Transcript Political and Economic Change - APEH

Political and Economic Change
1920s- Present
Postwar WWI Economic Problems
• Europe loses status as financial and credit center
– Europe in debt to each other and the US
– The Bolsheviks had cancelled Russian war debts to
France
– Germany could not pay war debts
• US did not demand reparations from Germany, but did demand
the repayment of debts from other Allies
• Europe’s infrastructure, (bridges, roads, factories,
hospitals), had been damaged or destroyed by the war.
• US became less dependent of European production and
was a major competitor.
• Slow postwar economic growth and an overall decline of
economic activity lowered international demand for
European goods.
New Roles for Government and
Labor
• Prominence of labor during the war gave unions a
greater role in national government.
– Government could not ignore labor
– Wages fell after the War, but workers generally were
paid better than pre-war conditions
– Collective bargaining agreements would remain
– Middle classes became more conservative and more
concerned about Communism
The Soviet Experiment Begins
• The creation of the Soviet Union was the
most important transforming event in postWWI Europe.
• Existed from 1917 until 1991
• The Communists were neither a mass party
or nationalists (less than 1% early on)
War Communism
• The Bolsheviks rapidly developed authoritarian policies in response to
internal and foreign military opposition
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Controlled by Leon Trotsky and the Red Army
• formed the Cheka, a new secret police
• political and economic administration became highly centralized.
• Economic policy of war communism,
• Took control of all the major industries that included financial and
transportation.
• Seized grain for the Red Army and city workers
• War Communism aided the victory of the Red Army over their rivals
• Created domestic opposition
• Strikes occurred in 1920 and 1921
• Baltic fleet mutinied
New Economic Policy
• Lenin’s strategic attempt to regain control
– Private property tolerated- peasants could grow
food for profit
• NEP made the economy more stable
– No consumer goods
• Caused disagreements in the Politburo
(governing body of the communist
government)
Stalin vs. Trotsky
• Lenin dies in 1924
• two factions emerged in struggles for leadership of the
party
• Leon Trotsky and Joseph Stalin were on opposite sides
• Trotsky
• The “left wing”
• Urging agricultural collectivism, rapid industrialization, and
new revolutions in other nations.
• Stalin
• A right-wing faction
• Nikolai Bukharin as its representative and Stalin manipulating
the group that called for continuation of Lenin’s NEP and slow
industrialization.
• Stalin began to gain power
• Mid-1920s, he supported Bukharin and denounced Trotsky for
his vision of international revolution, endorsing the doctrine of
“socialism in one country.”
• Stalin defeated Trotsky and controlled the Soviet state.
Third International
• In 1919, the Soviet Communists founded the Third
International of the European Socialist movement, known
as the Comintern.
• In 1920, the Comintern imposed the Twenty-one
Conditions on any Socialist party that wanted to join it.
• Effort to destroy democratic socialism
• Split every major European Socialist party
• Divided the political left, and created a vacuum of power, (no
political voice) for right-wing politicians
• led to the rise of Fascists and Nazis.
France
• After WWI- a new conservative government is
elected
• Clemenceau loses bid for president
– Versailles seen as too lenient
– Clemenceau did not establish a separate Rhineland state
• New government wanted to security against
Germany and Russian Communism
– Few domestic reforms
– Many changes in ministers
Great Britain
Economic Confusion
• 1918- British electorate expanded to all men
above 21 and women above 30
• Disagreements between PM Herbert Asquith and
David Lloyd George split the Liberal Party
– George maintained a coalition between Labour and the
Liberal Parties
• British economy remained depressed in the 1920s
– High unemployment
– Government expanded insurance to unemployed
workers, widows and orphans
• Did not create new jobs
The First Labour Government
• In 1922, the first Labour government in Britain was headed by Ramsay
MacDonald.
• The Labour party was socialistic in its beliefs but democratic and nonrevolutionary,
• its rise in English politics caused the decline of the English Liberal
party.
• Macdonald had been against WWI
• Macdonald’s plan for reform
• Social reform
• Established the Labour party as a viable party
The General Strike of 1926
• Stanley Baldwin returned as Conservative PM
– Government returned to the gold standard
• Hoped to stabilize the monetary system
• Set rate too high, raised price of British goods
• In attempt to lower prices- cut wages
• Coal industry most directly effected
– 1926 went on strike
– Sympathetic workers from other industries joined them
– Workers lost argument, high unemployment made unions weak
• Government attempted to help workers with new housing and
reforming poor laws.
Empire
• WWI gave British colonies the increased
idea of independence and self determination
– India
• Self determination movement started by Mohandas
Gandhi,
• Started discussion with British government
• Gained right to impose tariffs to protect its own
industry.
Economic and Ethnic Pressures
in Eastern Europe
• No successor states had strong economies
– political independence slowed trade between them
– Dependant on foreign loans – rural people in
industrialized world
• Ethnic groups sought power unchecked by
politics;
– minorities in each state wanted independence –
– interwar economic/nationalistic problems would rise
again in 1990s;
• breakup of Habsburg Empire similar to breakup of Soviet
Union, Yugoslavia and Czechoslovakia
The Great Depression
Economic Hardship
and Political Change
Toward the Great Depression
• Three factors combined for intense severity and
length of Great Depression:
• 1) financial crisis from WWI and settlement
• 2) crisis in production and distribution of goods in
world market
• 3) west European nations and US didn’t act
responsibly and lead others
The Financial Tailspin
• Most of Europe emerged from WWI with
inflation
– demand for consumer and industrial goods
drove up prices,
– Price and wage increases stopped after 1921,
but inflation remained haunted governments as
source of political and social instability
Reparations and War Debts:
• France/US determined to get reparations
– much of the money European powers got from
Germany went to US
– 1922, Great Britain announced it would receive
reparations only to pay US;
– war debts made normal business, investment, and trade
difficult and expensive for European powers,
– currency speculation drew funds away from capital
investment
American Investments:
• 1924, Dawes Plan reorganized administration and
war debts;
– afterwards, private US currency flowed into Europe in
short-term loans
• 1928, this lending contracted as American money
was withdrawn from Europe and put into New
York stock market
– US banks loaned customers money,
– they invested in stock market:
– huge amounts of money were lost in Oct 1929 stock
market crash,
– little US money available for Europe
The End of Reparations
• Credit ran out, financial crisis struck Continent;
– Kreditanstalt, major bank in Vienna,
– collapsed May1931
• Germany couldn’t make next payment,
• Hoover announced 1-yr moratorium on all
payments
• French agreed to moratorium reluctantly;
– little alternative
– Germany’s economy almost collapsed
– Lausanne Conference in 1932 ended era of reparations
• 1933 debts owed to US settled
Problems in Agricultural Commodities
• Production and trade went down
– less demand meant idle factories/fewer jobs
– new wheat farming methods sent world wheat prices to
record lows:
• good at first for consumers and bad for farmers
• farm problems pressing in eastern Europe
• new farms were inefficient – German farmers were major
source of support for Nazis
• Outside Europe
– agricultural commodity producers had similar problems
• production had outstripped world demand
• collapse in agricultural prices/financial turmoil led to
stagnation/depression for Europe: depression sustaining itself
Depression and Government Policy
• People with work always outnumbered people w/o
work,
– Feared they would be next,
• created social discontent
• John Maynard Keynes’ General Theory of
Employment, Interest, and Money -1936
– orthodox economic policy called for cuts in govt
spending to prevent inflation
– govt involvement in the economy increased rapidly
from west to east across Continent
– furthered political experimentation
America: Causes of European
Economic Crisis
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Black Tuesday, October 29, 1929
Stock Market Crashes
Panic follows
Run on the Banks
Banks Fail
US investment in Europe stops
1/3 of Americans unemployed
Global Consequences
Great Britain
• Struggles to Recover from WWI
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Merchant fleet was devastated
Sale of oversees investments to finance war
Production falls to 80% of prewar levels
New industries require renovation and capital
investment, little to be found.
– Return to gold standard makes pound to
expensive, sales drop in foreign markets
Great Britain: A Nation Divided
• Ramsey McDonald, Labour Party,
– Inexperienced Economic Advisors
• American trade and credit dries up
• Unemployment Doubled, Labour splits
• Conservative Landslide – The National Economy
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Cut unemployment, balanced the budget, raised taxes
Macdonald replaced by Conservative Neville Chamberlain
Regional differences, based on industries
Abandoned the Gold Standard, Pound Fell
• Leads to a Gradual Recovery
• Rise of the Welfare State
France
• Generally had recovered from WWI
– Maintained high tariffs
– Plunged France into the Depression
• Conservative Government Fails
– Radical Government replaces them
• Stavisky Scandal almost leads to civil war
– New Coalition of Middle Class and Working Class
unite to combat Fascism
• The Popular Front (Leon Blum)
– Raised Taxes, Cut Spending, Recognized Unions,
– 40 hour work week, raised wages
Germany- the Nazis
• Depression and Political Deadlock
– Weimar Republic hit hard by the Depression
• Coalition government could not decide on economic reforms
• Hindenburg appointed Heinrich Bruning as chancellor
– Governed under emergency decrees
– German unemployment rose
– Situation benefited the extreme political parties
• Nazis gained seats in Reichstag
Nazi Economic Policy
• Destroyed unions
– Strikes became illegal
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Limited private exercise of capital
Allowed private property and capitalism
Government controlled prices and investment
Created government projects to stimulate the
economy
– Built the Autobahn
– Government farms
– Prepared the military for war
Italy: Fascist Economics
• Began in 1920’s “Battle of Wheat”
• Corporatism
– Industrial Syndicates
– Planned Economy
– Government Arbitrators
• Corporations
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Unified common industries
22 Corporations
Corruption, increased oversight
Shift to War Economy 1935
Stalin’s Soviet Union
• Central Economic Planning
• Rapid industrialization
– Five Year Plans
– Gosplan (State Planning Commission)
• Massive investment in infrastructure
• Supported by widespread propaganda
• Collectivization, assault on the Kulaks
– Cost- Millions of innocent lives
Urban Struggles and Growth
• Peasant flight to the cities
– 12 Million migrate to the cities
– Housing Shortages
– Lack of consumer products
• The Great Purge
– The Soviet Holocaust
– Stalin’s Paranoia, targets all enemies
• Achieves rapid economic and industrial growth
Post WWII Era
Marshall Plan
• Economic Aid plan to rebuild Western Europe
– Created by George C Marshall
– Only requirement to work together for mutual
benefit
• Invited the USSR and other communist governments
• Finland, Czechoslovakia- willing to join
• Poland, Hungary interested- USSR forbid them
– 1949 Soviets and Eastern Europe
• Form Council of Mutual Assistance (COMECON)- integrate
economies
Stalin – Post WWII
• 1947- International meeting of all communist parties
– Formed the Communist Information Bureau (Cominform)
• Dedicated to spreading Communism world wide
• Officially ended cooperation with noncommunist parties
• February 1948- Stalin expelled Democratic members of
Hungary’s government
– Included Jan Masaryk- son of Czech founder
– President Benes forced to resign
– Hungary completely controlled by Soviets
• Required other E. Europe countries to follow
– Caused by Josip Tito freeing Yugoslavia from the Soviets
– Stalin wanted to stop other countries from following
Post-War Germany
• West and Soviets differed on postwar
treatment and economic policy
– Russia dismantled German industry in the East
– Americans rebuilt industry in the West
• Didn’t want to economically support Germany
• No rebuild- chaos and communism
– Soviets feared a strong Germany
Khrushchev Domestic Policies
• 1953-64- retreat from Stalinism
– Wanted to reform Soviet system
– Intellectuals freer
• Solzhenitsyn (One Day in the Life of Ivan Denisovich)
– Reformed economy
• More consumer goods,
• Removed restrictions on agriculture
– Reforms caused grain shortage
• 1956- Secret Speech
– Attacked policies of Stalin and the crimes of purges
– Started to remove Stalinist officials
– Seen by E.European leaders as easing of restrictions
Cold War: Brezhnev and Gorbachev
• Supreme Soviet from 1964-1982
• The Brezhnev Doctrine: USSR will
intervene in all communist countries in
the name of preserving the revolution
• Brezhnev Stagnation: Economic
Recession, Ignored basic economic
problems
Gorbachev
• Communist economic problems plague the eastern
bloc (Poland)
• Gorbachev and Perestroika
– Attempt at Economic Revival
– Glasnost: A Communist Debate
– Easing of political and economic restrictions
1989 New Constitution and Elections
– Gorbachev’s economic policies fail but he opens the door
for future democracy.
– Brandenburg Gate Speech
The Fall of the USSR
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Gorbachev recognizes the need for reform
Eliminates the Single Party State
Republics wage a “War of Laws”
Gorbachev allies with the conservatives, Bad
Move!
August 1991 the Conservatives attempt a coup
and place Gorbachev under house arrest.
The People Speak: the largest protest in the
History of Russia, The Communist Party
disintegrates
Yeltsin gains favor
December 1991, under a revised constitution
the Soviet Union ceases to exist: The Cold War
is Over!
Yeltsin and Putin
• Yeltsin- First president of Russia
– Opposed by Parliament
• 1993 -He suspended it
– Parliament tried to lead uprisings
– Military supported Yeltsin
• Oct 4 1993- Yeltsin ordered tanks to stop rioters- established his
authority
– West supported him
• December 1993- New constitution
• 1994- War with Islamic province of Chechnya
• 1990s – Process of dismantling Soviet economy and
government
– Created small groups of very rich individuals
• 1998- Yeltsin replaced by Vladimir Putin
– Renewed war on Chechnya
– Supported US in Afghanistan in 2001
– Has sought to regain central control over independent states
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Welfare States
• William B. Beveridge – British thinker who
believed if medical care, old-age pensions, and
other benefits were available to all, there would
not have to be a redistribution of income
• Britain becomes first welfare state under Labour
Party’s Clement Attlee, who creates the National
Health Service after World War II
• France and Germany do not follow suit until
the 1970’s
Resistance to the Welfare State
• Three economic states in Europe since World War II:
– Reconstruction from 1945–1950
– 1950s to late 1970s – period of economic growth
– Inflation in the late 1970s to a period of low growth and high
unemployment from the 1990s to the present
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Margaret Thatcher – British prime minister wanted to make British
economy more efficient and competitive
Privatization of industries
Cutting the power of trade unions
Welfare assistance in Europe to help the sick, the injured, the
unemployed, and the elderly, meet resistance for higher costs and
taxes
Even left-of-center political parties in Europe have curbed
welfare benefits
Communism in Western Europe
• Disillusionment with communism – (four events)
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Stalin’s purges
The Spanish Civil War
Nazi-Soviet Pact of 1939
Soviet invasion of Hungary in 1956
A Consumer Society
• Western Europe has enjoyed a vast
expansion of consumer goods and services
• People in Eastern Europe, seeing the
success of the West, became discontented
and helped bring down communism
European Unification
• European Economic Community – members known as the
Common Market (1957) out of the European Coal and
Steel Community
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Goals
Elimination of tariffs,
Free flow of capital and labor,
Similar wages and benefits for workers of all countries
• Original six members – (France, West Germany, Italy,
Belgium, Netherlands, and Luxembourg)
• 1973 – Great Britain (despite protest from France), Ireland
and Denmark become members
• 1982 – Spain, Portugal and Greece apply to join
• Norway and Sweden refuse
• European Union – 1993 – Treaty of Maastricht
turns the EEC into the European Union with a
common currency for twelve of the member
nations – the Euro
– Membership in union rises to twenty-five countries in
2004
– Many former Soviet bloc countries need economic aid
from the Union
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Discord in the Union
• Proposed European Constitution of 2004 involved a bill of rights
and complex economic and political agreements between nations,
transferring considerable power from individual nations to a central
power
• France and the Netherlands defeat the treaty, while Britain postpones
voting on it
• Several factors contribute to the Treaty’s defeat:
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Gap between European elite and voting public
Stagnant economies
Small European nations felt ignored by Britain and France
Many nations believed the Euro put them at an economic disadvantage
Reluctance to cede national sovereignty and authority to a bureaucracy
The controversy over possibly admitting Turkey a poor, mainly Muslim
state to the Union
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Saddle River, NJ 07458. All rights reserved.
New Financial Crisis
• Key Events of 2008:
– Russian invasion of Georgia
– Worldwide financial crisis
Copyright © 2010 Pearson Education, Inc., Upper
Saddle River, NJ 07458. All rights reserved.