Great Depression

Author: Murray Bookchin
Publisher:
Publish Date: 2003-11-22
Features: Some economists tend to believe that the Austrian theory can "sometimes" explain the cycles of prosperity and depression, but they also say that other examples can be explained by different theories. However, as we pointed out in the previous section, we believe this statement is incorrect: we firmly maintain that the Austrian school's analysis is the only one capable of explaining the business cycle and similar phenomena. The Great Depression by Murray Bookchin is Austrian. The contribution of Mises lies in taking human behavior as the sole logical starting point. Bookchin's conclusion is astonishing: the Great Depression of 1929–1932 was caused by the Hoover administration's implementation of fixed wage rates during the crisis, which first damaged the interests of profits and investment. This practice is nothing but government intervention, violating the principles of a free-market economy based on laissez-faire! It is exactly the opposite of common sense. At the same time, the Austrian school argues that the correctness of a theory cannot be tested by history but only proven by whether its hypothetical starting points are correct and whether its logic is consistent.