1929: FROM BOOM TO COMBAT DEPRESSION 
The October 24, 1929 panic broke out in the great New York Stock Exchange. 12,894,650 shares changed hands, many at bargain prices. On Thursday October 29 Wall Street began its long decline. Crack Wall Street is divided into two eras: the joyous "Jazz Age" of the twenties and thirties, the decade of depression.
Everyone knows that in October 1929 in New York shares experienced a "little local difficulty." And everyone knows that millions went hungry and misery for the next ten years, a hardness that ended with the horror of the war. What is the relationship?
The crisis is inherent in a system where production is planned and which is driven by private profit. The crisis in the form of overproduction, with workers who are idle machines stops. Every recession has its own characteristics and may have a different trigger. The crash on Wall Street may be considered as the trigger of the Great Depression, as the "credit crunch" marks the beginning of the current crisis. It is also true that panic played a role. In all capitalist crisis can apparently accidental factors play a role. Both the crisis of 1929 as now, sooner or later the crisis was coming. U.S. industrial production index rose from 127 in June 1929 to 122 in September, 117 in October, 106 in November and 99 December. Automobile production rose from 660,000 units in March 1929 to 440,000 in August, 416,000 in September, 319,999 in October 92 500 169 500 in November and December.
In other words, when Wall Street was already exploded on the way the downturn in the real economy. Galbraith, historian of the events, said: "The cause and effect of the economy pass into the bag, never the other. If the economy in 1929 had been strong the effect of the Great Crash of 1929 may have been small." The downturn in production is reflected in the world of actions, dreams and illusions. The panic on Wall Street in turn had a critical effect on the world of production and profits.
collapse was unprecedented. In the U.S., between 1929 and 1933, national income fell 30 percent and industrial production roughly in half. In 1933 more than a quarter of the workforce was unemployed. According to the League of Nations global unemployment nearly tripled between 1929 and 1932.
After the First World War gave the U.S. a dynamic world economy, and also led the world into depression. The boom was fueled by new and expanding industries, mass production of automobiles and electrical appliances, power generation and construction.
The Roaring Twenties
The boom of the "Roaring Twenties" had important similarities to the boom that ended in 2007. The boom was not accompanied by a real increase in wages for workers, but inequality and fueled profits for the rich. Between 1925 and 1929 the price of industrial stocks in the U.S. tripled. In 1926 it was clear the feverish speculative element had the boom. Florida housing bubble during the twenties clearly allows a comparison with the housing bubble that drove the recent boom. And the bubbles burst.
The speculative element was fueled by the practice of buying stock "on margin", ie put money that only a small part of the share price. While the shares rise in price seems to be a passport to prosperity. That is exactly the same as the "leverage" of the banks a couple of years, paying thirty or even fifty times what your assets are worth is what drove the housing bubble in recent years. In both cases, the practice ended in tears.
But every crisis is different, but all have common elements. The crash of 1929 had important differences with today. The First World War had encouraged export-oriented agriculture in the Americas and Australasia to feed the soldiers in Europe. On the eve of the war was over-institutionalized and misery. In the twenties living standards of two-thirds of the world's population depends critically on the price of primary commodities, mainly agricultural. The collapse of agricultural prices was a major cause of the collapse of world trade.
Another factor in the reduction of trade, which affected all countries, was the wave of protectionism and competitive devaluations that accompanied the crisis. The devaluation was in the form of detachment of the gold standard. The international payments system was completely destroyed by the Great Depression. There were also attempts to bear the brunt of the crisis on the shoulders of other countries, thus effect of impoverishing everyone.
Why was so severe the crash of 1929? The counterpart to the growth of world trade in the twenties, and their collapse in the thirties, were the financial flows between countries. In conventional economic theory poor countries to borrow money from rich nations. But in the twenties, the bankruptcy of Germany was intensified by the war reparations to be paid to the victors, Britain and France, which in turn gave the money to the rich United States to pay their war loans. These cash flows were evil and ultimately unsustainable. Broke the chain collapse of international credit further exacerbated the fall in world trade.
Similarly, in recent years the biggest debtor is the United States, who has lived at the expense of relatively poor countries like China. Martin Wolf, the guru of finance capital has repeatedly warned that these imbalances can not continue. "The spectacular collapse of the western financial system is a symptom of this great reality ... In the long term, the global economy will be balanced. If not, the world economy may crumble. As in the thirties, there is now a danger real. "
We have not seen a downward spiral of protectionism on a large scale or monetary chaos, but the tensions are there and can not be ruled out.
Most governments between 1929 and 1933 could not or did not have the capacity to intervene in the collapse of their economies, were confined to the capitalist clichés about the need to balance spending. During the past two years the capitalist governments have intervened massively to "prevent another 1929." Later discuss the effectiveness of these measures.
What caused the crash of 1929? Keynesians say that the main reason was a fall in autonomous expenditure, especially investment. It is true that private investment experienced a collapse of 90 percent between 1929 and 1933, construction fell by 85 percent and capital goods production by 75 percent. Why? The reason seems to be the most profitable opportunities provided in the twenties for the development of new industries and markets are exhausted at the end of the decade. In other words, any of the ways the boom would end. The boom and recession are regular features of capitalist development.
The monetarists like Milton Friedman blaming the fall in money supply caused by the general collapse of the banking system. In 1933, 9,000 U.S. banks closed their doors forever. The three main waves of bankruptcies banks were 1930, 1931 and 1933. Obviously these failures came too late to be the cause of the collapse, although obviously the situation worse. The financial chaos interacted with the collapse of production and even dragged the economy.
Kindelberger is right when he says: "Neither autonomous monetary theory or money spending, with or without decline in the stock market, have to do with these movements precipitous. They require an outdated theory of the instability of the credit system." (
Manias, panics and cracks ). The problem is that production under capitalism is really social. Producers around the world depend entirely each other. And just discovered this reality when the market system and the monetary system that greases the wheels fall flat. Marx explained: "
The law of gravity is reaffirmed when a house falls between our noses." Governments when the crisis came to their home countries saw as falling tax revenues and spiraling costs skyrocketed. That was the natural effect of causing the budget deficit. This deficit was denounced by economists of the time as financial profligacy. The British Labour government in a minority of the establishment came under pressure to balance the budget at all costs. So they decided to reduce unemployment and lower wages for teachers and other staff. Of course this action caused a split in the Labour parliamentary group. That was not what I needed to do the job! Ramsey MacDonald and a handful of traitors in the government went "national" to implement these measures with the support of the Tories. Subsequent elections, all followers of the financial cuts forming a bloc against the candidates of the Independent Labour Party, left the game with only 54 seats in parliament. More important was the psychological blow which accounted for the labor movement.
must never forget that this policy of cuts was a total failure and was not recovery. Thatcher repeated the same strategy in the recession in the early eighties. His intention was quite clear that the working class to bear the weight of the crisis. That is what we now have in mind the Tories under Cameron's direction for the upcoming elections. New Labour wants to keep spending, feeding the government deficit before the elections next year. But they agree with the Tories in new cuts will be needed in the future to balance the expenditure.
Roosevelt took office as president of the United States in 1933, amid the recession. It was a shrewd capitalist politician representing the Democrats. The New Deal embodied the first recognition by the bourgeois politicians of the depth of the crisis and the danger it engendered, threatening the existence of the capitalist system in general.
The New Deal Roosevelt's economic activism in many ways coincided with the rise of Keynesian economics in the thirties, as an alternative to the failed and outdated orthodoxy. Keynes in no way be seen as a representative of the labor movement, in fact said: "The class war will find me on the side of the educated bourgeoisie." Instead of balancing the budget in hard times, Keynes thought the government should spend money that included deliberately incur budget deficits if necessary, in order to keep aggregate demand high. When Roosevelt was elected put millions of unemployed to work in various public infrastructure projects and for that spending government money. In this alphabet soup of workers did not receive a full salary, but they charged some form of aid to alleviate hunger. (There was no universal system of unemployment insurance). That was a help, not a cure for unemployment. These projects never spanned more than a quarter of the unemployed.
Roosevelt also dealt with the overproduction of the only way I can make capitalism destroying productive forces. Roosevelt reached out to farmers. In 1933 they paid to harvest less than 100 million acres of cotton (a quarter of the crop that year) and killed 6 million pigs. Crazy, perpetuate poverty in the midst of plenty!
New Deal Did it work? No. As now, important sectors of the capitalist class were more concerned with reducing the governmental budget to help the unemployed. After beating his Republican opponent in the elections of 1936 with the enthusiastic support of the poor, in 1937, Roosevelt decided, under pressure from the capitalist class, reduce the deficit. Programs were eliminated Help and began to collect taxes for federal social security. As a result the federal deficit from 5.4 percent of GDP to 1.2 percent. This contraction coincided with a steep drop in economic activity (the "Roosevelt recession") and unemployment soared in 1937. Hundreds of thousands were expelled from social welfare schemes and hope of millions vanished.
U.S. In 1940 there were more than 10 million unemployed. As the Keynesian economist Paul Krugman, "
A massive public works program ... restored full employment, also known as World War II ." The other side of the war were fifty million dead. The working class capitalist exchanged a horror for another.
There is a difference between 1929 and today, and governments are intervening terrified about the political consequences that would do nothing. In the U.S., prior to the election of Roosevelt, President Hoover did absolutely nothing to alleviate poverty. Only remembered in the history of the word 'Hooverville', which describes the shanty towns created to house the unemployed and homeless in depression.
Since 2007, governments have intervened against collapse. Mainly intervened to rescue banks. This measure has taken the position Mussolini before the Great Depression, private and individual. The losses are public and social. They nationalized the banks' losses and made profits in private hands. As a result of this policy have added £ 1.5 trillion national debt and for example Britain now has a deficit exceeding 10 percent of GDP. U.S. bailout costs have reached 23.7 billion dollars, although there have been even more astronomical figures. It has borrowed this money and then you have to return it. There is a danger that this measure strangled before birth to the future recovery.
was used monetary policy to reduce rates interest to reach historically low levels, but does not seem to have much effect on the economy. Regarding fiscal policy, budget deficit policy as proposed by Keynesians not seem to be boosting aggregate demand as banks have used the ransom money to rebuild their assets. At this time we do not know if government intervention has eased the recession, but what is certain is that there is a ticket or an easy step to recovery.
A parody of Marxism and Marxists in stating that we welcome the economic downturn. That means we do not care much suffering of the masses. We only care about the effect of radicalizing their consciousness that have these hardships. We rubbed their hands and exclaim: "It's a great opportunity!"
Actually these ideas are far from sober analysis of economic processes and their effects on consciousness showed Lenin and Trotsky in his writings. Here's an example: "The problem is that the increase of the farm is not raising the fighting spirit of the proletariat. Thus, in the midst of a cyclical low, with increasing unemployment, especially after a loss occurs, increasing exploitation does not cause the radicalization of the masses but on the contrary, its demoralization, fragmentation and disintegration. We saw, for example, in British coal mines immediately after the strike of 1926. We saw it on a larger scale in Russia, when the industrial crisis of 1907 coincided with the crushing of the 1905 revolution. If in the past two years led to increased exploitation of the strike movement growth, which is evident, the bases of this process are in the short-term revival of the economy, not its decline. "(Leon Trotsky. The"
Third Period "of the errors of the Communist International . January 8, 1930).
Crisis and awareness
In general, there is no automatic link between crisis and development of consciousness. How workers think and what they make out depends on the entire preceding period of class struggle and how they have experienced. True, the crisis causes a deep questioning of the nature of the capitalist system and its manifest failure. Things can not continue as before. But may not cause immediate revolutionary action. During a period of years the crisis of 1929, which was both political and economic, led counter-revolutionary perspectives and across the globe. What happened in the class struggle in each country depended critically the direction of the working class.
Take the case of the British working class. British workers came to the Great Depression only three years after the biggest defeat ever. In 1926 the TUC called a general strike in solidarity against a concerted attempt by the ruling class to end the conditions that were the miners, reducing wages and increasing their working hours. The general strike was solid. Led revolutionary terror at the prospect that opened the leaders of the TUC gave no warranty and left alone to fight the miners. Beaten on the industrial front, workers turned to the political front and elected a Labour government in 1929. This government was powerless against the rising unemployment that exceeded billion in 1931. MacDonald and company were replaced by the Tories and Labour in the polls almost disappears.
Where they were supposed to go for British workers? Industry had suffered a defeat and political in five years. The wind pounded the ships of the working class and the deep recession undermined their negotiating position. The first years of the decade witnessed a grim parade of hungry and manifestations of local battles against cuts in unemployment benefits. It is true that, in the late thirties, some sectors of the working class had recovered enough to fight, but the new fighting was cut short by the outbreak of war.
In the U.S., during the twenties, suffered a decline in trade unionism. The only workers who were organized they were in their branch. But as we saw, one of the characteristics of the decade was the emergence of new mass production industries like car with a semi labor or unskilled. From 1929 to 1932, unemployment rose to 15 million, representing a third of the working class. Those who were still clinging to his job and suffered an atmosphere of terror in the workplace.
From a superficial standpoint workers seemed cowed. But it would be utterly wrong to see this situation as a sign of acceptance of capitalism. The workers were angry, but they were useless. When the economy began to protrude slightly from the depths of 1933 saw some workers a fighting chance.
During the decade of 1923-1932 in the U.S. were less than 10,000 strikes, involving less than 4 million workers. The gate was opened in 1934 with the great strikes in Toledo Auto-Lite, Minneapolis truckers and a general strike of the San Francisco longshoremen. These strikes were led by a new generation of leaders combative, not the older generation of union leaders inclined to old social compact and had led the union during the twenties.
strike wave '
During the decade of 1936-1945 there were 35,000 strikes. Nearly 16 million workers participated in the struggle. Correctly called "the giant leap of the labor movement," the wave of unionization took the form of industrial organization, covering all employees of a company regardless of their qualifications or work done. The radicalization also expressed in a change in political attitudes. More and more workers struggling a real alternative for the working class against the capitalist politicians.
The decade of the thirties led to the Wall Street crash of 1929 and led to political upheaval. There were revolutionary opportunities in France and Spain, led the counter black in Nazi Germany, and finally to the war. The critical determinant of all was that the outcome depended on the direction of movement of the working class. Mick Brooks
Source: THE MILITANT
