Roger Garrison calls our attention to this fascinating post by David Laidler, who is discussing the Austrian theory of the trade cycle. His description seems fairly competent and his account of the times is strikingly interesting. But what in particular draws my attention is his account of why the promising theory of the Austrians never went mainstream in the years that it might have:
The Austrian model seemed to its exponents to yield nihilistic policy implications for dealing with the depression... The only remedy was to let the passage of time restore equilibrium between the desired time-structures of consumption and production. This message had considerable resonance in conservative financial market circles where “passive-money” banking school ideas taught that one had to await recovery before allowing credit and money to expand. But it also ran counter to a widespread political desire in more progressive circles, to defend the liberal political order against the idea that only totalitarian regimes could manage the economy - recall the political situation in europe in the mid-1930s. This is an important reason why the theoretical ideas of The General Theory caught on so quickly after 1936, and why Austrian theory was abandoned.
