ABSTRACT
Prevailing social theories are convenient constructions of reality which seek, more often than not, to justify whatever is by forcing the “facts” of social existence into preconceived ideological boxes. Such was the state of affairs, a little over fifty years ago, with the onset of the Great Depression. It was by far the greatest challenge American capitalism had to face since the Civil War. Adam Smith was not unaware of the great perils confronting freely competitive markets. “People of the same trade,” he wrote, “seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” The government’s impact on output and unemployment would be primarily through the government budget. For the most part, the postwar period was an economic success. The fear of another Great Depression was replaced by a series of mild, short-lived recessions.
