Technological Progress in the 1930s

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"Technological Progress in the 1930s"

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Via Tyler Cowen, economic historian Alexander Field makes the case that the 1930s was the decade in which we saw the most technological progress:

Because of the Depression’s place in both the popular and academic imagination, and the repeated and justifiable emphasis on output that was not produced, income that was not earned, and expenditure that did not take place, it will seem startling to propose the following hypothesis: the years 1929–1941 were, in the aggregate, the most technologically progressive of any comparable period in U.S. economic history. The hypothesis entails two primary claims: that during this period businesses and government contractors implemented or adopted on a more widespread basis a wide range of new technologies and practices, resulting in the highest rate of measured peacetime peak-to-peak multifactor productivity growth in the century, and secondly, that the Depression years produced advances that replenished and expanded the larder of unexploited or only partially exploited techniques, thus providing the basis for much of the labor and multifactor productivity improvement of the 1950’s and 1960’s.

I think a phrase like “the most technologically progressive” period is hard to define properly. But there’s no disputing the fact that there was substantial technological innovation during the Depression (refrigerated trucking as we know it, to cite just one example, arose during this period) and a ton of productivity growth. You can tell about the productivity increased by the fact that GDP had fully recovered to its 1929 peak by 1936, was clearly higher in 1937, remained above ’29 levels throughout the 1938 trough, and then was higher still in 1939 and 1940 even though the unemployment situation remained bad for much of this period, and absolutely terrible during the ’37-’38 recession-within-a-depression:

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I assume that part of the story here is that the Roosevelt administration implemented labor market policies that had the effect of pushing real wages up in what they thought was an anti-deflation measure, rather than letting them fall in a way that would have encouraged more employment. This should have given employers and workers incentives to try very hard to make labor-hours as productive as possible.

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