Crises and the state

Most of my dissertation focused on the constitutional moments that arise during crises, documenting instances of radical policy reform (focusing on Eastern Europe and the collapse of communism). Of course this is a direct refutation of Naomi Klein's thesis (to the extent that she has a thesis) of "disaster capitalism", precisely because the specific cases I looked at are so rare. The stylised facts of crises is that they lead to an increase in the size and scope of the state. People that are broadly sympathetic to Klein's ideological bent defend her ignorance of this basic fact on account of her position as a non-academic. But a failure to treat seriously references as fundamental as Robert Higgs's Crisis and Leviathan is inexcusable for any author, period. In class I show this graph, which neatly captures the relationship between war and the rise of government.

B. R, Mitchell (ISBN 0 521 33008 4): table Public Finance 3. Gross Public Income - United Kingdom 1801-1980 for the total government income and table National Accounts 5

I was interested to see Greg Mankiw provide complementary analysis:

The most noteworthy feature of these data is the substantial growth of government from 1929 to 1945. It is easy to understand why the size of government grew so much during this period: The nation was responding to the crises of the Great Depression and, especially, World War II. But what is noteworthy is that while these crises were transitory, the increase in the scope of government was permanent.

And a corresponding chart: