Abstract

Conventional wisdom maintains that without government intervention, capitalism is prone to collapse, as it did during the 1930s, and that only Keynesian policies have stabilized post‐World War II capitalism. But recent research suggests that postwar economic stabilization is largely a statistical artifact, the result of poor prewar data, and that the Great Depression was caused, not by the inherent instability of capitalism, but by policy errors made by government agencies. Thus, we should not be so quick to credit the economic successes of the last 70 years to enlightened intervention.