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The Return of Depression Economics

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The Return of Depression Economics

W.W. Norton,

15 min read
10 take-aways
Audio & text

What's inside?

If governments can make calm decisions and if investors don’t panic, economies can recover from all kinds of mayhem.

Editorial Rating



  • Innovative


Economic scholar Paul R. Krugman investigates the forces that drive economic growth and recession, and makes sense of several complicated issues. His ability to maintain the essence of a topic while simplifying complex economics with examples and analogies is a hallmark of his work. Despite the gloomy title, the book is not depressing because, Krugman concludes, another Great Depression is not looming in our future. Capitalism has, overall, provided the foundation for prosperity in advanced and developing economies alike. Indeed, the information age has introduced entrepreneurs who have generated wealth while becoming romantic heroes for succeeding in spite of giant corporations. However, Krugman stays alert for dark forces, warning us against panic attacks in the international financial markets, where multiplying negative feedback can overwhelm the effects of monetary policy. recommends Krugman’s in-depth analysis to anyone with an interest in world economics and financial markets.


The Need to Want More

The world economy will not enter a depression reminiscent of the 1930’s in the near future. However, a large part of the world must become sensitive to the forces of depression economics. For the first time since WWII, failures on the demand side of the economy including insufficient private spending have become the greatest hazard to prosperity for many economies.

The Success and Romance of Capitalism

The return of depression economics does not signal the failure of capitalism. In fact, depression economics has returned in the midst of the triumph of capitalism. The former Soviet Union - once the financier of worldwide socialist movements - has lost its ability to support other nations. Russia’s economy is in a miserable state. In addition, Hong Kong’s capitalist system, virtually untouched despite its return to China in 1997, shows the world that the free market is too valuable to destroy, even in the eyes of the People’s Republic.

Not only has capitalism brought economic success and prosperity to many nations, it has redeveloped a romantic hero. After Henry Ford, the economy was dominated by giant corporations, run not by romantic...

About the Author

Paul R. Krugman is a professor of economics at the Massachusetts Institute of Technology (MIT) and produced this book in a time of economic crisis, specifically, in Brazil in January 1999. He is a prolific economic scholar. Fortune magazine claims that he "writes better than any economist since John Maynard Keynes," and the Economist describes him as "probably the most creative economist of his generation."

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