carey_jim

Robert Shiller: This Is No Average Recession

I haven't looked closely at the 1873-79 depression but it too occurred during a period of huge technological advances.

The telephone, telegraph and even electric dynamo (generator) were discovered during that period and the railroad infrastructure was being constructed.

These changes caused a large movement of unskilled workers from farms to cities and also created unmet demand for skilled workers. This unprecedented technological change certainly contributed to the economic and financial chaos of that period.

It's possible to see the 1929-35 depression as a result of similar technological displacements which resulted from a surplus of unskilled farm workers who were forced into cities and were unprepared for an economy of skilled jobs producing cars, refrigerators and other new devices.

I haven't seen any studies comparing those two periods with the present but we could be witnessing a similar process of financial breakdown in the face of so much technological change.

I don't think it is possible to extract any simple laws or lessons from these similarities but we might take comfort knowing that all of our economic and financial problems are NOT simply due to greed and stupidity. After all, economic (and other) vices seem to be a constant in human societies.

We are probably simply facing a large change in social and working conditions produced by huge technological changes and the institutions that are now in place, including economic theories, are simply not adequate to deal with these changes.