The Depression's Bright Side

“The Most Technologically Progressive Decade of the Century” by Alexander J. Field, in _The American Economic Review_ (Sept. 2003), 2014 Broadway, Ste. 305, Nashville, Tenn. 37203.

Maybe the Great Depression was not so bad after all. In fact, it was a lot better than that. It was “the most technologically progressive of any comparable period in U.S. economic history,” Field emphatically declares.

In the conventional telling, America owes its post-World War II prosperity to huge increases in productivity and government spending during the war. But the real war effort occupied only three years, and data from that period reveal as many subpar as stellar productivity performances in various sectors of the economy.

The real story, says Field, an economist at Santa Clara University, is that the postwar economy rode on a wave of advances from the 1929–41 period. Plexiglass, Teflon, and nylon were all Depression-era innovations. So were organizational techniques pioneered by makers of cars, vacuum cleaners, and radios. All of these new processes and technologies, and more, enabled the nation to churn out tanks, ships, and airplanes in the 1940s. The Depression brought the launch of the workhorse DC-3 airplane and major government investment in municipal airports that paved the way for a postwar boom. One of the biggest areas of progress was structural engineering, which saw new “techniques for utilizing concrete in conjunction with steel in bridge, tunnel, dam, and highway design.” New Deal agencies and other government entities increased the nation’s stock of roads and highways by two-thirds.

What do the numbers say? Data on labor and capital productivity are notoriously difficult to get and interpret. A sample of Field’s arguments: In railroads, which still accounted for more than a quarter of America’s fixed nonresidential assets during the Depression, labor productivity rose “much more dramatically” in the 1930s than it had in the 1920s. The telephone and electric utility industries also recorded big increases. Economist Claudia Goldin found that overall U.S. labor productivity growth was faster during the Depression than before, in part because massive unemployment drove less educated people out of the work force.

Field doesn’t argue that depressions are good for the economy, and many of the advances of the 1930s would have come along without a depression. But it’s important to recognize that good times aren’t the only sources of economic growth.