From a regulation theoretical perspective, the Great Depression can be understood as the result of a lack of compatibility between the new production methods and an inadequate mode of regulation, which did not enable wage-earners to increase their consumption sufficiently to match rapidly growing industrial output. It was the regulation aspect of the growth strategy that had to change. During capitalism’s greatest crisis to that point, President Roosevelt, in power from 1933 to 1945, initiated a ‘New Deal’ of socio-economic regulation. The cornerstone of the new strategy was the provision of a minimum standard of welfare through economic stabilisation and social policies. This implied a reinterpretation of the role of the state in socio-economic affairs. Once the state was no longer exclusively regarded as an impartial ‘watchdog’ agency, more and more areas were influenced by the New Deal — even once sacrosanct domains, such as prices and the valuation of money. According to Agnew, the New Deal did not end the Great Depression but made ‘life bearable or even possible for large numbers of people’, and ‘it certainly headed off dissent’. But the probably most lasting effect was that ‘it legitimized the idea of a strong federal government usually in partnership with, rather than opposed to, big business’ (Agnew, 198 7, p. 69). A new corporate coalition between American government and business evolved and became the structural basis for US strategies in the domestic and global economy over the following decades.
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