly, in depth.
Denis Gildea is a retired civil servant and long-standing member of SOF.