Although the American economy has suffered several financial panics in its history, none had the legacy of the panic of 1929. My concern is to examine the economy's failure to recover in the thirties – a failure epitomized by the fact that it was not until the outbreak of war in Europe that industrial production reached its pre-crash levels and the unemployment rate fell below a decennial average of 18 percent.

A theory of long-term growth

Secular economic growth is not well understood. Most analytical traditions view the trend in strictly quantitative terms, by means of the concept of the “natural rate of growth,” with qualitative change most often relegated to the status of an exogenous factor. In the one major analytical tradition that seeks to integrate the secular development of an economy with its short-run behavior, namely the Marxian, the theory of long-term growth is subsumed within a theory of the firm that focuses on the concentration of capital into larger enterprises and a decline in the number of independent firms.