Economic Theories of the Great Depression
Although the Austrian theory, as described by Fred E. Foldvary, links business cycles to monetary distortion, John Dewey’s institutionalist economic theory offers a distinct interpretation of both the causes of and responses to the Great Depression.[1] Dewey’s critique of “pecuniary individualism” and promotion of economic planning and democratization sought to address the conditions that he believed contributed to the crisis and its aftermath.[2]
Though best known for his contributions to educational reform, Dewey also engaged deeply with questions of economics. According to Robert J. Samuelson, neoclassical economists emphasized market equilibrium and rational actors; by contrast, Allan G. Gruchy explored how thinkers like Veblen focused on the role of societal norms and organizational settings in shaping economic behavior.[3] This human-centered perspective viewed economies as evolving through the people’s actions and emphasized how power relations between groups shaped outcomes. This school of thought seemed to offer Dewey intellectual purchase, a foothold to challenge the abstractions of neoclassical economics.
Dewey’s Institutionalist Economic Theory
John Dewey (1859–1952), philosopher, psychologist, and reformer, developed an economic perspective consistent with institutionalist thought. Born in Vermont, Dewey taught at universities including Chicago and Columbia and became a widely recognized intellectual of the twentieth century.[4]
A central tenet of Dewey’s thinking was his critique of “pecuniary individualism,” his term for the prevailing emphasis on profit over public well-being.[5] In Individualism Old and New (1930), he contended that the “pecuniary-profit system” encouraged speculation at the expense of real investment and no longer aligned with technological progress.[6]
Causes of the Great Depression Through Dewey’s Lens
The Great Depression, beginning with the 1929 stock market crash, has been attributed to a variety of causes. Michael A. Bernstein’s The Great Depression as Historical Problem complements Dewey’s focus by exploring how long-term developments shaped the crisis.[7] Dewey’s analysis underscored the dangers of concentrated wealth and corporate dominance. He contended that financial and industrial elites wielded outsized control over the nation’s resources.[8]
From Dewey’s point of view, financial speculation and manipulation had overtaken productive investment. He saw the government’s failure to regulate markets as indicative of institutional capture by business interests. According to Dewey, both major political parties aligned too closely with finance and failed to enact regulatory reforms; and, now in the twenty-first century, this concern remains relevant as Senator Elizabeth Warren, as recently as April 15, 2025, has repeated her long-standing call for a ban on stock trading by members of Congress to prevent conflicts of interest.[9]
Dewey’s Perspective on Ending the Depression
Dewey acknowledged that aspects of Franklin D. Roosevelt’s New Deal provided short-term relief but believed that it preserved too many negative elements of capitalism.[10] He argued that a more durable recovery required the public control of major industries such as banking, energy, and transportation. Dewey emphasized planning over market competition and favored redistribution policies, including steep inheritance taxes.
Other economists, such as Christina D. Romer, have emphasized alternative explanations for recovery. Romer’s research highlights monetary policy, including gold inflows, as a key driver of renewed growth.[11] Differently, Dewey’s argument, that the Great Depression’s resolution required more than technical economic adjustments, may be reconsidered.
John Dewey’s economic vision provides one lens through which to understand the Great Depression, but not all agreed with him. Edward J. Bordeau’s 1992 article discussed how Dewey faced critics such as Richard Hofstadter, Morton White, and Reinhold Niebuhr.[12] But because Dewey’s approach made a trifold connection of economics, culture, and religion, a disambiguating critique citing Carl McIntire is proposed next. The rationale for this comparison with McIntire is because Dewey specifically contrasted “spiritual capital” with “material capital.”[13] Moreover, Dewey critiqued religious bodies for their passive response to the economic crisis.[14]
McIntire: An Institutionalist Counterpoint
A common historiographical move is to contrast Dewey’s reforms with pro-business wartime recovery, a recovery condition applied by Franklin D. Roosevelt after the U.S. entered World War II, as explained by Larry Schweikart in “The Economic Impact of War on Business.”[15] Yet a more striking ideological contrast appears in the work of Carl McIntire.
Carl McIntire, Fundamentalist Presbyterian minister and founder of The Christian Beacon (1936- ) and author of The Rise of The Tyrant: Controlled Economy Vs. Private Enterprise (1945), provides an opposing perspective of institutionalist economic theory.[16] While McIntire and Dewey did not directly engage each other, their ideas reflect divergent assumptions about the role of institutions in economic life.
Allan G. Gruchy refers to the “Olympian theory of government” as a model in which rule comes from above, guided by experts who claim distance from public pressures.[17] Though McIntire is not named in Gruchy’s account, the concept informs McIntire’s effort to cast a politics animated by divine mandate and moral certainties. Therefore, in contrast to Dewey, McIntire viewed expanding government authority, described by Robert Higgs as a “Ratchet Phenomenon,” as a threat to churches and families.[18]
In his 1937 “Thanksgiving Message” sermon, McIntire contended that the Depression stemmed from moral and spiritual decline, rather than faults in the economic system’s design, as an excerpt below shows.
The reason, no doubt, is that in our day, especially the last few years, people have become aware of the fact that the constitution is challenged and our social system disputed. In the name of so-called social justice, and the name of humanity, in the name of progress, and the name of “the greatest good for the greatest number,” and in various other names and – all popular, fine sounding slogans—so frequently the very foundation principles upon which our Government rests are being challenged.[19]
Where Dewey focused on reshaping systems of ownership and federal powers, McIntire argued that government expansion and increased reliance on the state to solve economic issues were fundamentally incompatible with Christian values.[20] Their disagreement highlights how theoretical commitments that seem similar can yield opposing interpretations of economic crises and policy responses.
At right: Guilty: Carl McIntire Accused by Media and Liberal Clergy, 1964, Editorial Illustration, “Christian Beacon,” Collingswood, NJ.
Conclusion
Dewey’s institutionalist economic theory presents one approach to understanding the Great Depression, emphasizing how concentrated economic power, speculative financial practices, and regulatory failures may have contributed to the downturn. His proposed reforms of expanding public ownership, planning, and wealth redistribution represented his vision of change.
His contrast with McIntire raises permanent questions about the proper foundations for economic governance, public and democratic mechanisms, and traditional and moral worldviews. Their disagreement reflects a lasting divide between those who see government as a force for progress and those who view it as a threat to individual and moral order.
[1] Fred E. Foldvary, “The Austrian Theory of the Business Cycle,” The American Journal of Economics and Sociology 74, no. 2 (2015): 278–97.
[2] John Dewey, Individualism, Old and New (1930; repr., Amherst, NY: Prometheus Books, 2009), 45.
[3] Robert J. Samuelson, “Revisiting the Great Depression,” The Wilson Quarterly 36, no. 1 (2012): 36–43; Allan G. Gruchy, “The Influence of Veblen on Mid-Century Institutionalism,” The American Economic Review 48, no. 2 (1958): 13.
[4] Jay Martin, The Education of John Dewey: A Biography (New York: Columbia University Press, 2003), 31.
[5] Dewey, Individualism, Old and New, 58.
[6] Ibid., 51.
[7] Michael A. Bernstein, “The Great Depression as Historical Problem,” OAH Magazine of History 16, no. 1 (2001): 3–10.
[8] Dewey, Individualism, Old and New, 19.
[9] Ibid., 20-21; Elizabeth Warren, “It’s Time to Finally Ban Congressional Stock Trading.,” YouTube Senator Elizabeth Warren, April 15, 2025.
[10] Ibid., 55.
[11] Christina D. Romer, “What Ended the Great Depression?,” The Journal of Economic History 52, no. 4 (1992): 759.
[12] Edward J. Bordeau, “John Dewey’s Ideas About the Great Depression,” Journal of the History of Ideas 32, no. 1 (January 1, 1971): 67.
[13] Dewey, Individualism, Old and New, 7.
[14] Ibid., 31.
[15] Larry Schweikart, “The Economic Impact of War on Business” (Lynchburg, VA, 2020).
[16] Carl McIntire, “Christian Beacon (Collingswood, N.J.) 1936-Current,” The Library of Congress, 1936; Carl McIntire, The Rise of the Tyrant: Controlled Economy Vs. Private Enterprise (Collingswood, NJ: Christian Beacon Press, 1945); Sarah Ruth Hammond, God’s Businessmen: Entrepreneurial Evangelicals in Depression and War (Chicago: University of Chicago Press, 2017), 181.
[17] Gruchy, “The Influence of Veblen on Mid-Century Institutionalism,” 20.
[18] Markku Ruotsila, Fighting Fundamentalist: Carl McIntire and the Politicization of American Fundamentalism (Oxford: Oxford University Press, 2016), 59; Robert Higgs, “Crisis, Bigger Government, and Ideological Change: Two Hypotheses on the Ratchet Phenomenon,” Explorations in Economic History 22, no. 1 (1984): 1–28.
[19] Carl McIntire, “Thanksgiving Message,” Sermon Delivered on Thanksgiving Morning, November 25, 1937 at the Collingswood Presbyterian Church.
[20] Markku Ruotsila, Fighting Fundamentalist: Carl McIntire and the Politicization of American Fundamentalism (Oxford: Oxford University Press, 2016), 60.
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———. “Thanksgiving Message Sermon Delivered on Thanksgiving Morning, November 25, 1937 at the Collingswood Presbyterian Church.” November 25, 1937. https://carlmcintire.net/thanksgiving/.
———. The Rise of the Tyrant : Controlled Economy Vs. Private Enterprise. Collingswood, NJ: Christian Beacon Press, 1945.
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