The American Anti-Austerity Tradition

The financialization of the U.S. economy has directed U.S. savings into more and more unproductive speculative investments. Consumption has become increasingly buoyed by unsustainable “indebted demand.” And the threat of secular stagnation due to inequality looms increasingly large against the backdrop of changing demographics and environmental degradation. To many, these are the novel economic conditions that are confounding conventional wisdom, driving an explosion of questioned assumptions.

But in fact, the United States has been here before. In the early 20th century, these concepts were not just familiar to economists and policymakers—they also formed the core of a pragmatic U.S. economic tradition stretching back deep into national history. Translated into practice by the New Deal nearly a century ago, they laid the groundwork for the post-World War II economic growth of the ensuing decades.

That may sound surprising since the victory of neoliberalism beginning in the 1980s has so totally vitiated our historical imaginations, it can be hard to picture the American past as anything other than a laissez faire frontier society. But as we face mounting threats to our economy and society, learning to recognize our unfamiliar history can give policymakers the confidence they need to move forward on the public investments necessary to save the environment, fight inequality, and boost growth today.

Read more from the crew at Equitable Growth here.

Published by tiltingatM3

Nic Johnson is a PhD Candidate in the History Department at the University of Chicago, researching the intellectual history mid-century Keynesianism and the Federal Reserve. Prior to joining the University of Chicago, Nic was ABD in economics, specializing in monetary theory.

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