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A comprehensive and coherent assessment of the current economic contraction, one that largely rebuts attribution of failure to capitalism or the market. The targets become the practicing politicians of all parties, whose cumulative mistakes have now hurt us all. We have learned some things from comparable experiences of the 1930s’ Great Depression, perhaps enough to reduce the severity of the current contraction. But we have made no progress toward putting limits on political leaders, who act out their natural proclivities without any basic understanding of what makes capitalism work.

James M. Buchanan
Nobel Laureate in Economic Sciences, 1986

“It is now conventional to draw parallels between the sharp recession into which the United States and most of Europe plunged at the end of 2007 and the Great Depression of 1929–1945. The two events surely have much in common. Both were preceded by excessively loose monetary policies that fueled speculative asset bubbles – in the prices of real estate during the late 20th and early 21st centuries and in the market values of publicly traded equities during the Roaring Twenties. Both triggered epic responses from central governments worldwide after the bubbles inevitably burst, financial institutions collapsed, investors and businesses retrenched and unemployment spiked. Financed primarily by borrowing and informed by a fatal Keynesian conceit that governmental intervention can soften, indeed circumvent, painful but purgative market corrections, the Great Depression gave birth in America to Herbert Hoover’s Reconstruction Finance Corporation and to Franklin D. Roosevelt’s New Deal. Fiscal “stimulus” on a much larger scale, the Troubled Asset Relief Program, intended to clear balance sheets of toxic mortgage-backed securities and similarly worthless paper claims, and taxpayer-financed bailouts of banks, insurers, automobile manufacturers and other privately owned companies deemed too big to fail because of the perils of “systemic risk” are the accepted policy prescriptions for reversing today’s economic decline.”

Charles K. Rowley

Charles K. Rowley was born in Southampton, England in 1939. He was educated at the University of Nottingham where he obtained a First Class Honours Degree in Economics in 1960 and a Ph. D. in Economics in 1964. He taught at the Universities of Nottingham, Kent, York and Newcastle upon Tyne and held summer fellowships in the Center for Socio-Legal Studies at Wolfson College, Oxford before migrating to the United States in January 1984 to join the Center for Study of Public Choice at George Mason University.

Dr. Rowley has written and edited some 40 books and some 200 scholarly papers in the fields of industrial organization, public choice, welfare economics, international trade and law-and-economics. His work consistently emphasizes the importance of private property rights, limited government and the rule of law as the basis for a free and prosperous society. Among his recent books are The Right to Justice (1992), Property Rights and the Limits of Democracy (edited 1993), Trade Protection in the United States (with Willem Thorbecke and Richard Wagner) (1995), The Political Economy of the Minimal State (edited 1996) and Classical Liberalism and Civil Society (edited1997). He also edited Public Choice

Theory (three volumes 1993), Social Choice Theory (three volumes 1993), The Economics of Budget Deficits (two volumes, with William F. Shughart, II and Robert D. Tollison, 2002), The Encyclopedia of Public Choice (two volumes, with Friedrich Schneider, 2004), and The Origins of Law and Economics: Essays by the Founding Fathers (with Francesco Parisi, 2005). Most recently, he has edited, with introductions, in ten volumes, The Selected Works of Gordon Tullock (2004-6).

Dr. Rowley was a Founding Editor, 1980-1986, of The International Review of Law and Economics and served as Joint Editor of Public Choice between 1990 and 2007. He is Duncan Black Professor of Economics at George Mason University, General Director of the Program in Economics, Politics and the Law in the James Buchanan Center for Political Economy, and General Director of The

Locke Institute, an independent non-profit educational foundation located in Fairfax, Virginia and dedicated to the advancement of a classical liberal political economy.

Nathanael Smith

Nathanael Smith is currently studying for a Doctoral Degree in Economics at George Mason University. He is a Senior Research Fellow at The Locke Institute in Fairfax, Virginia. He obtained a Bachelor’s Degree in History and Economics from Notre Dame University and a Master’s Degree in Public Administration and International Development from Harvard University. He worked as an analyst at the World Bank between October 2003 and July 2004, as a fiscal policy research analyst at The Cato Institute between August 2004 and July 2005, and as a consultant at the World Bank between August 2005 and January 2008. He has published a number of short articles in TCS Daily and a coauthored scholarly paper on Islam and Democracy (with Charles Rowley) in the June 2009 Issue of Public Choice.