During the Great Recession, economic policymakers in the United States and elsewhere sought to restore full employment. For its part, the U.S. government implemented fiscal policy (through the American Recovery and Reinvestment Act of 2009, for example), monetary policy (through quantitative easing, for example), and financial supervisory and regulatory policy (through the Dodd–Frank Wall Street Reform and Consumer Protection Act, for example).

Today, government intervention—macroeconomic stabilization and macroprudential financial supervision and regulation, in the case of the Great Recession—provokes intense debate among policymakers, academicians, and politicians and their constituents. Typically, the working hypothesis is that government intervention is counterproductive; rejecting this hypothesis requires overwhelming evidence to the contrary.

Sometimes the debate centers on the practice of government intervention, and the question of whether or not in fact intervention—which, after all, requires economic resources—improves economic outcomes overall; to wit, do intervention ends justify their budgetary ways and means? Other times the debate centers on the principle of government intervention, and the question of whether or not intervention constitutes an appropriate role for government to play in a free society; to wit, do intervention ends justify their controlling ways and means?

Why government intervention in practice provokes debate is clear. Generally, identifying empirically how an economy responds to, say, discretionary government taxing or spending is difficult to do. And, in any case, the outcomes of interventions are not uniform across time; the effects of past interventions do not precisely reveal what to expect from future interventions.

However, why government intervention in principle provokes debate—and, at times, vitriol—is less clear. To many contemporary observers, the Great Depression and the coincident disintegration and brutality of political organization abroad revealed unbridled markets could not reliably steward society’s collective wellbeing. As is well known, the U.S. federal government responded to this notion with New Deal-inspired employment programs and a web of regulatory agencies—the Federal Deposit Insurance Corporation was created in 1933, for example. After World War II, and in the wake of other macroeconomic shocks, the government introduced policies designed to stabilize income and employment. Initially, these included taxing and spending policies implemented by Congress and, later, interest rate policies implemented by the Federal Reserve (itself a governmental response in 1913 to myriad financial crises in the nineteenth and early twentieth centuries).

Not surprisingly, then, after the Great Depression, government intervention—not free markets alone—seemed a sensible way to steward prosperity and collective wellbeing; that is until the intellectual tide shifted.

In The Great Persuasion: Reinventing Free Markets Since the Depression, Angus Burgin, an assistant professor of history at Johns Hopkins University, analyzes this normative shift—among economists and, ultimately, the bodies politic in the United States and Europe—toward freer markets and limited government intervention.

Readers likely know the abridged version of events that shaped this normative shift: in the immediate aftermath of the Great Depression, a zero-sum battle of ideas transpired between those who advocated an activist role for government in the economy and those who did not. John Maynard Keynes won the battle and, ultimately, Friedrich Hayek won the war. Burgin deftly demonstrates that this oversimplified and stylized version of events obscures a richly nuanced and largely underappreciated process through which thinking about the role of government in the economy evolved over the twentieth century.

The less-understood, unabridged version of events begins in the 1930s, when economists, including Edwin Cannon, Lionel Robbins, and Friedrich Hayek, at the London School of Economics and those at the University of Chicago, including Frank Knight and Jacob Viner, opposed the prevailing Keynesian consensus; meanwhile, they and their like-minded colleagues elsewhere struggled to proffer an economically viable and politically palatable alternative. They disagreed—profoundly, at times—on the necessary conditions for a system of free enterprise. Though, they agreed a system based on laissez-faire, particularly of the nineteenth-century American sort, was a nonstarter. In their view, laissez-faire lacked a requisite moral philosophy and, in the immediate aftermath of the Great Depression, was politically unpalatable in any case. However, by the 1960s, Milton Friedman and others passionately endorsed just such a system, particularly of the nineteenth-century American sort. Friedman dispensed with the competing moral philosophies that so concerned and preoccupied Hayek (and other members) of the Mont Pèlerin Society, to which both men belonged. Instead, he argued empirically for free markets. And, ultimately, his essays and lectures on positive economics catalyzed the great persuasion.

How philosophical, economic, and political forces shaped this internecine tension among otherwise uniformly anti-collectivist intellectuals in the mid-twentieth century is a fascinating and important contribution of this book. Many readers—and, in particular, economists—will be surprised by the extent of government intervention many of these free-market advocates generally tolerated and, in most cases, encouraged.

Some readers may wish for more discussion of how the evolution of economic thought Burgin so effectively conveys was shaped in part by contemporaneous economic events. For example, how did the Great Inflation of the 1970s, the concomitant breakdown of the Phillips curve—an ostensible structural policy menu of inflation and unemployment outcomes—and, thus, the seeming weakness of discretionary monetary policy inform and strengthen arguments for credible government commitments to rules-based monetary policies? Here Burgin rightly identifies Fed Chair Paul Volcker’s decision in 1979 to target nonborrowed reserves (and, thus, lean against inflationary winds) as a tactical shift in the spirit of Friedman’s rules-based approach; but how did the inflationary episode itself instigate the evolution of economic thought that informed this eventual tactical shift?

In any case, Burgin has written a smart and provocative interpretation of how, not long after the Great Depression, free-market economics reappeared as the dominant narrative. Today, the history of economic thought occupies too small a space in the economics profession. This important book will help attract the attention the subject deserves.