Page 110 - Berkshire Encyclopedia Of World History Vol I - Abraham to Coal

tfw-50 berkshire encyclopedia of world history

History gets thicker as it approaches recent
times. • A. J. P. Taylor (1906–1990)

haunted producers during the nineteenth century when,
as productivity rose, they had greater difficulty marketing
what they produced. From at least the 1870s people had
realized that capitalist economies are prone to periods of
boom and bust as productivity outstrips market demand.
The business cycles of capitalist economies were the mod-
ern equivalents of the agrarian era’s Malthusian cycles of
growth and decline, but, in a striking contrast, the busi-
ness cycle was driven by overproduction,whereas Malthu-
sian cycles had been driven largely by underproduction.
During the early twentieth century people realized that
raising demand might be a more promising way of ensur-
ing long-term growth than seeking protected markets.
However, for demand to rise, governments and em-
ployers had to ensure that consumers had sufficient cash
in their pockets to purchase goods and services. During
the depression of the 1930s economists such as John
Maynard Keynes (1883–1946) argued that governments
could help revive capitalist economies not by cutting
wages further, but rather by boosting consumption
through devices such as the provision of unemployment
payments. However, governments were already experi-
menting with such devices. In the United States the “New
Deal” of the 1930s pumped large amounts of money into
the economy through government programs mostly
designed to boost spending by creating employment
through the building of new infrastructure such as roads
and dams.
For capitalist governments mass consumption offered
another advantage that undercut some of the anticapi-
talist arguments of Marxism and its offshoots. During the This line drawing by the poet ee cummings
twentieth century people realized that populations with shows the austerity typical of so-called
access to increasing material wealth were unlikely to modern art.
turn into the sort of revolutionary proletariat that the Ger-
man political philosopher Karl Marx had envisaged as
the gravediggers of capitalism. Mass consumption was 1955) and quantum mechanics, developed by such sci-
the capitalist antidote to revolution. entists as Niels Bohr (1885–1962), Erwin Schrodinger
(1887–1961), Werner Heisenberg (1901–1976), and
Crisis and Innovation Max Born (1882–1970), challenged earlier mechanistic
In many fields the crisis period of 1914–1945 was also models of the universe, while the Austrian neurologist
a period of cultural revolution. The theory of relativity Sigmund Freud (1856–1939), by showing the impor-
advanced by the U.S. physicist Albert Einstein (1879– tance of unconscious psychological drives, challenged