The most technologically progressive decade of the century

Because of the Depression’s place in both the popular and academic imagination, and the re-peated and justifiable emphasis on output that was not produced, income that was not earned, and expenditure that did not take place, it will seem startling to propose the following hypoth-esis: the years 1929–1941 were, in the aggre-gate, the most technologically progressive of any comparable period in U.S. economic history.1 The hypothesis entails two primary claims: that during this period businesses and government contractors implemented or adopted on a more widespread basis a wide range of new technol-ogies and practices, resulting in the highest rate of measured peacetime peak-to-peak multifac-tor productivity growth in the century, and sec-ondly, that the Depression years produced advances that replenished and expanded the lar-der of unexploited or only partially exploited techniques, thus providing the basis for much of the labor and multifactor productivity improve-ment of the 1950’s and 1960’s. The hypothesis does not imply that all of the effects of the advances registered in the decade were immediately felt in the productivity data, nor, on the other hand, does it dismiss the sig-nificance of larder-stocking during the 1920’s and earlier, upon which measured advance built. Rather, it draws our attention to the prob-ability that progress in invention and innovation in the 1930’s was significant, in ways not well appreciated, both in facilitating the remarkable U.S. economic performance before and during World War II, and in establishing foundations for the prosperity of the 1950’s and 1960’s. I. Output Growth, Input Growth, and the Productivity Data The starting point for this exploration is mac-roeconomic data on real output growth, labor force growth, and the growth of the real capital stock, series that underlie our conclusions about trends in labor productivity and multifactor pro-ductivity growth. Major contributors to the con-struction, adjustment, and interpretation of these data have included Edward Denison, Joh