If this is the Depression again, we’ll be alright

When the economic pundits tell us that today's financial worries are not nearly so serious as the inter-war 'great slump', our reaction tends to be: 'I should bloody well hope not.'

As it happened, however, the great inter-war slump ­ was not nearly as bad as legend would have us believe. Indeed, if the world economy recovers as quickly in this instance as it did all those years ago, then our present fears about doom and disaster are greatly exaggerated.

Let the facts speak for themselves. By 1939 most people in Britain were better off than they had been in 1929 when the slump began. It was in those years, according to the historian Robert Skidelsky, that the transformation from a 19th century economy based on cotton, coal, shipbuilding and railway construction to an economy based on home-building, mass consumption and service industries was largely accomplished. Even the

notorious 'hunger marches' attracted only tiny numbers.

None of this accords with socialist mythology, which likes to portray the great slump as a humanitarian disaster comparable to the Great War: prolonged unemployment, complete economic stagnation, virtual insurrection.

By 1933, as it happened, unemployment was falling from 22.8 per cent to 9.5 per cent, and output, real wages, and the real value of social services (including unemployment benefits) rose above their pre-slump level. Yes, the slump was a terrible shock, but the speed of the recovery was little short of a miracle.

In other words, comparing now and then should arouse hope rather than dread, since what the great slump demonstrated was not so much the weakness of capitalism as its astonishing strength. The rest is socialist mythology.