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Hist-B 391 Stephen McNamara 1

The world progressed throughout the 20th century from a state

controlled system to a market oriented economy. Starting with the rise of

socialism in the early 19th century, states controlled all aspects of the

economy. Many saw capitalist tendencies to be evil, intellectuals sought to

replace the scramble for private gain with the achievement of Collective

Welfare1. The idea was everyone was looking out for himself or herself

which did not help the country. It was a rat race filled with greed and how to

get rich off of other peoples work. Instead of allowing individuals to seek

their own financial gain, the government can take a more macro approach

and focus the nations production to help everyone not just a select few.

Socialist practices were supposed to curve this plague on society and

collectively raise the nation to prosperity.

Socialism was sold to people across the world as a way to give power to the

workers. Industry was growing along with creating many wealthy individuals.

The workers were feeling taken advantage of and exploited. Liberalism

became the predominant political shibboleth, under cover of which the

largely Jewish commercial and industrial elements pursued their own ends

and filled their pockets. The rise of Christian socialismpricked the Liberal

1Yergin, Daniel and Stanislaw, Joseph. The Birth of the British Welfare State.
Comanding Heights, 1998 ed., p. 22-25.
http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/ess_britishwelfare.html (Lin
ks to an external site.)
Hist-B 391 Stephen McNamara 2

bubble2. Countries like Austria were transitioning to a socialist government;

the poor and middle class felt disenfranchised and were looking for a

scapegoat. They found their scapegoat in capitalism (which they referred to

as liberalism) and members of the Jewish community who managed to work

with the market to accumulate wealth. Not only was socialism supposed to

bring prosperity to the nation but also it was seen as the moral approach to

governing. It was going to put an end towards greed and allow the poorest in

the nation to rise up and gain an importance they havent felt in generations.

As socialism was taking hold in European countries, most still leaned

on capitalist notions and the rise of the free market to boost the economy.

The nations of the world were straddling capitalist and socialist principles. An

example of this dualistic approach is Johnathan Keynes and his ideas

surrounding the, economics of the whole3. When capitalist markets

crashed, Keynes introduced the idea that government intervention could help

stabilize the market and could allow it to have a soft landing. Intervention

was a popular idea amonst most politictians; it helped to diminish the

outrage of the crashing market while simultaneously giving them more

2 "Liberalism In Austria." Times [London, England] 21 Nov. 1907: 5. The Times


Digital Archive. Web. 28 May 2016.

3 Nasar, Sylvia. Keynes: The Sunny Economist. The New York Times. Sept 18,
2011. http://www.nytimes.com/2011/09/18/opinion/sunday/john-maynard-keynes-
his-sunny-optimism-shaped-economists-approach-to-depression.html?_r=2&hp (Link
s to an external site.)
Hist-B 391 Stephen McNamara 3

power and influence. This idea where government intervened or controlled

the market had socialist principles, that were used in capitalist economies.

Keynesian economic policies were heavily implemented in the 1930s to try

and quell the Great Depression. The United States took pride in its capitalist

system and the idea of the free market. But even the land of opportunity

looked towards these socialist principles in order to deal with a great crash in

the market. President Hoover, in a message to the congress stated, I have

instituted systematic voluntary measures of cooperation with business

institutions and with the State and municipal authorities to make certain that

fundamental business of the country shall continue as usual4. Like it or not,

socialist ideas were spreading across the world and beginning to shape ideas

on how to govern with the market. As these ideas started to spread, policies

began to change in order for politicians to show their constitutes that they

are actively working to make their lives better.

Markets began to flourish and even with the spread of socialist

principles, socialism began to weaken. Theories brought about by Keynesians

were to be put in a proverbial, break glass in case of emergency box.

Capitalist ideals were growing at a rapid rate and nations were trying to

figure out how to make the market work for them. Government greed and

banking crashes were stalling economies and hurting the working class. It

was seen as too much power being consolidated by the government. This led
4 "U.S. World Policy." Times [London, England] 4 Dec. 1929: 13. The Times Digital
Archive. Web. 28 May 2016.
Hist-B 391 Stephen McNamara 4

to the push for privatization and less government interference. Take for

example, Margret Thatcher and her platform of government. She sought to

widen ownershiplimit the role of the sate[and] reduce governments

share of the GNP5. These ideas, once implemented, allowed Brittans

economy to grow at a rapid rate while keeping the citizens invested in the

growth of the economy. Increased profits allowed for more prosperity and

globalization that began to metaphorically shrink the world.

As much of the world was moving towards a privatized economy, the USSR

was still holding on to socialist control over industry. This stringent control

over the economy created drastic conditions when quotas were not achieved

and threatened the stability of the country. The USSR was consistently under

producing enough grain to feed their people, [this] structural weakness was

endemic to Soviet-style planned economies the heritage of Stalins

insistence that all socialist states adopt the Soviet model6. With socialist

governments, such as the USSR, struggling to meet food production, and

having to rely on the importing food from capitalist nations; deep schisms

were being formed in socialist government, and the rulers were doing what

5 Yergin, Daniel and Stanislaw, Joseph. The Birth of Privitization. Comanding


Heights, 1998 ed., p. 114-124.
http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/ess_privatization.ht
ml (Links to an external site.)

6 Peter, Van Ness. 1980. "Does Market Socialism have a Future?" New York Times
(1923-Current File), Nov 02, 1. http://library2.iusb.edu:2443/login?
url=http://search.proquest.com/docview/121406097?accountid=11653
Hist-B 391 Stephen McNamara 5

they could to keep it from falling apart. The markets showed no signs of

slowing down and socialism was being left in its wake.

With the aforementioned being the path the West took to reach the

capitalist markets that are formed today, the East installed much different

policies that brought prosperity; while still allowing the free market to work

for them. The East had an interesting balance between government control

and letting companies compete through the free market. This was done by

creating competition to work for the governments interest. Exporting

became a focal point of government business relations. Firms therefore

sough to export not just to get the various export incentives but also build up

credit in their future dealings with the government. In, this sense, there was

a government-created export culture7. This completion allowed for a

dualistic approach where companies competed feely in the free-market while

allowing the government to enact incentives to drive this competition. While

the government is acting upon business, it isnt impeding growth and

completion. This allows the market to still drive the economy, and instead of

regulating, the government is pouring gasoline on the fire. This type of ruling

is a unique convergence of government intervention and free market

competition that allowed Eastern nations to grow a competing economy on

the world stage.

7 Wade, Robert. The Visable Hand: The State and East Asias Economic Growth,
Current History, 92:578 (1993:Dec.) p. 431
Hist-B 391 Stephen McNamara 6

Eastern nations also made the market work for them by limiting social

policies and growing the idea of competition. Nations such as Japan and

South Korea have both living standards and their economies growing tenfold

simply by letting the market work. Asian countries have a diverse economy

where inefficient workers can be fired at will, whereas Eastern European

countries are over industrialized and have a large government safety net

that guarantees them retirement and a lax work environment8. By trusting

the communities and not the state to take care of those who the market

leaves behind, governments in the East can perpetuate a competitive

environment without having to interfere with market. This notion combined

with the incentives given for increased growth helped bring about economic

prosperity in Asian countries.

The 20th century saw the rise, success and failure of socialism. A battle of

ideology was waged against competition, the free market and the role of

government. Socialism rose to prominence as people throughout the world

began to feel taken advantage of and left behind. As socialism grew it began

to effect policies in capitalist governments and economic theories were

slowly put in place. Even with the implementation of socialist policies

through the world, its dominance began to fade as the free market offered

both prosperity and as a way to put check the power of the government. If

8 Passell, Peter. 1995. "The Shock Therapy Route: Is it the Only True Path to
Capitalism?" New York Times (1923-Current File), Jan 19, 1.
http://library2.iusb.edu:2443/login?
url=http://search.proquest.com/docview/109438366?accountid=11653.
Hist-B 391 Stephen McNamara 7

the government intervened and hampered the growth of the market, the

populous would get angry at those politicians responsible. Socialist

governments may be dwindling but their fingerprints can still be found in

capitalist institutions today.


Hist-B 391 Stephen McNamara 8

Citation

"Liberalism In Austria." Times [London, England] 21 Nov. 1907: 5. The Times


Digital Archive. Web. 28 May 2016.

Nasar, Sylvia. Keynes: The Sunny Economist. The New York Times.
Sept 18, 2011.
http://www.nytimes.com/2011/09/18/opinion/sunday/john-maynard-
keynes-his-sunny-optimism-shaped-economists-approach-to-
depression.html?_r=2&hp (Links to an external site.)

Passell, Peter. 1995. "The Shock Therapy Route: Is it the Only True Path to
Capitalism?" New York Times (1923-Current File), Jan 19, 1.
http://library2.iusb.edu:2443/login?
url=http://search.proquest.com/docview/109438366?
accountid=11653.

Peter, Van Ness. 1980. "Does Market Socialism have a Future?" New York
Times (1923-Current File), Nov 02, 1.
http://library2.iusb.edu:2443/login?
url=http://search.proquest.com/docview/121406097?accountid=11653
"U.S. World Policy." Times [London, England] 4 Dec. 1929: 13. The Times
Digital Archive. Web. 28 May 2016.
Wade, Robert. The Visable Hand: The State and East Asias Economic Growth,
Current History, 92:578 (1993:Dec.) p. 431
Hist-B 391 Stephen McNamara 9

Yergin, Daniel and Stanislaw, Joseph. The Birth of Privitization.


Comanding Heights, 1998 ed., p. 114-124.
http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/ess_pr
ivatization.html (Links to an external site.)

Yergin, Daniel and Stanislaw, Joseph. The Birth of the British Welfare
State. Comanding Heights, 1998 ed., p. 22-25.
http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/ess_br
itishwelfare.html (Links to an external site.)