5-3-06 - Wrap up of the Great Depression

5-3-06 - Wrap up of the Great Depression - i If likelihood...

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Great Depression Wrap Up 5/4/06 1. Lessons from the Great Depression a. Globalization – economic interconnectedness profound changes i. Dissolution of the nation state ii. Belief that progress is irreversible iii. Highly integrated international communities dissolve under great stress 1. Breakdown in capitalism destroyed Britain iv. Exploitive, nationalist globalism v. Can the world economic system still auto destruct? 1. Many worry that unreal financial economy (Enron) that dwarfs the real, underlying economy where goods and insurances are traded 2. Casino economics – placing bets on imagined things 3. Globalism can fail because humans and their institutions cannot always handle the consequences of the interconnected world a. 19 th century: Globlism was managed by national institutions b. After WWI, belief that global institutions can solve c. After WWII, effective international organizations such as the IMF, WTO are globalization b. GD arose solely out of the problems of the first world war
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Unformatted text preview: i. If likelihood of other massive conflicts is low, then we needn’t worry ii. Schumpeter argued that capitalism while gaining in stability, creates a style of life incompatible with this goal. Capitalism creates the seeds of its own undoing c. Depression of the 1930’s shows us themes i. Capitalism comes in several viable forms 1. Germany a. Stresses the interests of the whole as seen by promotion of cartels 2. USA a. Historically organized around individualism and the free market ii. Government presumes legitimacy as a regulator 1. In absence of a workable legal infrastructure, provides rule of law iii. Capitalism relies on broadly shared societal values 1. Will collapse if they are not upheld iv. Economic change and depression incurs high social costs 1. Creation and destruction v. Business requires moral choice 1. Free market individualism has moral problems vi. What is history? 1. History is what we made of it....
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