Economic Crises: Protectionism, New Deal, and the Great Depression
Economic Protectionism
Economic protectionism: A policy that favors free trade economic theory, aimed at protecting a national economy from foreign competition. It contradicts the principles of economic liberalism and strengthened remarkably with increasing competition among industrial states during economic downturns. It often involves raising tariffs on foreign goods.
The New Deal
“New Deal”: The term refers to the social and economic reforms undertaken by the administration of U.S. President Franklin D. Roosevelt to address the effects of the economic crisis of 1929.
The Crash of 1929
Crash of ’29: This consisted of a dramatic fall in the New York Stock Exchange on October 24, 1929, also known as Black Thursday. The initial crash occurred on Black Thursday, but the catastrophic downturn of Black Monday and Black Tuesday (October 28 and 29, 1929) precipitated widespread panic and had unprecedented long-term consequences for the United States. The collapse continued for a month. Economists and historians disagree on the role the crash played in subsequent economic, social, and political events. In America, the crash coincided with the onset of the Great Depression, a period of economic decline in industrialized nations, and led to the establishment of financial reforms and new regulations. The crisis of ’29 has been considered one of the greatest economic crises to confront the capitalist system.
The Great Depression
Great Depression: A major economic crisis between 1873 and 1896. Agriculture was severely affected by European markets being invaded by foreign goods produced at lower costs and sold at low prices, causing profits to fall by 30%. In the industrial sector, the crash of the Vienna Stock Exchange was followed by bank failures, leading to increased unemployment and decreased wages. Most countries adopted protectionist measures as a solution.
The Roaring Twenties
Happy 20’s: The 1920s were a decade of apparent prosperity. Economic recovery after the end of the Great War manifested in significant growth. It was also a decade of remarkable technical innovations and changes in forms of production.
Soviet Five-Year Plans
Five-Year Plans: A Soviet economic planning process initiated in 1928, with each plan covering a period of 5 years. The first plans, from 1928 to 1937, achieved spectacular industrial development and collectivization of land.
The New Economic Policy (NEP)
“NEP”: Measures agreed upon by the Tenth Congress of the Communist Party of the USSR in 1921, lasting until 1927. It tolerated a degree of freedom of trade and the creation of small and medium enterprises, which improved the economic situation.
The Second International
II International: An umbrella organization for various parties, unions, and other labor movements from the second half of the 19th century. The II International was created in Paris in 1889 (the 1st centenary of the French Revolution) to reconstruct the unity of workers and was dominated by Marxist thought. It defended the claims of workers: an 8-hour day, increased wages, and better social conditions. It was a socialist federation that greatly influenced politics and public opinion.