The Great Depression and the Current Economic Crisis

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The validity of the old saying “history repeats itself” can be best illustrated when we compare the causes of American Great Depression in thirties with the current economic crisis. In his article “Main Causes of the Great Depression”, Paul Alexander Gusmorino provides us with insight on variety of reasons as to why America’s economy had sustained such a heavy blow in 1929; however, the most important of them appears to be the fact that, by beginning of thirties, citizens’ buying power became deprived of its objective properties: “Between 1925 and 1929 the total amount of outstanding installment credit more than doubled from $1.38 billion to around $3 billion. Installment credit allowed one to “telescope the future into the present”… This strategy created artificial demand for products which people could not ordinarily afford” (Gusmorino 1996). According to the author, such situation became possible as the logical consequence of nation’s wealth is unequally distributed among Americans, which in its turn, came as the result of American few rich moneybags indulging in speculations on financial markets, at the expense of undermining America’s national integrity: “Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920’s, and the extensive stock market speculation that took place during the latter part that same decade” (Gusmorino 1996). In other words, it is exactly people’s irrational greed, which created preconditions for the American economy to experience rapid decline, during the course of thirties. The true causes of today’s global economic crisis appear to be essentially identical, although particularities of modern crisis relate to the fact that we live in post-industrial world. It is estimated that only 5% of total amount of money in the world, reflects the actual value of physical assets – the rest is nothing but paper, which simply cannot be redeemed. During the course of eighties and nineties, such transnational banking corporations as Citigroup, Merrill Lynch and Lehman Brothers, were generating milliards of dollars in profits out of the thin air annually, despite the fact that the actual value of these companies’ physical assets only amounted to the worth of bulletproof safes and office furniture. In its turn, this simply reflected the fact that, by the beginning of new millennium, the process of generating commercial profit had become “thing in itself” – something that had nothing to do with the process of manufacturing. In the last thirty years, it is namely banking which became the most lucrative economic activity. This explains why the number of banks in the world had doubled, within a matter of these thirty years. The rapid progress of informational technologies allowed banks to significantly increase the commercial effectiveness of their operations. Nowadays, the financial transactions between banks do not even involve handling cash – banks literally exchange nothingness (in banks’ computer systems, money are designated as sequence of ones and zeros), while generating ridiculously high incomes, unrelated to manufacturing. Whereas, originally, the index of Dow Jones used to represent market’s standing of America’s largest 12 industrial corporations – nowadays, it includes such companies as McDonald’s Corp., Walt Disney Co., American Express Co., Bank of America Corp., Citigroup, Inc., JPMorgan Chase and Co. – these companies do not produce any physical products: yet, the prices for their shares affect the Dow Jones’ overall standing more than the prices for the shares of any other companies, included into the index. Therefore, just as was the case in 1929, the investors’ financial overconfidence had played a bad trick on them. All of the sudden, they realized that the financial stability of world’s largest banking corporations (which used to be associated with the best investment prospects), is nothing but a myth. When investors tried to return their money back, banking corporations (Lehman Brothers), simply refused such their request. As the result, people’s confidence in banking system has been ruined overnight, which in its turn, had triggered a worldwide economic recession, which now is only beginning to gain a momentum. In his article “Nationalize the Banks”, Matthew Rothschild comes up with an absolutely valid suggestion that American banks simply need to be nationalized: “The banks got us into this financial mess in the first place by making unwise home loans and by speculating in unregulated credit-default swaps tied to those loans. They have taken the entire world economy down with them… Truly nationalized banks, run by the government for the people, would help out the economy as a whole” (Rothschild 2009). is namely the hook-nosed promoters of Globalization (“the brave new world”), affiliated with world’s most notorious financial speculators, such as George Soros, which should be solemnly blamed for instigating current economic crisis. While prompting people to think of Globalization as the mean of “international cooperation” and “providing help to citizens in poor countries”, they were well aware that Globalization could only benefit bankers, because it would allow them to instantly transfer huge amounts of money from one corner of the globe to another, without the regard to countries’ national laws and regulations. Yet, they proceeded to advertise Globalization, with their parasitic mentality preventing them from understanding a simple fact that, once world plunges into an economic chaos, they would also be affected by it.

As we have mentioned earlier, the unequal distribution of wealth among Americans in thirties, was one of the major causes of Great Depression. At the same time, it would be wrong to suggest that if a particular country manages to equally spread its wealth among citizens, it would automatically guarantee an economic stability, within such a country. In 1991, Soviet Union had collapsed due to the fact that this country existed in the state of perpetual economic crisis, ever since seventies, even though that the principle of “equal distribution of wealth” has always been Communism’s most important ideological dogma. It is simply impossible to assure people’s absolute equality, because they are being made “unequal” from the time of their birth. As George Orwell once said in his novel “Animal Farm”: “All animals are equal, but some of them are more equal than the others”. It is in people’s nature to strive to enrich themselves. However, very often such their desire assumes grotesquely pathological subtleties, as it has been illustrated by Great Depression and by current economic crisis. As history had shown, the ideologies of both: Capitalism and Communism are based on conceptually wrong assumptions, which is why striving to achieve people’s complete equality is just as wrong as suggesting that “if people cannot help themselves – no one can”, as neo-Conservatives do. Back in thirties, the designing of America’s socio-political policies did not involve understanding people’s racially biological nature, just as it is the case nowadays. This is the reason why Great Depression had occurred in the thirties and also the reason why today’s America experiences an acute economic crisis. Rich moneybags can never be instilled with socially productive mentality, unless it is being made clear to them that their immoral pursuit of riches, at the expense of destroying their fellow citizens’ economic prosperity, will be dealt with in swift and severe manner. The reason why “sworn enemies” Capitalists and Communists were so quick to combine their efforts to destroy National-Socialist Germany, is because in thirties, this country had shown the whole world what can be accomplished, once financial speculators are being removed from position of power.

In today’s America, we have many people who simply do not know what to do with all their money – they have fresh lobsters flown to them directly on their private planes, they drink champagne that cost $10.000 – $15.000 a bottle, in the way we drink water, they light up cigars with thousand dollar bills, in time when majority of ordinary working Americans have a hard time, while trying to meet ends. In his article “Tax the Rich to Pay for the Bailout”, while describing realities of 21st century America, Bernie Sanders says: “In our country today, we have the most unequal distribution of income and wealth of any major country on earth, with the top 1 percent earning more income than the bottom 50 percent and the top 1 percent owning more wealth than the bottom 90 percent. We are living at a time when we have seen a massive transfer of wealth from the middle class to the very wealthiest people in this country” (Sanders 2008). The similar situation could be observed in America, during the course of “rolling twenties”. This is the reason why people, capable of drawing historical parallels, were predicting that it was only a matter of very short time, before New Great Depression would reduce America from the greatest country on Earth, into a battleground of everybody against everybody. And, as it now became obvious to everyone, they were right.

Although we cannot agree with David Moberg’s tendency to idealize class consciousness as “thing in itself”, apparent from reading his article “Class Consciousness Matters”, we nevertheless must admit that in it, author had made quite a few valid suggestions. And the most important of them is Moberg’s thesis as to the fact that the gap between poor and rich in America continues to widen at unprecedented rate: “While the real income of the bottom 90 percent of Americans fell from 1980 to 2002, the income of the top 0.1 percent—making $1.6 million or more—went up two and a half times in real terms before taxes” (Moberg 2005). There can be little doubt that such situation is simply intolerable. At the same time, it appears that author is being unaware of history of international Marxism, because otherwise, he would not be coming with the idea that increasing citizens’ “class consciousness” is the key to solving socio-political problems in contemporary America. As history of twentieth-century had proven, it is people’s racial affiliation, which defines their existential mode more then any other factor. Therefore, it is very naïve, on Moberg’s part, to think that people’s social standing is solemnly responsible for how they act. Also, it could not escape our attention that, even though in his article author assesses class consciousness from variety of different perspectives, he nevertheless does not bother to provide us with definition of class. What is class? Should we think of a waiter at New York’s Ritz-Carlton Hotel, who gets paid $2000-$3000 in daily tips, as being associated with significantly lower social status, as compared to an elementary school teacher, whose monthly salary is often lowered then $2500? What social class do celebrities or drug dealers belong to – bourgeoisie, intelligentsia or proletariat? Can our definition of poverty have a universal value, given the fact that in many countries, an individual who makes $5 a day is considered to be rich? Can we really think of those Hispanics, who live in the “projects”, while relying on welfare checks, as the solemn source of their income, as truly unhappy people, given the fact that they like playing merry Latino tunes 24/7, while always remaining in festive mood?

It is important to understand that, in multicultural society, the issue of class affiliation loses its acuteness, because it is namely people’s racial makeup, which corresponds to the degree of their perceptional idealism, which in its turn, lays at the core of their existential identity. Given the fact that in recent decades, the process of racial mongrelization has been affecting social realities in this country to ever-larger extent, it comes as no surprise that today, many Americans simply cannot define their own racial identity, not even to mention the social one: “For now, the realm of freedom for most Americans remains constricted to the shopping mall, where they can buy their identities” (Moberg 2005). Therefore, one does not have to be a particularly “class conscious” to understand that, in the country ruled by reason, banks must be nationalized – it is simply a common-sense notion. The fact that this is not the case in today’s America, simply reflects the fact that this country is being ruled by greed. If modern political establishment, which largely consists of greedy bankers and their neo-Liberal spokesmen, would be replaced by greedy representatives of proletariat, the situation would not change for better, no matter how strongly “class conscious” these “proletarians” might be. There are plenty of historical examples that confirm the validity of this statement. It is our genes, and not our social status, which prompts us to act in one way or another, which is why idealizing economic aspects of one’s existence, can hardly be thought of as the pathway to filling such existence with the sense of purpose. The fact that Marxists failed to realize this, caused them to sustain an utter ideological defeat. Therefore, it is quite unfortunate that, despite the fact, that Moberg’s article contains plenty of valid suggestions; it is actually misleading, in its essence.


DiNitto, Diana. and Cummins, Linda “Social Welfare: Politics and Public Policy”. 6th Edition. NY: Allyn & Bacon, 2007.

Gusmorino, Paul “Main Causes of the Great Depression”. 1996. Gusmorino.Com. Web.

Moberg, David “Class Consciousness Matters”. 2005. InTheseTimes.Com. Web.

Sanders, Bernie “Tax the Rich to Pay for the Bailout”. 2008. MR Zine. Web.

Rothschild, Matthew “Nationalize the Banks”. 2009. The Progressive. Web.

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