1929: Capitalism and the World Economy Flashcards
What did the concept of capitalism originally mean?
Money, either invested or lent
How was the term ‘capitalism’ originally used?
In criticism of a class society
How did the socialist Louis Blanc define capitalism in 1850?
“the appropriation of capital by some to the exclusion of others”
What did American writer Thornstein Veblen stress about capitalism in 1914?
That it was a concept much older than industrialisation, coming from the handicraft system, trade, and finance from the fifteenth and sixteenth centuries
Where did Thornstein Veblen see the concept of capitalism originating from?
Trade and finance in the fifteenth and sixteenth centuries
What were the 4 main components of capitalism according to Marx?
1 - the market, with a division of labour and money economy
2 - constant and unlimited accumulation of more and more capital (capital as an end in itself)
3 - irreconsilable tension between capitalists and workers
4 - enormous dynamism
How did Marx and Engels perceive the industrial revolution according to Jurgen Kocka?
“an epochal upheaval”
What did Marx think was endemic to capitalism?
Crisis
What would the crises inherit to capitalism result in according to Marx?
The overthrow of the capitalist system through a revolution of the proletariat
What did Joseph Schumpeter see as the core of capitalist development?
Creative destruction
How did Jurgen Kocka describe Schumpeter’s view of capitalism?
“It was clear to Schumpeter that introducing
the new means replacing and sometimes destroying the old.”
When was ‘Capitalism, Socialism, and Democracy’ published?
1942
Why did Schumpeter think the economy changed of its own accord?
Innovation, which is why he was so interested in entrepreneurs as the vehicles of innovation
What is Schumpeter’s idea of the business cycle?
Innovations trigger growth and expansion before turning into a downswing, which lasts until a new innovation comes along and starts the process again
When was the gold standard introduced?
1821
What is the gold standard?
When a country’s currency is fixed to the value of gold
What is the gold standard meant to do?
Manage the differences between different currencies and markets around the world which facilitated trade
Who was the first country to formally adopt the gold standard in 1821?
England
What does Patricia Clavin call Britain in the nineteenth century?
The world’s banker
What does Patricia Clavin see as the main international project between 1870 and 1933?
“The creation and maintenance of a worldwide gold standard”
What does Patricia Clavin see the First World War as doing financially?
It reordered the global hierarchy, greatly benefitting America and Japanese industries
How much money did Britain borrow from America in WWI?
$4.3 billion
Who was the new world banker in 1918 as a result of the loans made during WWI?
America
What does patricia Clavin see the gold standard as doing in the 19th century?
“facilitated the expansion of international trade”
What was agreed about the League of Nations in 1920?
That it should facilitate economic cooperation between its members
What was food crisis in Austria after WWI a catalyst for?
The creation of the Economic and Financial Organisation (EFO) in the League of Nations
What did the EFO do?
Facilitate the circulation of goods and money
What did the League of Nations give to Austria in 1922 to help it deal with its lack of finances and resulting food shortages?
Gave Austria a loan
What does Patricia Clavin say about the nature of the League loan to Austria in 1922?
“a loan scheme that, for the first time, handed financial oversight of a nation to an intergovernmental organisation”
What does Patricia Clavin see the LoN as providing the basis for?
“international financial oversight”
What was one of the conditions imposed on Austria for them to recieve LoN loans?
Joining the gold standard
What happened to monetary value as a result of the gold standard?
Deflation
What does Patricia Clavin see as linking international finance and Hitler in Austria?
The deflation caused by joining the gold standard in 1922 led to more economic crises and eventually facilitated the rise of the Nazis
What did some economists and financiers hope the LoN would do according to Clavin?
Inform and coordinate financial affairs
How would the LoN inform and coordinate international finance?
By promoting the gold standard
Quote by Patricia Clavin about the gold standard and the Great Depression?
“The gold-ordered world…helped bring about the Great Depression”
What did Ivan Bloch argue economic interdependence led to, in the words of Patricia Clavin?
“economic interdependence was in itself a guarantor of peace”
Who was Ivan Bloch and when did he make he assertion about global capitalism?
A Polish banker and railway financier, and at the end of the Spanish-American War in 1898
How does Susan Pedersen view the League of Nations?
“the arena in which a variety of claims and schemes for ordering the world emerged and clashed”
What did the LoN grant all league states within the mandates?
Equal economic rights
Which body of the LoN oversaw the mandates under their control?
Permanent Mandates Commission (PMC)
How did the PMC enforce economic policy?
It scrutinised economic policies and and contracts within the mandated territories
When did Germany become a member of the LoN?
1926
Before Germany entered the LoN what had many nations done that they could not do after they had join - and why?
They had excluded Germany and German businesses from mandated territories but they could not do so after 1926 because all members of the LoN had equal economic rights within mandated territories
What was the ‘open dorr’ principle?
That all members of the LoN had equal economic rights within mandated territories
What was the stated aim of the League of Nations?
To help train and guide dependent peoples for the responsibilities of statehood and civilisation
Why did Germany push for the independence of mandated territories once they joined the LoN?
They saw it as a way to develop economic relations with those new states, particularly since they had no mandates of their own
In the words of Susan Pedersen, how did the LoN pledge to regulate the relations between states?
“through the rules of the global economy and of international law” - so the global economy was already recognised as existing
What does Susan Pedersen see the LoN facilitating after Germany joined in 1926?
“battles over ecomonic access and sovereignty”
How does Tirthankar Roy see India’s experience of WWI?
“as a massive demand boost”
How does Tirthankar Roy characterise the British attitude to India goods during and after WWI?
“an emergency reserve,” promoting and protecting British industry first and foremost
What did the Indian government do after WWI to help Indian industries struggling to compete with other coutries?
Introduce tarrifs
Due to the tarrifs imposed by the Indian government, which industries enjoyed considerable growth during the 1920s in India?
- Sugar
- Steel
- Cement
- Matches
- Paper
- Wool
How does Tirthankar Roy characterise India’s economy before the Great Depression?
“extensive and
diversified”
How much of India’s national income came from foreign investment during the 1920s?
Less than one percent
What does Tirthankar Roy see as protecting India from the effects of the Great Depression?
“industrialization and retreat from the world
market”
Because of the small amount of foreign involement in their economy, did India experience much of a shock from the Depression?
No
When was the Communist Party of India established?
1925
What does Tirthankar Roy see India’s limited involement with global trade as doing once the Depression began in 1929?
“sheltered much of its economy from collapse.”
What does Alan Knight argue about the economic shock of 1929-30 in Latin America?
“severely aggravated existing trends”
What were the existing economic trends in Latin America that meant the Depression was nothing new?
Weak and falling commodity prices throughout the 1920s after the post-war boom ended
What goods from Latin America had been experiencing falling prices throughout the 1920s?
- Sugar
- Cacao
- Tin
- Wheat
- Coffee
How did Trotsky describe the circle of reparations and loan payments after the Young Plan of 1929?
“From the financial shackles on Germany’s feet, there extend solid chains which encumber the hands of France, the feet of Italy and the neck of Britain”
What does Adam Tooze argue the Young Plan of 1929 did?
“the Young Plan tightened the regime of financial orthodoxy”
How much money did American investors have in Germany by 1929?
$2 billion
What did President Herbert Hoover do to try and relieve the pressure of European economies and prevent a financial crash?
He proposed a plan to freeze political debts, both reparations and inter-Allied war debts
When did President Hoover announce his recovery plan?
June 1931
What caused President Hoover’s rescue plan to fail?
France vetoed it, refusing to cancel the paying of reparations and debts
What does Adam Tooze argue about France’s actions with regard to Hoover’s rescue plan?
“revealed the true weakness of the interwar system”
What does Adam Tooze see as underpinning the international order during the 1920s?
“disarmament and the rules of the international financial markets”
Who does Adam Tooze credit with collaborating and intentionally creating the new international order based on disarmament and economics?
Britain and America
What was at the heart of Britain and America’s international order after WWI?
The gold standard
What does Adam Tooze describe the gold standard as?
“the frame of discipline and coordination”
When did British Prime Minister Ramsay MacDonald withdraw Britain from the gold standard?
September 1931
How does Adam Tooze describe Britain’s departure from the gold standard?
“a truly global event, causing banks to fail in America and panic in Berlin”
How did Charles Maier view the Great Depression?
“one of three systemic global crises of capitalism during the twentieth century”
Who was relatively unaffected by the Depression?
The Soviet Union
Why did the Soviet Union become more attractive during the 1930s?
Because it was not hit by the Great Depression to the extent capitalist countries were
How does Kiran Patel characterise the Great Depression?
“putting capitalism to the test”
What was happening in the Soviet Union while the economies of the West were stagnating?
They were enjoying rapid growth
What did the Soviet Union represent during the Great Depression according to Kiran Patel?
“a clear-cut alternative”
What was the response of governments around the world to the Depression in the words of Kiran Patel?
“State intervention and protectionism”
What did the response to the Depression do to many Western countries?
It brought them closer to the Soviet economic model and further away from the American-led version of modernity of the 1920s
What was the vision of the world during the 1920s that was abandoned after the Depression hit, in the words of Kiran Patel?
“an integrated and prosperous world built on capitalism and cooperation”
How does Kiran Patel describe the effect of the response to the Depression?
“Economically, the world had been torn apart”
How long did it take for the system created after WWI to be destroyed according to Kiran Patel?
“it had taken less than three years to break the global links created in the previous decade”
What did US Department of State advisor, Herbert Feis, say in 1931 that shows the approach America had taken to build connections during the 1920s and the way this approach changed following the Depression?
“Never again should we lend or invest out money in foreign lands”
Which Act was passed in America that epitomised the protectionist response to the Depression?
The Smoot-Hawley Act, 1930
When was the Smoot-Hawley Act passed?
1930
What did the Smoot-Hawley Act do?
Raised tariffs on over twenty thousand imported goods to protect American production from foreign competition
When states started to struggle to pay their war debts and reparations, what did they do?
They used their gold reserves to make payments that was meant to be used to back-up the value of their currency
When did countries begin to adopt the gold standard?
Towards the end of the 19th century
Who was the leader of the gold standard during the 19th century?
Britain
What does Kiran Patel credit with providing the prosperity of the 1920s?
“America’s web of foreign debts and loans had contributed to the prosperity of the 1920s”
After the Depression hit America, how does Kiran Patel describe the impact their response had on Europe?
“America exported and exacerbated the global crisis”
How did Germany pay its reparations to Europe?
Through American loans
How does Kiran Patel characterise the circular payment of loans and reparations?
“New debts were made to pay for old ones”
Why was no nation involved in WWI prepared for the conflict?
They all thought it would be over quickly, “ideally over by Christmas”
Who did the Allies turn to to finance WWI?
America, making them the largest international money-lender
What was the result for America of lending money to Europe to finance WWI?
It made them the world’s banker
How does Kiran Patel describe the system created during WWI by American loans?
“This created a complex web of liabilities that spanned the globe”
Who said that the USSR represented a “clear-cut alternative”?
Kiran Patel
Who said that the GD was a global crisis of capitalism?
Charles Maier
Who said that “The gold-ordered world…helped bring about the Great Depression”?
Patricia Clavin
Who said that the gold standard was “the frame of discipline and coordination”?
Adam Tooze
Who said that “America exported and exacerbated the global crisis”?
Kiran Patel
Who saif that the gold standard “facilitated the expansion of international trade”?
Patricia Clavin
