2 - Challenges to the new economics of the 1920s

Summary

The doctrine developed by the Hooverites in the 1920s was ambitious in its claims that a new economic order could be built in the United States and daring in its insistence that the orthodox “laws” of economics could be repealed through informed manipulation. It is hardly surprising that the various components of this model of a new era should attract critics. Some of the attacks came from the governmental insiders who read the priorities of economic policy quite differently. Other critiques were presented by academicians on the outside. The skeptics, however, did not speak with one voice. While they could ally as disputants to arguments advanced by the advocates of the “new economics,” the objectors did so for diverse reasons.

Critiques of the analysis of productive efficiency

In the vision of the Hooverites, it was taken as axiomatic that two types of measures were important to the advancement of efficiency in the production process: (1) governmental support for the collection and distribution of relevant economic data and (2) governmental guidance to producers on best practices to reduce costs and to minimize wasteful product differentiation. Neither of these articles of the new faith won universal endorsement, however.

Within the government, the Department of Justice had put on record its reservations about Hoover's position on the work of trade associations. The rulings of the Supreme Court in 1925 had largely resolved this matter at the official level in Hoover's favor.