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History of Global Economics - Jeffry A. Frieden
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International Economic Integration
http://en.wikipedia.org/wiki/Economic_integration This time span saw the opening of a free global market of goods, capital, and labour. This was held together by the use of the Gold Standard. Time of Specialization. Remade economics and often deyroyed traditional way of life. Inventions such as the Steam Engine, Train, and Refrigeration The fruits of growth were not distributed equally. Grew at its most rapid rate in recorded history. The Gold Standard was central to this growth -
Rise of Labour Unions
Became a prominant part of the political and economic landscape -
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The Shift of Working Population
Before WWI about 1/3 of the working population were farmers. After WWII this proportion was below 1/6 and falling fast. New innovations in machinery increased farming production and at the same time reduced the needs for farm labour -
The Automobile Bcomes Popular
1905: 160000 cars wolrdwide 50% in the USA -
Assembly Line
Henry Ford's Assembly Line The Assembly Line - designed by Henry Ford - would launch a new way of industrial production that would change the industry the whole world over by 1929 1000 workers were turning out 400 cars each week vs. 200 workers producing 10 cars per week in 1909 -
Unemployment Compensastion
Many Euopean towns and regions had unemployemnt compensation programs - although spotty -
Automobiles Spread even further
1913: 1.7 Million Cars worldwide 3/4 in USA -
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Global Economic Collapse
The world indured economic, political, and social collapse -
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US Shifts From Debtor to Lender
USA becomes worlds largest lender -
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Rise of the Corporations
Activities that had previously been carried out separately was now brought together in one enterprise - research, design, production, ditribution, advertising. On the eve of WWII all the major industrial economies were dominated by very large, diversified, and integrated corporations -
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Germany faces massive inflation
In an attempt to pay for damages mostly to France - Germany faces hyperinflation - this wiped out life savings and purchasing powers of millions. Reparations -
Europe had essentially recovered
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Interwar Economic Collapse
The Established Order Collapses
• It was enormous
• The economies of the industrial world dissolved for the entire five years
• Deflation did not recover the economy as it did before 1914 • US Stock market collapsed is response to the collapse in Argentina, Australia, Brazil, and Canada as they went off gold
• output dropped by 1/5
• unemployment went above 1/4 of the labour force
• American money to the world dried as investments in Europe and Asia lost their appeal -
The Roaring 20's
The Gold Standard appeared to be back in place and world trade was 42% higher than in 1913 in 1929 -
Stock Market Crash - Black Tuesday
http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 Starting point of the Great Depression. Lasted througout most of the 30's and into the 40's
The Depression destroyed the established order.
• Germany, Itlaly, and their fascist brethen rejected Global integration. - Autarky, state intervention, antilabor repression. -
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The Great Depression
http://en.wikipedia.org/wiki/Great_Depression Oringinated in the US with the stock market crash in 1929 and lasted world wide into the late 30's and into the early 40's in some places. Brought Left governments to power in most of the European democracies.
New extremely Right governments arose under the likes of Musslolini in Italy and refined by the Nazis in Germany - support came from the small businesses and farmers • The gold standard set the stage for the depression, by its fragility -
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Air Travel
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The World Economy is DEAD
• an atmospher os desperaton, political polarization, and mutual recrimination.
• Keynes was proven right, to go off gold.
• After Roosevelt took the dollar off Gold - recovery gradually began to take place.
• The classical world economy had failed -
Building a Social Democracy
Social Democracy
Sweden and the USA began building Social Democracy
• attempted to reduse effect and frequency of cyclical downturns in general, to maintaqin full employement
• Governement spending to reduce unemployment
• Social insurance in Sweden
• Social Democrats were now allied with both traditionally antagonist farmers and at peace with bi business. Social Democracy had arrived in Sweden.
• The US looked a little different -
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The Rise of Fascism and Autarky
The Fascists had promised to fix the economic problems
Countries included:
• Italy, Spain, Albainia, Portugal, Poland, Lithuania, Yugoslavia, Romainia, Australia, Germany, Latvia, Estonia, Bulgaria, Greece
• The Depression destroyed the established order.
• Germany, Itlaly, and their fascist brethen rejected Global integration. - Autarky, state intervention, antilabor repression. -
Farmers come on board with Social Democracy in Sweden
•Through tariffs and price support of farmer products they ensured support for policies from farmers.
Social democrats were now allied with both traditionally atgaonistic farmers, and at peace with big business. • Social Democracy had arrived in Sweden. -
Turn To Autarky (Self-sufficiency)
• Autarky was a response to the failed classical economy by most debtor nations - this was in fascist form or nationalist
• Global investors and traders imposed the gold.
• The autarkies turned away from international competition and toward the use of national resources to meet the national demands - this led to a cascade of measures to reinforce economic nationalism from Japan to Portugal and from Brazil to Germany.
• National production for National use
• suspension on foreign debts -
Autarky - Continued
Autarky moved for Industrializarion at all costs.
• Turned inward
• idustrial investments vs. agricultural and made moves against consumption
Kept money at home by inforcing strict controls on capital movement -
Social Democracy in Place
By the late 1930's Social Democracy was n place as a response to the rise of Autarky's Facism and Communism. •Keynes and Social Democracy
• 1932 - Roosevelts New Deal adapted emergency programs to regulate industrial prices, support agriculture, provide insurance, and reduce unemployemnt
• 1935 National Labor Relation Act
• Most Industrial nations followed:
Norway, Denamrk, France
• Common view is that Keynesian economic ideas triumphed
- paid vacation - 40 hour work week... -
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New York - Worlds Fair
Worlds Fair •Showed what life would be like in 1960. Many home appliances showcased. • Went bankrupt
• Germany was not present dur to WWII
Tour of the US in the 1960's
Showed an array of home appliances - Radios, Refrigerators, stoves, heaters... -
Atlantic Charter
Roosevelt and Churchill announced the Atlantic Charter stating joint War aims. UK got loans from the US in return UK eliminated all forms of discriminatory treatment in international commerce, and the reduction of trade barriers
• The British had bent to USA view
US and GB began developing ITO -to manage reduction of trade barriers.
http://usinfo.org/docs/democracy/53.htm -
International Monetary Fund
Keynes and White had established what would be a compromise between the international stability of a gold-dollar standard and the national felxibility of managed currencies. -
World War II Ends
http://en.wikipedia.org/wiki/World_War_II
•The most important element was to have the USA engaged for those who wanted economic integration.
• 3 main components: 1) freer trade 2) international monetary stability, 3) the recovery of international investment
