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As I write these words, hordes of financial analysts in lower Manhattan and dozens of other locations are hard at work estimating the value and risk of financial derivatives so exotic that, a few decades ago, literally no one could have conceived of them. Many – probably most – of these analysts are “rocket scientists” with graduate degrees in physics, mathematics, or statistics. Using what might have been called “supercomputers” not so long ago, they seek to create composite assets that react in particular, predictable ways to changes in the prices of equity and debt contracts. These attempts to conquer the risk-return tradeoff and to ensure a healthy return in any and all market conditions have yet to succeed completely (as a recent Federal Reserve bailout testifies), but the rocket scientists are still hard at it, seeking to maximize returns while minimizing risk.

This chapter investigates the nature of the transformation of macroeconomics by focusing on the impact of the Great Depression on economic doctrines. There is no doubt that the Great Depression exerted an enormous influence on economic thought, but the exact nature of its impact should be examined more carefully. In this chapter, I examine the transformation from a perspective which emphasizes the interaction between economic ideas and economic events, and the interaction between theory and policy rather than the development of economic theory. More specifically, I examine the evolution of what became known as macroeconomics after the Depression in terms of an ongoing debate among the “stabilizers” and their critics. I further suggest using four perspectives, or schools of thought, as measures to locate the evolution and transformation; the gold standard mentality, liquidationism, the Treasury view, and the real-bills doctrine. By highlighting these four economic ideas, I argue that what happened during the Great Depression was the retreat of the gold standard mentality, the complete demise of liquidationism and the Treasury view, and the strange survival of the real-bills doctrine. Each of those transformations happened not in response to internal debates in the discipline, but in response to government policies and real-world events.

This paper proposes a holistic institutional approach to provide insight into the policy reforms necessary to progressively achieve compliance with internationally recognized labor-related human rights. Drawing on institutions theory from political economy, the paper reframes international legal norms as holistic institutions, comprised of rules, social norms, and actual behaviors, the so-called rules of the game. In this way, problems in implementing labor-related human rights that may result in violations of international law are also considered as employment practices and, like other employment practices, are embedded in a web of formal and informal rules – institutions that govern work and employment. Based on the understanding that institutions contribute to violations, this holistic institutional approach also includes a framework to improve regulation and compliance based on Harold Koh's compliance theory from international law. The approach is illustrated using the example of forced obligatory overtime in textile assembly (maquilas) in Honduras and Nicaragua.