Economists often take on the Great Depression to show that their theories pass muster. JM Keynes wrote his General Theory in part to show that Classical Economic Theory only covered the special (and rare) case when an economy enjoyed full employment. M Friedman countered with a series of articles and books in the 1950s that showed how government intervention deepened and lengthened the Great Depression. Yet, how can economics—which attempts to recognize and formalize the aggregate decisions of delimited communities—adequately take into account Käthe Kollwitz’s despair? Why did J Frieden begin a chapter about the onset of the Great Depression with this story?
Economists are famous for dismissing—at the peril some argue of both their theories and their societies—the social and political consequences of economic events. Despair, such as that experienced by Ms. Kollwitz, often propels people to action and their actions often give rise to economic events that are entirely unanticipated by economists. Do economists have a responsibility to consider the effects of economic events on social and political forces?
The cascade of unanticipated events unleashed by World War I and its aftershocks is bewildering. But so too is economists’ naïveté over the possible repercussions of economic events leading up to that War. Imperialism, colonialism, and militarism are only the most obvious of the economic processes that gave rise to World War I. Even if economists are not responsible for controlling these processes, how might they account for them in their theories? And, if economists are not responsible for their failure to take these processes into account, then of what value can their economic theories be in helping us to understand the world or predict how economic policies and decisions will shape the world of tomorrow?
(To get us thinking about this, you might want to reflect on the costs and benefits of WWI, WWII, the Holocaust, the Rise of the Soviet Union, the Cold War, anti-imperial and anti-colonial conflicts, etc.)