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24 October, 17:17

Do you think the causes of this Depression could in any way be linked to the conservative trickle lown and laissez-faire policies of the 1920's? Why or why not?

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  1. 24 October, 17:30
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    Definitely not.

    The Great Depression of the 1930s had its roots in the overproduction that took place in the American economy in the 1920s. The American economy was buzzing because during the first war the US was the largest supplier of food and manufactures to Europe and this drastically postwar. The American domestic market, although large and heated, was not enough to absorb the entire production of capitalism.

    The companies produced in large quantities because they had inconsequential credits from the banks. All of this culminated in the crash of the NY Stock Exchange in 1929, the beginning of the Great Depression.

    Conservative policies and laizze faire induce regulated capitalism, where the state acts as regulator of the economic environment in order to avoid this kind of economic catastrophe.

    In the case of the Depression, what happened was the opposite. The government stimulated overproduction and did not have efficient regulatory instruments to prevent the unbridled expansion of bank credit.
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