Next week Senator McCain is giving a speech at Franklin Pierce University on corporate responsibility. It seems in times of trouble that many, although not Mr. McCain, want government to take a greater role in mandating and directing the behavior of the corporate sector.

Wherever this discussion may lead, I wish to remind everyone, from the historical record, that mingling of the government and corporate sectors often does not have happy results. Economists have known and continue to reconfirm that the policies of the National Recovery Administration and the National Industrial Recovery Act during the Great Depression were failures.

During the downward phase of the Depression the unemployment rate went up to 25% from 3% and U.S. industrial production fell more than 50%. The punishing deflation in the general price level and the monetary and financial market disruptions threw the business cycle into a tailspin.

The economy hit rock bottom in March 1933. When Franklin D. Roosevelt took office that month, remember inauguration day was March 4 and not January 20 until Roosevelt’s second term, he proceeded to remove the largest impediments to reflation of the price level and economic expansion by declaring a bank holiday, jettisoning the gold standard and beginning the rehabilitation of financial markets.

As the record shows, there was rapid recovery for a short time and then we limped along growing slowly, falling back between 1937 and 1938, and then again plodding forward. It basically took America’s involvement in World War II before the economy was fully recovered back to its pre-Depression trend. Why did it take the economy so long to recover? One thing economists knew and current research is reaffirming is the record of slow recovery can not be separated from the effects of the New Deal and the NIRA.

To be clear, this is not referring to the New Deal programs that provided direct relief. When millions of hungry, desperate people look to you with sunken eyes and their hand out, it does make sense to pay them to dig holes and fill them up again. In this sense the New Deal, the symbolism of the “New Deal” being that of shuffling the economic deck of cards and having a “New Deal,” dealt a winning hand to those crying out for assistance and was considered necessary and correct.

But, the New Deal also dealt a losing hand of some pretty poor microeconomics that resulted in some bad macroeconomic outcomes. The idea behind the NIRA was to raise prices and end the deflation and there is no doubting this was the right goal. However, the devil is in the execution of the policy.

It does not oversimplify the choices facing the Roosevelt administration to say they could reflate the economy by increasing aggregate demand, decreasing aggregate supply, or doing both. The measures taken to raise prices through financial market rehabilitation, going off gold, restructuring the Federal Reserve System and providing direct relief were spot on. But the NIRA went about trying to raise prices by decreasing output in the middle of the greatest economic downturn in history. No, that is not a misprint.

Roosevelt believed the Depression resulted from excessive business competition and this caused low prices and wages. The NIRA went about structuring the economy to promote cartels and wage and price fixing. It went about the task of trying to make firms behave more like monopolies and thus less competitively. It provided “codes of fair competition” for industries. If they were approved, industries would raise wages and permit collective bargaining in exchange for being exempt from antitrust law enforcement. Prices and wages both went up, but output and employment both fell.

The NIRA was ruled unconstitutional in 1935, but the ruling was practically ignored for the remainder of the 1930s. This history recently has been re-examined in an important paper by Harold Cole and Lee Ohanian, “New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis.” Not only do they document these important events, but also quantitatively, they can assign 60% of the anemic recovery directly to the influence of the NIRA codes and the policies of the National Recovery Administration.

One of the great mysteries of the Great Depression was the fact that we had waves of unemployed people needing homes and clothes and shoes and thousands of firms willing to produce those goods, yet the two sides could not get together. Why?

While there are many answers to this question for the initial downward phase of the Depression between 1929 and 1933, it seems clear that a major part of the responsibility for the weak recovery phase of the Depression lies at the feet of the National Industrial Recovery Act, or the government’s attempt to control markets.

Mr. Parker is a professor of economics at East Carolina University.