THE WORLD IN DEPRESSION, 1929-1939 by Charles P. Kindleberger


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In theoretical economic models equilibrium is natural; in the real world though it takes leadership to keep the world economy in balance. And leadership, Kindleberger, M.I.T.'s renowned international economist, declares was exactly what was lacking during the Great Depression. By the early '30's Britain, concerned with the value of the pound and with internal employment levels, ""turned away from a leading world role, cultivating the Commonwealth and freedom to manage sterling"" while the United States, also giving priority to domestic interests and demands, was unwilling to step in as international financial arbitrator. No nation Was willing or able to support glutted markets, to engage in ""counter-cyclical long term lending"" or to discount short-term loans in order to preserve a fluid flow of capital. Lacking controls or alternatives, medium powers such as France ""Not quite big enough to have responsibility forced on it nor small enough to afford the luxury of (irresponsibility"") obstructed through intransigence (on reparations and the gold standard) and the smallest and weakest countries survived the best they could. As a panacea economic theorists and overly pious statesmen could only put forth utopian proposals -- cancellation of war debts and renunciation of reparations, an end to tariff war, an international currency -- that were politically impossible to carry out. Economic techniques have advanced since those days but the world scenario shows certain similarities -- the Common Market is not yet forceful in its leadership and we have again become wary of our international responsibilities. While either American or European predominance would be preferable to their squabbling, Kindleberger places his hope in the emergence of international institutions such as a world central bank, and capital market and an effective international tariff agreement. A scholarly treatment of a problem which isn't academic to the prospects for international economic stability.

Pub Date: Nov. 26th, 1973
Publisher: Univ. of California Press