I remained amazed concerning the mass hysteria of my chosen profession in times of adjustment. Why do we even talk of "depression economics" as if the lessons of economic science drastically change? Would it makes sense to talk of "depression physics" or "depression biology"? Wouldn't the teachings of physics and biology have a more universal claim?

To admit that institutions matter --- political/legal/cultural context --- is not to say that the principles of economics are transformed. Those principles transcend time and place, but the manifestation of those principles in action are context dependent. The basic teachings of economics do not go out the window because governments are engaging in fiscally irresponsible behavior and pursuing expansionary monetary policy and regulating and even nationalizing industries. In fact, it is the teachings of economics in that context that allows us to predict the results of such a policy path.

So here are some words from great economic teachers over the years to contemplate as my professional peers decide to collectively loose their heads and make arguments for nationalization, for inflation, for deficits, for collectivism, etc.

Adam Smith, The Wealth of Nations (University of Chicago Press, 1976): Book IV, Chapter V, pp. 49-50:

“The natural effort of every individual to better his own condition, when suffered to exert itself with freedom and security, is so powerful a principle, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often incumbers its operations.”

F. A. Hayek, The Constitution of Liberty (University of Chicago Press, 1960), p. 228:

“A free system can adapt itself to almost any set of data, almost any general prohibition or regulation, so long as the adjusting mechanism itself is kept functioning. And it is mainly changes in prices that bring about the necessary adjustments. This means that, for it to function properly, it is not sufficient that the rules of law under which it operates be general rules, but their content must be such that the market will work tolerably well.”

F. A. Hayek, The Constitution of Liberty (University of Chicago Press, 1960), p. 332:

“…the stimulating effects of inflation must cease to operate unless its rate is progressively accelerated and that as it proceeds, certain unfavorable consequences of the fact that complete adaptation is impossible become more and more serious. The most important of these is that the methods of accounting on which all business decisions rest make sense only so long as the value of money is tolerably stable. With prices rising at an accelerating rate, the techniques of capital and cost accounting that provide the basis for all business planning would soon lose all meaning.”

James Buchanan and Richard Wagner, Democracy in Deficit (Academic Press, 1977), p. 56:

“Sober assessment suggests that, politically, Keynesianism may represent a substantial disease, one that can, over the long run, prove fatal for a functioning democracy.”

Henry Simons, Simons' Syllabus (Center for the Study of Public Choice, 1983), p. 3:

"Academic economics is primarily useful, both to the student and to the political leader, as a prophylactic against popular fallacy."

Ludwig von Mises, Human Action (Henry Regnery, 1966), p. 885:

"The body of economic knowledge is an essential element in the structure of human civilization; it is the foundation upon which modern industrialism and all the moral, intellectual, technological, and therapeutical achievements of the last centuries have been built. It rests with men whether they will make the proper use of the rich tresure with which this knowledge provides them or whether they will leave it unused. But if they fail to take the best advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race."

If you so choose, take these words to heart and mind. Realize the power of the market to utilize self-interest, to coordinate dispersed information, to spur entrepreneurial discoveries of better opportunities for exchange, better ways to build existing products, and new products that can satisfy our wants more effectively. Realize the inefficiency of government control with the crowding out of wealth creating investment, the systemic errors produced by knowledge problems, the unleashing of vested interests in the race for privileges, and the governmental habit of deficits, debts and debasement. Take up your task as an economist and teach the basic principles of the discipline from Smith and Hume, to Hayek and Buchanan, with Say, Bastiat, Ricardo, Mises and Friedman in between. Resist the popular fallacies of Malthus, Marx, Veblen, Keynes, Samuelson, and Galbraith.

Extraordinary times call for ORDINARY ECONOMICS, keep your head, teach the discipline, and hope that political leaders will come to heed Mises's words. They cannot eliminate the teachings of economics, but they can make its worst predictions come true.