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Hall of Mirrors: The Great Depression, the Great Recession, and the Uses—and Misuses—of History

  • Per H. Hansen

Barry Eichengreen's new book Hall of Mirrors is a detailed, excellent, and somewhat pessimistic comparison of the two most serious financial crises ever—their causes, development, and consequences. Readers well versed in the comprehensive literature on the Great Depression and the Great Recession in the United States and Europe will not find much information in Hall of Mirrors that is completely new, but most others will. What is new is the comparative approach: the detailed and analytically successful search for similarities and differences between the Great Depression and the Great Recession.

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1 See, for instance, Straumann, Tobias, “The UBS Crisis in Historical Perspective” (working paper, Institute for Empirical Research in Economics, University of Zurich, 2010); Eichengreen, Barry, “The Great Detour: European Money and Banking in the Second Half of the Twentieth Century,” in Bank Austria Creditanstalt: 150 Jahre Österreichische Bankengeschichte in Zentrum Europas, ed. Rathkolb, Oliver, Venus, Theodor, and Zimmer, Ulrike (Vienna, 2005); Cassis, Youssef, “Banking and Finance in Europe since 1945,” in Perspectives on European Economic and Social History, ed. Hesse, Jan-Otmar, Kleinschmidt, Christian, Reckendrees, Alfred, and Stokes, Ray (Baden-Baden, 2014); Moss, David A., “Reversing the Null: Regulation, Deregulation, and the Power of Ideas,” in Challenges to Business in the Twenty-First Century, ed. Rosenfeld, Gerald, Lorsch, Jay W., and Khurana, Rakesh (Cambridge, Mass., 2010); and James, Harold, The Creation and Destruction of Value: The Globalization Cycle (Cambridge, Mass., 2009).

2 See, for instance, Paul Krugman, “How Did Economists Get It So Wrong?” New York Times Magazine, 2 Sept. 2009.

3 Allan von Mehren, “Global: Lessons from the Great Depression” (research paper, Danske Bank, 23 Feb. 2009); “There Could Be Trouble Ahead,” Economist, 10 Dec. 2011.

4 James, Creation and Destruction of Value. See also Bordo, Michael and James, Harold, “The Great Depression Analogy,” Financial History Review 17, no. 2 (2010): 127–40; and Calomiris, Charles, “Banking Crises Yesterday and Today,” Financial History Review 17, no. 1 (2010): 312.

5 Richard S. Grossman and Hugh Rockoff, “Fighting the Last War: Economists on the Lender of Last Resort” (NBER Working Paper No. 20832, National Bureau of Economic Research, Cambridge, Mass., 2015). See also Brian M. Carney, “The Weekend Interview: Anna Schwartz. Bernanke Is Fighting the Last War,” Wall Street Journal, 18 Oct. 2008.

6 For this idea of narratives applied to business history, see Hansen, Per H., “Business History: A Cultural and Narrative Approach,” Business History Review 86, no. 4 (2012): 693717.

7 Among the pioneers in the uses-of-history approach, see Hobsbawm, Eric and Ranger, Terence, The Invention of Tradition (Cambridge, U.K., 1983); and Nora, Pierre, “General Introduction: Between Memory and History,” in Realms of Memory: Rethinking the French Past, ed. Nora, Pierre (New York, 1996). For uses of history in business history, see Hansen, “Business History”; and Hansen, Per H. and Wadhwani, R. Daniel, “Can Business History and Anthropology Learn from Each Other?Journal of Business Anthropology 3, no. 1 (2014): 5159.

8 One exception that comes to mind is Deirdre McCloskey's work. See McCloskey, Deirdre N., The Rhetoric of Economics, 1st ed. (Madison, Wis., 1985); and McCloskey, Deirdre N., Bourgeois Dignity: Why Economics Can't Explain the Modern World (Chicago, 2011).

9 Eichengreen, Barry, “Economic History and Economic Policy,” Journal of Economic History 72, no. 2 (2012): 289307.

10 See, for instance, Hansen, “Business History”; Hansen, Per H., “From Finance Capitalism to Financialization: A Cultural and Narrative Perspective on 150 Years of Financial History,” Enterprise & Society 15, no. 4 (2014): 605–42; and Hansen, Per H., “Making Sense of Financial Crisis and Scandal: A Danish Bank Failure in the Era of Finance Capitalism,” Enterprise & Society 13, no. 3 (2012): 672706. See also Mordhorst, Mads, “Arla and Danish National Identity: Business History as Cultural History,” Business History 56, no. 1 (2014): 116–33; and Mordhorst, Mads, “From Counterfactual History to Counter-Narrative History,” Management & Organizational History 3, no. 1 (2008): 526.

11 See Kindleberger, Charles P. and Aliber, Robert Z., Manias, Panics, and Crashes: A History of Financial Crises, 6th ed. (New York, 2011); Minsky, Hyman, “A Theory of Systemic Fragility,” in Financial Crises: Institutions and Markets in a Fragile Environment, ed. Altman, Edward I. and Sametz, Arnold W. (New York, 1977); and Fisher, Irving, “The Debt-Deflation Theory of Great Depressions,” Econometrica no. 1 (1933): 337–57. See also Hansen, “Making Sense” and “From Finance Capitalism to Financialization.”

12 See Friedman, Milton and Schwartz, Anna J., “The Great Contraction, 1929–1933,” part 7 in A Monetary History of the United States, 1867–1960 (Princeton, 1963).

13 Eichengreen, Barry, Golden Fetters: The Gold Standard and the Great Depression, 1919–1939 (Oxford, 1992).

14 See also Eichengreen, Barry and Temin, Peter, “Fetters of Gold and Paper,” Oxford Review of Economic Policy 26, no. 3 (2010): 370–84.

15 See also Blyth, Mark, Austerity: The History of a Dangerous Idea (New York, 2013).

16 Friedman, Walter A., Fortune Tellers: The Story of America's First Economic Forecasters (Princeton, 2014), 200.

17 Eichengreen, “Economic History,” 290.

18 See Abolafia, Mitchel Y., “Making Sense of Recession: Toward an Interpretive Theory of Economic Action,” in The Economic Sociology of Capitalism, ed. Nee, Victor and Swedberg, Richard (Princeton, 2005); Abolafia, Mitchel Y., “Narrative Construction as Sensemaking: How a Central Bank Thinks,” Organization Studies 31, no. 3 (2010): 349–67; and Hansen, “Making Sense.”

19 Koselleck, Reinhart, Futures Past: On the Semantics of Historical Time (New York, 2004).

20 Eichengreen, “Economic History,” 304. See also Hall of Mirrors, 382.

21 To see that there are widely different perceptions of what caused the financial crisis, one need only contrast Eichengreen's account with, say, Lawrence White's “How Did We Get into This Financial Mess?” (Briefing Paper No. 110, Cato Institute, Washington, D.C., 2008) or Wallison's, Peter J.Three Narratives about the Financial Crisis,” Cato Journal 31, no. 3 (2011): 535–49.

22 For general approaches in organizational history, see Bucheli, Marcelo and Wadhwani, R. Daniel, eds., Organizations in Time: History, Theory, Methods (New York, 2014); and Decker, Stephanie, Kipping, Matthias, and Wadhwani, R. Daniel, “New Business Histories! Plurality in Business History Research Methods,” Business History 57, no. 1 (2015): 3040. Brunninge, Olof, “Using History in Organizations: How Managers Make Purposeful Reference to History in Strategy Processes,” Journal of Organizational Change Management 22, no. 1 (2009): 826; Hansen, “Business History”; Hansen, “From Finance Capitalism to Financialization”; Hansen and Wadhwani, “Business History and Anthropology”;  Mordhorst, “Arla and Danish National Identity.” Suddaby, Roy, Foster, William M., and Trank, Chris Quinn, “Rhetorical History as a Source of Competitive Advantage,” in The Globalization of Strategy Research, ed. Baum, Joel A. C. and Lampel, Joseph  (Bingley, U.K., 2010), 147–73.

23 Eichengreen, Barry, “Central Bank Co-operation and Exchange Rate Commitments: The Classical and Interwar Gold Standards Compared,” Financial History Review 2, no. 2 (1995): 99118.

24 See also Akerlof, George and Shiller, Robert J., Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism (Princeton, 2009).

25 See, for instance, Ben S. Bernanke, “The Great Moderation” (remarks at the meetings of the Eastern Economic Association, Washington, D.C., 20 Feb. 2004), available at

26 Robert J. Shiller, “The Sickness beneath the Slump,” New York Times, 11 June 2011. See also Akerlof and Shiller, Animal Spirits.

27 Jesper Rangvid, “The Financial Crisis in Denmark: Causes, Consequences and Lessons,” Ministry of Business and Growth, Denmark, last modified 18 Sept. 2013, accessed 25 Apr. 2015,

28 See, for instance, “Dow Jones Introduces News Analytics to Institutional Trading Community,” Dow Jones press release, 14 Feb. 2012,

29 Geiger, Daniel and Antonacopoulou, Elena, “Narratives and Organizational Dynamics: Exploring Blind Spots and Organizational Inertia,” Journal of Applied Behavioral Science 45, no. 3 (2009): 411–36; Brunninge, “Using History in Organizations”; Hansen, “Business History.”

30 See Hansen, “Finance Capitalism to Financialization.” On cultural capture, see Kwak, James, “Cultural Capture and the Financial Crisis,” in Preventing Regulatory Capture: Special Interest Influence and How to Limit It, ed. Carpenter, Daniel and Moss, David A. (Cambridge, Mass., 2013).

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