The Crisis of Capitalism: The Great Depression
I. What was the Great Depression?
II. How the democracies responded
II. What to do? Policies and Politics
III. George Orwell’s The Road to Wigan Pier (1937)

online version of Orwell, The Road to Wigan Pier:
http://www.limpidsoft.com/a5/wiganpier.pdf

The Great Depression as a pivotal event in twentieth-century Europe:
no depression>>>no Nazi Germany
no depression>>>USSR does not gain prestige as a rival and viable alternative
no depression>>>post-WWII order in Europe incomprehensible (incl. broad consensus on welfare state)
(note: these are counterfactuals--used carefully, an important way to think about historical causation)

late 1920s stabilization (1924-1929)
Dawes Plan (1924): loans, international cycle of payments to resolve reparations problems
Locarno treaties (1925): guaranteed Germany’s western borders, with German participation

business cycles: boom/bust or growth/recession
mass unemployment | economic contraction
German: die Weltwirtschaftskrise = the worldwide economic crisis
in Britain: “the slump”

causes of the Great Depression
short-term factors: 1929 Wall Street crash, ensuing financial crisis
medium-term factors: dislocations caused by WWI (e.g. breakup of Austro-Hungarian empire), flaws in the Dawes Plan (overreliance on short-term loans)
llong-term factors: agricultural depression; imblances between production and demand; shift to new economic sectors (e.g. decline of coal; shift rom low-wage, labor-intensive industries vs. higher-wage industries

how well did parliamentary democracies cope with the Great Depression?
1. catastrophic failure: collapse of Germany's Weimar Republic (next class)
2. muddling through: Great Britain's National Government (see Paxton)
3. up to the brink of civil war: France's Third Republic (see Paxton)
4. a small band of innovators: Sweden and the "Scandinavian way"

contrast responses by the Soviets and the Nazis:
Five Year Plans (USSR): rapid forced industrialization
Four Year Plan (Nazi Germany): government spending to promote rearmament, Nazification
“I have seen the future, and it works.” (Lincoln Steffens, 1921, referring to a visit to the Soviet Union)
E.M. Forster, Two Cheers for Democracy

two views of the Great Depression:

1. orthodox liberal economics
classical liberalism: self-regulating markets; laissez-faire; the "invisible hand" (Adam Smith)
deflation = “lowering.” What should be lowered?
a. govt. spending, in order to balance budget and restore investor confidence
b. cut wages to lower prices, to make goods more competitive
policies: cuts in unemployment benefits and wages in response to mass unemployment and economic crisis

2. Marxist analysis: capitalism finally destroying itself
a. falling rate of profit (a widespread belief in the nineteenth century)
b. impoverishment of the workers ("immiseration")
=ever deeper crises

Keynes's response
reflation (“pump priming”) = government spending to stimulate demand, promote recovery
John Maynard Keynes, General Theory of Employment, Interest, and Money (1936)
after World War II, "Keynsianism" becomes the new economic orthodoxy in Western Europe

an altenative view of economics:
Joseph Schumpter (Austrian economist, emigrated to U.S.) | capitalism as "creative destruction"

George Orwell (Eric Blair), The Road to Wigan Pier (1937)

•an acute sense of GB as a class society
•disgust with the British empire (Blair had served as an imperial police official in Burma)
•Down and Out in Paris and London (1933)
•1936 commissioned by the Left Book Club to do a report on unemployment
•Orwell's account of the world of working-class culture
•the economic and symbolic signficance of the coal industry

"Trade since the war has had to adjust itself to meet the demands of underpaid, underfed people, with the result that a luxury is nowadays almost cheaper than a necessity. One pair of plain solid shoes costs as much as two ultra-smart pairs. For the price of one square meal you can get two pounds of cheap sweets…And above all there is gambling, the cheapest of all luxuries. Even people on the verge of starvation can buy a few days’ hope (‘Something to live for,’ as they call it) by having a penny on a sweepstake…

Twenty million are underfed but literally everyone has access to a radio. What we have lost in food we have gained in electricity. Whole sections of the working class who have been plundered of all they really need are being compensated, in part, by cheap luxuries which mitigate the surface of life.…

Do you consider all this desirable? No, I don’t. But it may be that the psychological adjustment which the working class are visibly making is the best they could make in the circumstances. They have neither turned revolutionary nor lost their self-respect; merely they have kept their tempers and settled down to make the best of things on a fish-and-chip standard.…

It is quite likely that fish-and-chips, art-silk stockings, tinned salmon, cut-price chocolate…the movies, the radio, strong tea and the Football Pools have between them averted revolution."

 --George Orwell, The Road to Wigan Pier, pt. I, ch. V

Orwell's questions:
1. Will the working class revolt against capitalism?
2. Exactly how does massive, chronic unemployment affect working-class communities and attitutes?
3. What are the political effects of the new popular and consumer culture?