Robert Higgs: His collected essays praised

It was a great idea for Robert Higgs and Oxford University Press to publish this collection of Higgs' papers [Depression, War, and Cold War: Studies in Political Economy]. The volume brings together ten papers that Higgs has published over the past two decades, which reinterpret some of the key events of the twentieth century. Several of these papers appeared originally in the Journal of Economic History and Explorations in Economic History and will be familiar to economic historians. Others, however, appeared in policy journals, and economic historians may have missed them. The papers reinforce each other, offering a coherent and stimulating view of three crucial events in the twentieth century: the Great Depression, World War II, and the Cold War.

The papers are arranged in chronological order. Chapter 1, "Regime Uncertainty: Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War," argues that part of the explanation for the persistence of the Great Depression was the "regime uncertainty" created by the New Deal. Investment was depressed not by the decline in income (the old multiplier-accelerator model), high real interest rates, or other conventional economic determinants of investment, but rather because of "a pervasive uncertainty among investors about the security of their property rights in their capital and its prospective returns" (p. 5). Potential investors were afraid to commit their funds because they did not know what Roosevelt and the New Dealers would do next. Low levels of investment in turn depressed the economy as a whole. This is not a new argument. Joseph Schumpeter (1962, 64-5), as Higgs notes, and other prominent economists had made the same point. Higgs, however, argues the point in detail, and brings in forms of evidence, such as opinion polls, that economic historians often ignore. He makes a strong case.

I find that papers by Higgs always lead to more questions. This is not a criticism, but rather an indication they address important issues. Terms like "regime uncertainty" and "security of private property" cover a lot of ground. ...

This is an important book. Economic historians, no matter their area of specialty, and no matter their ideological preconceptions, should be familiar with Higgs' arguments. You will not learn any new econometric techniques with which to wow your friends from reading this book. You will not find any data that you can use to quickly turn out a note for a journal. You will find, however, an original and thoughtful exploration of what the great events of the twentieth century tell us about the appropriate role of the government in the economy

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