Crises In The Capitalist System
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Crises In The Capitalist System
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Crises In The Capitalist System

Crises in the World capitalist system, these were the major conflicts and problems which upset capitalist production mainly in Europe and exploitation of the colonies in Africa and Asia caused by the European imperialist powers. These crises were The First and Second World Wars and the Great Economic depression and each of them had negative impacts in Europe and Africa.
  1. First World War; Causes and Impacts on Africa
The First World War was the first fighting happened between the imperialist nations such as Germany, Italy and Austria Hungary (Tripple Alliance) against Britain, France, and Russia (Tripple Entente). This war started from July 1914 and ended in November 1918, it fought on European soil and spread to other parts of the world especially in Africa and Asia where people joined the war to support the colonial masters.
Causes of the First World War
  • Development of capitalism to the highest stage of imperialism (Monopoly capitalism) so this stage caused competition between the European powers such as Britain, France, Germany, Italy, Belgium and Portugal to scramble for colonies in order to get their demands such as raw materials, cheap labor, markets, and Areas for investment.
  • Formation of alliances, this was the development of alliances that were formed by the European nations in order to defend their members militarily once they were attacked by another power. These alliances were Tripple Alliances which was formed by Germany under Bismarck with Austria-Hungary in 1879 and Italy was added in 1882 and Tripple Entente was formed by Britain, France, and Russia in 1907.
  • German growth as a powerful industrial nation, German manufactured more than European powers including Britain which had been the workshop and manufacturer of the world. So German developed more in finance, shipping, and its population so this situation threatened other countries such as Britain and France so they had to join with others to fight and suppress the growth of German industrial developments.
Effects of First World War in Tanganyika
  • Tanganyika colony changed hands from the Germans to the British
  • Death and destruction because Tanganyika was also required to fight in the war to help their colonial masters.
  • The spread of diseases like small pox, malaria, typhoid and others and all these caused the loss of African lives.
  • Hunger and famine occurred due to the decline of production, the war caused the decline of agricultural production.
  • The war caused the intensification of colonial exploitation to cover the cost of the war i.e increasing of taxation, forced labor, and low wages.
  1. The Second World War
This was an imperialist fighting which mainly involved European powers and other parts of the world such as Japan in Asia and African colonies like Algeria, Egypt, and Tunisia in northern Africa. The war started September 1939 and ended in 1945. Groups which fought the war was the Axis forces which included Germany, Italy, Japan and Austria and The Allied/ Democratic forces included Britain, France, China, Russia, and America. The Axis powers were finally defeated and surrendered in 1945.
Causes of the Second World War
  • Harsh terms and humiliation of Versailles Treaty of 1919 on Germany, This country suffered because of the treaty, she lost her colony and was compelled to pay for war reparation to the winners of the war so she started the war so as to bring back her colonies and punish the powers as the revenge for the humiliation in the treaty signed.
  • Failure of League of Nations in defending the world peace, the organization was not able to solve the international conflicts peacefully so this gave room for fighting in 1939.
  • The presence of Fascism and Nazism in Italy and Germany, these were the ideologies that became strong in 1930’s both of these ideologies believed in the use of force against their enemies. They combined to fight the enemy nations.
Effects of Second World War on African colonies
  • Fall in the production of raw materials, during the war the colonies under British and French were at war against the axis powers. Many Africans were recruited as soldiers to fight abroad in various areas like Burma against the Japanese so there was the shortage of labor in the peasants’ areas, settlers’ farms and plantation.
  • Shortage of imported manufactured goods from Europe, colonies could not import clothes, soft drinks, and cigarettes from Europe. Many industries were destroyed in Britain, France, and Italy.
  • The war brought hardship in the lives of Africans, they were suffering from hunger because they could not engage in the production of food. They were always worried of being attacked by enemies. In Egypt Algeria and Tunisia the people suffered most because there was actual fighting in such colonies.
  • Colonial government did not have income, they continued to pay lower salaries to the Africans who were still employed in government sectors.
  • African ex-soldiers got much experience that it was possible to fight and defeat the white men so when they came back they started to lead their fellow Africans to struggle for independence in Africa.
  • Former mandate Territory such as Tanganyika, Rwanda, and Burundi under League of Nations changed their status into Trusteeship territories that had to be under UNO’s preparation for their own independence.
  1. The Great Economic Depression
This was the situation in the world history where there was an economic decline in the capitalist system which took place firstly in U.S.A and spread to Britain, Canada, Italy, France, Austria and the colonies with the exception of the Union of Soviet Socialist Republics. The Depression created problems such as unemployment among the people, low salaries for few people who remained in industries and low ability to buy manufactured goods. The G.E.D mainly happened in 1929 to 1932/33 when there were a lot of measures to solve it.
Features of Great Economic Depression (1929-1932)
  • Fall of production in the industries in USA, Britain, and others due to over production of goods which were not purchased by the consumers.
  • Low prices especially of wheat in the US and Canada which faced farmers who had stock piles of crops, they had to dump some wheat and other crops into the sea or burned them in order to create scarcity.
  • Closure and poor performance of banks in the Capitalist powers, for example, 5000 American banks closed by 1932. In 1931 the largest Austrian banks announced the great loss, so this crisis in the banks was caused by a failure of businessmen to pay back the money they had borrowed for more production in the economy.
  • Unemployment in the world. For example, 30 million people had no job by 1932.
  • Fall of World’s international trade prevailed from 1929 to 1932/33
  • The collapse of the national income of capitalist countries for example between 1929 and 1932 the USA’s national income fell from $85 billion to $37 billion.
  • Low wages, food shortages and poor social services were the common problems during the economic depression.
Causes of Great Economic Depression
  • First World War and its effects, the war had ruined the capitalist economies with the exception of US economy, after the war the capitalist nations took steps to revive their economies by constructing industries, railways, roads and establishing farms for the production of cash crops in the early 1920’s.
  • High protective tariffs by the USA on the imported goods from Europe, this became a trade barrier in the International trade. These tariffs were fixed by the US in order to protect its industries from competition with foreign goods so this led to the rise of stock piles which could not be consumed.
  • Unequal distribution of income in the capitalist world, capitalist aimed at increasing profit in the production of goods so they paid low income to the workers/ proletarians who later failed to buy the goods due to low purchasing power.
  • The fall of the stock exchange in the USA, stock exchange are the places where businessmen sell and buy shares in the companies which produce goods. Normally the companies use the shares to expand production and make profits which would be divided as dividends to the shareholders. So with this fall many businessmen were no longer buying shares and others withdrew their money from industries, banks and farms. Companies had no capital to continue with production and sales.
  • Failure of speculators in paying back for the loans borrowed from Banks, they had obtained such money with the intension of investing in industries, farming, and other business with the aim of getting profit. In 1929 they could not pay so banks had to close down due to the loss of the money which had been lent to the speculators in the economy.
Effects of G.E.D in the USA and Europe
  • People lost jobs because the trading companies and industries closed.
  • Germany was no longer able to pay the war reparation to Europe allies.
  • Caused the rise of over production in US, Britain and other powers, they were too many goods which could not be bought.
  • A financial system such as banks had no money and many closed down.
  • It led to the growth of military and dictatorial states in Europe, such states were Germany under Adolf Hitler and his NAZI party in 1933 and Italy under Benito Mussolini with fascism ideologies in 130’s
Effects of G.E.D in the African colonies (East Africa)
  • Drastic fall in the prices of raw materials in the colonies, capitalist could not demand raw materials as they did before the depression.
  • Fall of worker’s wages in the colonies, colonial governments had low income. They reduced the number of wages. For example, in Kenya, the wages fell from 36 to 10 in 1930’s
  • The colonial government reduced the size of armies in order to minimize government expenditure so unemployment happened in the colonies.
  • Africans continued to get the poorer education and health services due to the reduction of government expenditures.

11-02-2017, 12:48 PM
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