Web Questions for Chapter 6 of Fulcher’s CAPITALISM

Below please find some questions on the portion of Chapter 6 on the Great Depression from Capitalism by James Fulcher  that we read. These were written by your classmate, Alex Ashurov. Please answer one of these with a response of a paragraph or more.

1) According to Fulcher, the 1930’s demonstrated the capitalist world economy’s vulnerability to crisis. What does he say are the main sources of said vulnerability?

2) Fulcher states that there was a period of steady growth lasting from the middle of the 19th century to the First World War. What problems arose in the 1920s that pointed to a slowing of this growth? In retrospect, what were some of the major signs of the oncoming depression?

3) When the Great Depression started, domestic production within countries faced major crises. What were the actions that governments took regarding foreign competition? What did the U.S. government do? How did these measures affect the world as a whole?

4 Comments on “Web Questions for Chapter 6 of Fulcher’s CAPITALISM”

  1. daniel chitrik says:

    3) During the great depression the government placed a tariff on many foreign goods. It was called the Smoot–Hawley Tariff, otherwise known as the Tariff Act of 1930.It placed an unprecedented tax on many classes of imported goods, that were flowing into the U.S.. Although there was much opposition against it from many politicians, and president Hoover nearly called it off; nevertheless in the end it was passed.

    It appears that it had a detrimental affect on the world. Many of the worlds greatest leaders threatened to boycott U.S. products. Some even imposed tariffs on U.S. exports. Most economists agree that the Tariff Act of 1930 Poisoned global trade, and some will even claim that the act augmented the depressing situation. Over 1000 economists at that time petitioned Hoover not to sign the act.

    Although are lessons to learned from the Tariff Act of 1930, I think politicians today tend to ignore this, as they tend to implement ridiculous ideas although they know that they are absurd.

  2. Gulnaz Aglyamova says:

    1) There are three main sources of vulnerability to crisis. First of all, Fulcher argues that huge level of production has to be constantly supported by consumers. And if the consumption will decrease, the industry will lose and will cut their workers, who are also the consumers, so the consumption will decrease again, which will get down the whole system and crisis would appear.
    The second source is the dependence of the global economy from one another through dividing the whole world on two main systems: industrial societies and producers of food and raw materials for these industries. So, if the demand for industrial products would fall, on another side of the world the market would fall to, and vice versa.
    The third source is desire of every country to protect the interests of their own nation, so because of this “international competition” and the lack of previously dominating Britain, which respected and controlled free trade, there is no longer stable economic growth.

  3. Levi McClellan says:

    1) 1) Fulcher attributes three main causes of the great depression and that these three causes are the sources of the vulnerability of a capitalist economy. The first source of vulnerability is overproduction. In a capitalist economy companies produce goods in hopes that they will be bought. Because of the way business is structured in a capitalist economy, the higher the production, the lower the cost of production. This causes a chain reaction of production beyond the level of consumer demand, which leads to surpluses and then to a downward shift in price level. To save money labor is downsized, unemployment rises, people can’t buy goods and demand drops more, price drops more and so on. The second cause and source is the “international division of labor” as Fulcher calls it. If demand or production of goods in an industrial country, such as the U.S., drops, the countries that export raw materials would feel a drop in demand, and therefore production, as well. Because countries are globally connection through this division of labor, when one country suffers, the others suffer too. The third source deals with free-trade and national protection. With some countries, mainly already economically sound countries such as Great Britain, adopting free-trade policies they opened a larger market for their goods. This is good but not for countries starting to industrialize. Countries that are building industry want to protect themselves by not adopting free-trade in order to generate money to their growing economy. This causes competition internationally and more “protectionist” measures for countries. This competition between countries allows for an unstable market because it no longer is controlled by one already well established economy.

  4. Katrina says:

    Question 1

    Although it is generally understood and accepted that crisis is a natural part of the capitalist cycle, the 1930s experienced a crisis so deep that it almost collapsed the capitalist economy. The conditions following World War I left both industrialized and non-industrialized economies especially vulnerable to crisis. According the Fulcher, there were three main sources of this vulnerability. The first was a problem of overproduction and underconsumption. Industralization led not only to increased production of manufactures goods, but also to the production of primary products such as food. This resulted in an imbalance: the level of demand did not increase with the level of supply. This was also a symptom of underconsumption caused by masses of underpaid workers. Another cause was the relatively new structure of global economic integration. In this system, there was an international division of labor, where industrialized nations produced manufactured goods, and non-industrialized nations provided them with raw materials, as well as a consumer market. Falling demand in industrial countries meant lower sales, prices, and incomes for primary producers. Lower incomes also meant lower overseas demand for industrial goods. The third problem was the growing need for a balance between international trade and national protection. Increased international competition called for increased national protection, and once one nation implemented measures, others were sure to retaliate, establishing barriers to trade.

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