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Q) “The Great Depression led to the rise of radical politics and the emergence of new forms of government intervention in the economy.” Comment.


Great depression refers to serious economic crisis that started with crash of New York exchange in 1929 triggering worldwide rise in unemployment and fall in national income. It was a watershed moment that led to the rise of radical politics:

  1. Since failure of capitalism was held as one of the major reasons for the great depression, radical politics began gaining strength. E.g., formation of Silver Legion of America in 1933.
  2. Latin America too saw the emergence of dictatorial leaders in the aftermath of great depression. E.g., Rise of Fulgencio Batista after the Cuban revolution of 1933 (a result of great depression).
  3. Rise of Fascism in Germany:
  4. Economic factors:
  5. The spill over impact of the great depression in Germany provided ready fodder for the Nazi propaganda for a better future.
  6. Post-World War 1, German investments and industrial recovery were totally dependent on short-term loans, largely from the US.

III. As banks collapsed and businesses shut down, workers lost their jobs and the middle classes were threatened with destitution.

  1. Political factors: People lost confidence in the democratic parliamentary system, which seemed to offer no solutions to the miseries of Germans.
  2. Social factors:
  3. The middle classes, especially salaried employees, and pensioners, saw their savings diminished when the currency lost its value.
  4. It created the fear of proletarianization, an anxiety of being reduced to the ranks of the working class, or worse.

III. The large mass of peasantry was affected by a sharp fall in agricultural prices and rural section of society also demanded radical reforms.

  1. The appeal of Fascist Italy grew post great depression, as the need was felt for a powerful leader who could steer the country out from the depression quagmire.

Apart from the radical politics, the great depression also led to new forms of government intervention in the economy:

  1. New Deal:
  2. The New Deal was the policies of economic reconstruction and social welfare introduced in 1933 by the F D Roosevelt administration to counter the great depression.
  3. The New Deal expanded the Government’s role in the economy and sought to provide money in the hands of the common man to revive the economy.
  4. 3Rs: Relief (for the unemployed), Recovery (of the economy through federal spending and job creation) and Reforms (regulation and creation of welfare programmes).
  5. The new interventions in the economy moulded the nature of government as per the prevailing circumstances. E.g., welfare benefits such as the Social Security Act, 1935 made the US a welfare state.
  6. Post War Consensus:
  7. Building upon the Beveridge report of 1942, post war consensus tried to deepen the welfare credentials of the state in UK.
  8. The post war consensus brought the focus of the government upon Keynesian principles of the economy. E.g., establishment of National Health Service (NHS).
  9. Post war consensus also advocated nationalization of major industries.
  10. The notion of a caring state gained strength with a renewed contact between the state and the governed, making citizens an informed stakeholder in the governance. E.g., President Roosevelt’s “Fire side chats” became a distinctive feature of his presidency.

The great depression of 1929 was a watershed moment in the modern history which gave thrust to radical ideas like fascism. The lessons from the depression also revived the importance of welfare state.

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