All Commentary
Tuesday, August 1, 1995

The American Economy in the Twentieth Century

Finally, A Free-Market Economic History Textbook

Uncork the champagne! It’s time to celebrate! The first free-market economic history textbook is now available for college students. The American Economy in the Twentieth Century is written by Gene Smiley, economics professor at Marquette University, and published by SouthWestern, a major college textbook publisher.

There is much to applaud. Smiley’s textbook is lucid, interesting, well-documented, and replete with charts and graphs.

Professor Smiley views it as a supplemental text because it covers only the twentieth century. But, as any student knows, pre-twenticth-century economic history is somewhat dry, and most professors don’t spend enough time on the twentieth century, where the hot issues of economic theory and government policies surface.

Smiley doesn’t just recount economic history, he addresses all the major debates. He does a masterful job of expounding on the theories and policies surrounding the two world wars, the Roaring Twenties, the Great Depression, and the post-war modern economy, giving fair treatment to all points of view.

What makes this text so different from all others? Lots of things. I particularly like chapters six through eight on government intervention in the economy during the critical period 1920-40.

•       Chapter 6, “The Role of Government, 1920-1940: Monetary and Fiscal Policies and the New Deal,” reveals new research on the booming 1920s, the evolution of monetary policy under a flawed international gold standard, and the pros and cons of the New Deal.

•       Chapter 7, “What Caused the Great Depression?,” is the most comprehensive piece ever written on the subject. It includes a full Austrian explanation, normally missing from standard textbooks. But it doesn’t shortchange Monetarist, Keynesian, and other explanations. Instructors need not be concerned about bias in this textbook. Smiley really does offer equal time for all schools of thought. Moreover, he doesn’t ignore any of his critics, a chronic disease among many academics.

•       Chapter 8, “The American Economy During the 1940s,” includes new research questioning the magnitude of the recovery during World War II, based on breakthrough research by historian Robert Higgs and others.

In addition, Smiley gives an objective analysis of public-sector unionism, the agricultural shortages and energy crises of the 1970s, and the farm debt and banking crises. In all these controversial issues, the author focuses on the role of government.

I also found fascinating his extensive coverage of the dramatic changes in technology and industry during the twentieth century. He has an entire chapter on the communications revolution, including radio and TV, often overlooked in mainstream textbooks. Another chapter is devoted to developments in retail trade. He covers finance, banking, international trade, labor, agriculture, and manufacturing. Finally, Smiley has a thought-provoking chapter on the distribution of income.

I recommend this textbook to all economic historians and students who desire a full and fair examination of what Paul Johnson labels the century of “superpower and genocide” and Carroll Quigley calls the generation of “tragedy and hope.”

  • Mark Skousen is a Presidential Fellow at Chapman University, editor of Forecasts & Strategies, and author of over 25 books. He is the former president of FEE and now produces FreedomFest, billed as the world's largest gathering of free minds. Based on his work “The Structure of Production” (NYU Press, 1990), the federal government now publishes a broader, more accurate measure of the economy, Gross Output (GO), every quarter along with GDP.