Who Runs the Economy? by Robert Skidelsky & Nan Craig

Author:Robert Skidelsky & Nan Craig
Language: eng
Format: epub
Publisher: Palgrave Macmillan UK, London

Over next 2 to 3 years, monographs were produced and the Committee met to take testimony from witness after witness. According to George Stigler’s count, 33,000 pages of reports and evidence were produced. Most of this was on precisely that theme: what has happened to the concentration of industry, the concentration of wealth, and the concentration of ownership of everything? How has that caused a breakdown? This, I would suggest, is fairly central to the American understanding of the Depression in the 1930s.

How does Keynesianism come into this? Two of the witnesses who were called were Alvin Hansen and Lauchlin Currie. Other people have told the story about how they turned up and wowed the committee with their Keynesian ideas. Despite their testimony covering only 88 pages out of those 33,000 pages, that is what many people have remembered. What they argued was that what had happened was not a problem with economic power but that the ‘financial machine’ had gone wrong. Again, this is a difference from Britain. I have not had time to think about this—and maybe Robert might have things to say on this because, if you look back to Keynes in 1914 or thereabouts, I think he is talking about the power in financial markets and thinking about power in the financial machine. At this time, Hansen and Currie were putting forward Keynesianism as a technical device involving flows of funds. Economic power is not mentioned in their discussions or their testimony, or in the papers they wrote.

To bowdlerise the story, in a sense their Keynesian revolution was almost converting the dialogue from a discussion of economic power to a discussion of the technicalities of financial flows and how financial flows led to investment. The idea was that the machine had broken down and therefore savings were not getting translated into investment.

Now, although Currie and Hansen were presenting a technical argument, politics was not far away. What happens on the day that Currie and Hansen were giving their testimony? Roosevelt writes another letter to the Committee. I think they read this out over lunchtime after one session. In it, he explained that he was concerned not only with idle men in factories, but also with the vast reservoir of money and savings that had remained idle in stagnant pools. So, on the day they were testifying before the Committee—and this was surely not coincidence, given that Currie was in the White House—a letter comes from Roosevelt to the Committee saying, ‘This is what you have to consider.’

In a sense, this is distracting attention from economic power. When the report was written up, the person who was writing up the report brought the two together and talked, almost in a Hobsonian manner, about concentration of wealth being one of the reasons the financial machine had got clogged up. This, I hope, is enough to justify my claim that, though this event may seem rather remote, the discussions covered inequality, and concentration of power within corporations, in a way that has become topical again.

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