A Comparison Of The Great Depression Of — страница 3

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the”Keynesian theory”. In 1938, Roosevelt, facing the semi-failure of his NewDeal, finally gave in to an increasing number of his close advisors whowere confident that Keynes’ ideas would be more successful.8 Theunderlying theory to Keynes’ ideas was that recovery could only comethrough fiscal expansion–in other words, running a bigger budgetarydeficit. The additional expenditures were pumped into the economy througha variety of government actions–like major public works–in order tostimulate demand by providing people with income. In Germany, the Nazis’ victory at the 1933 elections was a majoraccelerating factor on the road to recovery. The Nazi program aimed firstand foremost at the reduction of unemployment and it did accomplish atleast that. However, the

realization of the plans was conditioned by anomnipotent government which was best described by Peter Hayes’ analogy(1987):”It is perhaps accurate to say that, to German industry, the emergenteconomic system was stiff capitalism, but only in the same sense that for aprofessional gambler poker remains poker, even when the house shuffles,deals, determines the suite and the wild cards, and can change them atwill, even when there is a ceiling on winnings, which may be spent only asthe census permits and for the most part only on the promises.”9 One other essential vector that Nazis used toward recovery wasrearmament, starting in 1936. Hitler used the defense industry to satisfytwo of his im???: recreate a strong Germany while giving people work. The case of Great Britain is

different. We have mentioned earlierhow well (relatively to other nations) the U.K. got through the Depressionyears. Let us now attempt to explain why. Three elements are oftenmentioned in the British recovery: the abandoning of the gold standard in1931, the adoption of higher tariffs and the devaluation of the pound. When the U.K. abandoned the gold standard, it gave itself a competitiveadvantage via-a-vis those countries which did not. The new tariff lawshelped by protecting domestic industries and the 30 percent devaluation ofthe pound added to the competitive edge of the U.K by making Britishproducts cheaper to the rest of the world. In the face of Depression, France reacted quite differently fromthe other industrialized countries. Confident in its strong economy until1932,

France did not abandon the gold standard until June 1937 and did notdevalue the franc until October 1936. Those two factors made France ratheruncompetitive for most of the 1930’s, given the actions taken by the U.S.,the U.K., and Germany. Those measures, in time, helped lift France out ofthe Depression but the recovery there might have occurred a few yearsearlier if the French had only signed their policies to that of the UnitedStates and Great Britain in particular.10 When it comes to Japan, two reasons are proposed to explain itsgood economic performance through the Depression: the fact that it had aplanned economy, and the early understanding of the advantages ofdevaluating the yen. Japan improved its competitive position that way andit reacted very soon after the Depression

hit. As a result, the effects ofthe crisis were greatly reduced from the start. Footnotes 1″The origins and nature of the Great Slump,” Fearn. 2″The origins and nature of the Great Slump,” Fearn. 3″Capitalism in Crisis,”edited by Garside. 4″La Crise economique dans le monde el en France,” Nogaro. 5″The origins and nature of the Great Slump,” Fearn. 6″The Great Depression, 1929-1938,” Saint Etienna. 7″The Origins and Nature of the Great Slump,” Fearn. 8″Capitalism in Crisis,”edited by Garside. 9″Capitalism in Crisis,”edited by Garside. 10″Capitalism in Crisis,”edited by Garside.