The NRA was created by FDR to do something about the crippling deflation that raged during 1930 to 1932. Under the NRA industrial committees made up of business, labor and consumers were created to negotiate codes that set wages, working conditions, and market shares. It was not wildly successful at its inception and implementation, but it did accomplish one critical goal as seen in this chart:
 |
| credit: Attewell @ Money, Guns and Lawyers |
Deflation was well under control by 1933, and price controls did not hamper the recovery. In fact wages increased from an average of 47.6¢ per hour in January 1933 to 57¢ per hour in January 1935, a rate well above inflation of 2-3%. Capitalists argue that the economy would have recovered without price controls--a hypothetical that cannot be tested. What can be said is that social economics contributed to one of the fastest recoveries in American history.
A more successful example of comprehensive price controls was administered effectively by the Office of Price Administration (OPA) during WWII. Its job was to keep prices from inflating widely during an increase in government spending of almost 50% of GDP, and full employment among unionized workers whose pay packets were swelling with overtime earnings. The agency was also responsible for rationing of strategic comodities such as fuel, rubber and metals. Its economic staff was stellar and its enforcement mechanism was robust, extending down into individual households where housewives were mobilized into local advisory committees to keep watch over local retailers. OPA's success in holding down inflation during a time of 100% production utilization was spectacular. Even though the economy was growing at 12%--the highest it has ever been--inflation was controlled to under 3%, down from 11% fin 1941.
 |
| credit: Attewell @ Money, Guns and Lawyers |
This performance made OPA popular, and it was continued after the war. Only one problem: the capitalists hated it with a passion. They pulled high profile goods (mostly foodstuffs) off the market for higher prices in what was essentially a capital strike in late 1945. Notice the spike in inflation in 1946, above. Coupled with an intense lobbying campaign on Capitol Hill, the program was crippled and it expired without presidential support. In order to respond to renewed high inflation the central bank imposed higher interest rates that led to the recession of 1949.
Price controls can be badly mismanaged too. See Nixon's use of this valuable economic tool during the Vietnam War inflation crisis. For a discussion of that clusterf--k see Attewell. So the next time a MAGAist you know touts the free market system remind him or her what social economics did for 'Merica during two of the most severe crises in our history.