Theories of the Great Depression: Why Did Profitability Matter?

Abstract
This paper attempts to show that inadequate levels of profitability played an important role in the onset of the Great Depression. Three popular alternative views of the crash are first criticized: the Monopoly View, the Underconsumption Theory, and the Monetarist Explanation. In our opinion, the underlying cause of the crash was the instability at the end of the decade of the 1920s which resulted from an earlier decline in the rate of profit.

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