7.4 Economy and Political Changes in the Interwar Period

Economic Crises and Government Responses

Historical Context

  • Post-World War I trauma led to the Great Depression of the 1930s.
  • Governments increased intervention in the economy due to growing unemployment, hunger, and homelessness.
  • Different countries adopted contrasting approaches:
    • United States: Liberal policies under President Roosevelt (New Deal).
    • Germany, Italy, Japan: Shift towards radical right policies.
    • Russia: Implementation of Five-Year Plans under government control.

Effects of the Great Depression

  • Severe economic disruption worldwide, with high unemployment and inflation.
  • Germany particularly affected due to reparations from the Treaty of Versailles and inflation from printing money.
  • Global economies reliant on major industrial powers faced downturns:
    • U.S. stock market crash in 1929 triggered a worldwide economic crisis.
    • Japan's exports halved due to dependency on foreign trade.

Emergence of Key Economic Theories

  • Keynesian Economics:
    • Advocated for government intervention in the economy through deficit spending.
    • Aimed to boost economic activity and decrease unemployment.
  • The U.S. New Deal incorporated these ideas to provide relief, recovery, and reform.

Global Spread and Impact

  • The Great Depression led to a global trade decline, exacerbated by nations imposing tariffs.
  • Japan recovered quickly by devaluing currency and expanding militarily.
  • International response varied based on political ideologies.

Political Changes and Economic Management

Russia: Lenin and Stalin

  • New Economic Plan (NEP): Lenin's temporary retreat allowing some private trade.
  • Stalin's Five-Year Plans: Focused on rapid industrialization and collectivization of agriculture, which led to famines and political repression.

Mexico's Institutional Revolutionary Party (PRI)

  • Dominated politics and implemented land reforms; nationalization of the oil industry under Lázaro Cárdenas.
  • Economic improvement, but little change in social hierarchy.

Rise of Fascism

  • Fascism emerged in response to economic turmoil, characterized by extreme nationalism and suppression of dissent.
    • Italy: Benito Mussolini's regime glorified militarism and corporatism.
    • Italy sought imperial expansion, notably in Abyssinia (Ethiopia).

Spanish Civil War

  • Conflicted ideologies led to the Spanish Civil War; Nationalists vs. Republicans.
  • Foreign intervention influenced the outcome, with the bombing of Guernica highlighting the brutalities of war.

Brazil's Estado Novo

  • Transition away from democracy under Getulio Vargas, almost resembling fascist policies.
  • Despite alignment with the Allies in WWII, domestic conditions remained repressive.