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Question – Discuss the policy measures taken to deal with the Global Economic Depression (1929–32). – 24 May 2021
The capitalist economy is a fragile system, in which any disturbance rapidly affects the other part of the world. The world economic depression was a serious economic problem that affected the whole world, and the United States in particular had to face extremely terrible difficulties. This recession was very widespread, due to which the measures for its solution proved to be complex.
Policy measures taken to deal with the World Economic Depression (1929–32):
- In 1932, the Lausanne Conference was organized. Under this, Germany’s war indemnity amount was abolished.
- In 1933, a new government was formed under the leadership of Franklin D. Roosevelt. This included financial assistance for farmers and a creative program to generate more employment, banks were more closely regulated and savings were better protected.
- Germany and France attempted to cut public expenditure.
- At the same time, Britain adopted the policy of budget control. It did not work. Then the capitalist countries tried to set up a tax wall against each other to save their home industries. For this reason, a kind of tax war broke out.
- Similarly, various counties adopted the policy of devaluation of currency for export promotion by abandoning the gold standard, which was termed as ‘Beggar thy neighbor policy’ byJohnson, but all the above methods proved ineffective.
- The Nazi government of Germany further emphasized public works for employment promotion. This method worked very well, but it turned the German economy towards the war. On the other hand, D. Roosevelt, the President of the United States of America, took steps to increase demand by direct intervention in the American economy through New Deal policy. This step proved to be very effective. But it changed the nature of the capitalist economy. This capitalism was based on government’s intervention and not on free market principle.
The World Economic Depression of 1929–32 was the first major crisis on capitalism in front of which the capitalist concept began to falter and parallel to capitalism the concept of socialism was strengthened.