From War to War, the world in the years 1918-1939 - Essay Example

The U.S., being the only Western country with an economy nearly unaffected by the war was in a position to assist the war-torn nations. It supplied loans to Germany and Austria, the losing parties in the Great War. Germany and Austria, on the other hand, were obliged to pay reparations to France and Great Britain. Both Great Britain and France, for their part, had to repay the U.S. which had provided them with loans in the duration of World War I. In such situation, the U.S. financial institutions saw that investments in Europe had become no longer viable and they were prompted to pull out their funds out of the continent, leaving Germany and Austria in serious economic turmoil. The U.S too suffered greatly in the economic sphere.

For a time, its agricultural sector grew while there was virtually no competition from Europe, which has yet to recover from the war. However, when Europe’s farmers began to produce the same agricultural products as the Americans came up with, an overproduction occurred. The crisis of overproduction eventually led into the downfall of a great number of farms and agricultural enterprises. As the stock market crashed in 1929, industrial and commercial activities came to a slowdown, depriving hundreds of thousands of workers of their jobs.

The market contracted further and resulted in more joblessness. This was because “consumer demand no longer sufficed to purchase all the goods that businesses produced, and when business realized that could not sell their inventories, they responded with cutbacks in production and additional layoffs” (Bentley & Ziegler, 2011, p.986). As America suffered great setbacks in its economy, a chapter in history called the Great Depression, the countries in Europe also began to experience worse economic crisis.

Among those that bore the brunt is Germany. As the Great Depression wreaked havoc on the U.S. and other countries of Western Europe, the Soviet Union managed to pursue more seriously its own socialist economic programs. The Great Depression was pointed out as a sign that capitalism is a bankrupt system and that socialism is the only path towards economic development. Both V.I. Lenin and Josef Stalin were able to initiate programs that aimed to industrialize the Soviet Union, less concerned this time with external threats coming from the weakened West.

Lenin, however, was pragmatic as he considered certain aspects in the economy that should bear the hallmarks of capitalist system at least for a certain period of time. Through the New Economic Policy or NEP, “large industries, banks, and transportation and communications facilities remained under state control, but the government returned small-scale industries (those with fewer than twenty workers) to private ownership” (Bentley & Ziegler, 2011, p.992). When Lenin died, however, his successor Stalin, decided to hasten the construction of a purely socialist state.

He did so by overturning the NEP and initiating the collectivization of agriculture. The objective was apparently to bolster the efforts in national industrialization. However, Stalin’s policy led to the alienation of many peasants, especially the kulaks who benefitted much from the NEP. Discontent grew and many began to oppose the Stalin’s government. In response to this, Stalin used the full force of the state and the Communist Party in running after individuals who are suspected of opposing the policies