FORM FOUR HISTORY, TOPIC NO 1: CRISES IN THE CAPITALIST SYSTEM

Introduction 

Crises in the Capitalist system were the major conflicts and problems which upset capitalist production mainly in Europe. In the mid of 19^th century capitalism reached its highest stage that is monopoly capitalism, which led to high demands of raw material, markets and areas for investment, for this reasons there were the needs for expansionism which in turn resulted into capitalist crisis, which manifested in the;

·         The First World War

·         The Great Economic Depression

·         The Second World War

I. THE FIRST WORLD WAR

Meaning of the concepts

War refers to any conflict between two or more people or group of people where various weapons are used to fight against each other. It can also be defined as any armed conflict between two or more people or group of people.

First World war was the greatest capitalist/imperialist war which was fought between two military camps, Triple Entente (Britain, France, Russia) with full support from their allies i.e. USA, Japan, Rumania, Serbia, Belgium, Montenegro against Central Powers or Triple Alliance (German, Austria Hungary, Italy and Turkey) from 1914 to 1918.

Background of the First World War

The World War One had its roots in many political and economic tendencies of the big Capitalists nations. The glorious age of science, democracy and social reforms ended in one of the fatal wars that had not yet occurred in the history of the world.

Military and naval activities were likewise enormously increased. Until 1914 in particular, each continent of the great powers had not only a huge standing army but also millions of trained reserves among the civilians population.  This sensation marked the beginning of the Great War to be inevitable.

Factors that led to the occurrence of First World War

There were many direct and indirect factors which contributed to the occurrence of the First World War. Some of the remote or underlying causes of the world war one can be traced far back into the history of Europe for more than the century from about 1870.

A.     Long Term Causes of the First World War

Long-term causes are traced back in the 19^th century mainly in the development of capitalism in Europe. Some of the underlying factors (causes) of the First World War are summarized below;

1.      Economic motives of the Capitalist nations.

Since the rise and development of capitalism through various stages, Capitalists had been struggling to get four main capitalist demands i.e. raw materials, areas for investment, market and cheap labour. The struggle for these demands gave rise to various means of struggle which led to fear, suspicion, collision, conflicts and eventually the world War One.

Also due to industrial revolution competition was intensified in all capitalist nations, raw materials became the crucial need of them and market became the reason for expansionism, thus the struggle led to conflict which resulted into war.

2.      Political reasons

Political aspect of the occurrence of the First World War was;

•   Nationalism of German in 1870. After completion of unification of German, intensified her military hence posing strong challenge to other capitalist nations in Europe especially Britain. This led her capability to expand and acquire more colonies in the world which led to conflict between her and other imperialist power which were also intensified in potential areas.
•  Pan-Germanism in 1895. This was the movement of German people (Pan-Germany League) which advocated to the expansion of Germany to incorporate all Teutonic people of central Europe. The boundaries of the empire had to be extended lie Denmark, the Netherlands, Luxemburg, Switzerland, Austria, Poland as far as East Warsaw. This German expansionism brought about conflicts with other big imperialist nations and later led into the First World War.

3.      French revenge movement

This was the movement of the French men who wanted to revenge and take back the two rich provinces of Alsace and Lorraine which were annexed by German during the Franco-Prussian war of 1870-1871; the provinces were very rich in coal and iron which were very crucial minerals for industrialization. The demand of French cultivated a lot of hatred between the two nations, which resulted into conflicts eventually war.

4.      Dissatisfaction of Territorial arrangement

By the 19^th century almost all part of the world was under big capitalists powers with exception of Africa which came to be colonized at the end of 19^th century after Berlin conference. The colonialists were never satisfied with their political and territorial boundaries; hence they started eying other territories with the aim of annexing them. Example;

• British were interested in Mesopotamia, Iraq and Palestine which were the colonies of Turkey so as to secure Egypt.
•   Russia was interested in the partitioning of Turkey and Constantinople (present day Ukraine)
•  Japan was interested in expanding to China, Korea and other parts of Far East.

5.      Moroccan Crisis (Crash over Morocco) in 1904 and 1911

The first and the second Moroccan crises of 1905 and 1911 respectively intensified the old hostile relation between Germany and France that was planted by the Franco-Prussian war of 1870-1871. Germany was attempting not primarily to keep French out of Morocco nor even to reserve Morocco to itself, but to break up the new understanding between France and England. The conference of 1906 supported the French claims in Morocco. The Germans government had thus created an incident and been rebuffed. British were disturbed by German diplomatic tactics but she stood by the French all the more firmly.

6.      Formation of Entangling Military Alliances.

Military Alliance was the military union of the big capitalist nations formed for mutual benefits, like fighting together against common enemies. The military alliance formed were the Dual Alliance (1879) created between Austria Hungary and Germany but it changed to Triple Alliance after the joining of Italy to the alliance. On the other hand, France and Russia began political friendship which moved to Alliance in 1890, later on Britain join the Alliance in 1907 and came to be known as Triple Entente.

These alliances were accompanies with militarization which intensified fear and suspicion which stimulated aggression among the conflicting nations.

B.     Immediate Causes of the First World War

These were the reasons that sparked off the outbreak/occurrence of First World War in 1914. There was only one factor that triggered off the outbreak of the First World War which was;

7.      The Assassination of Ferdinand Archduke in Sarajevo the capital city of Bosnia.

On June 28, 1914, the Archduke Ferdinand was assassinated in the empire. Archduke who would soon become the emperor of Austrian throne. For this Austria Hungary accused directly the Serbia government to have fully involved itself in the murder.

General impacts of the First World War

By the end of 1918 the European communities and the surrounding land witnessed death by tens of thousands; no one could have predicted the horrifying consequences of modern weapon being used together with out-of date’s tactics. People were affected directly and some indirectly. The effects are summarized here under;

1. Destruction of the economic infrastructure i.e. banks, industries, factories and roads and railways which were badly damaged by the war. 
2.  Many people were killed, it is estimated that in one hour (60 minutes) more than 3 millions of people were killed in the 2^nd year of the war. This led to highly depopulation in Europe.
3.  Failure of the economy and inflation of many European countries currencies.
4.   Formation of dictatorship regime in Europe, i.e. NAZISM of Hitler in Germany and FASCISM of Mussolini in Italy.
5. The birth of League of nations in 1919
6. The occurrence of Great depression (economic slump), which invaded Europe and the global community at large, resulted from this great war of the 1914.
7.   Dispossession of Germany colonies because she was accused of mobilizing the war.
8. It was the initial stage of the rise USA as giant capitalist nations in the world.

Effects of First World War on Africa

As matter of fact, the world war one didn’t originated in Africa, but still Africans were badly affected by the war, just because of being a colony of big power. Such effects included;

1.   Intensification of exploitation of Africa aimed at recovery the war ruined European economies.
2. Cut down the colonial expenditure so as to reduce expenses and raise income.
3. Launching of different schemes in Africa i.e. land rehabilitation schemes and crops schemes.
4. Change of colonial master, i.e. Rwanda, Burundi and Tanganyika fall under Britain. These were formerly Germany colonies.
5.   Prices of crops were lowered so as to maximize profits.
6. Forced labour was more intensified in colonies especially in Africa.
7. Depopulation, as many soldiers who went to battle field some of them died, while some came back with new nationalist ideas.
8.  Economic stagnation
9. Famine and social miseries

Post War Settlement 

This was the period after the war, whereby the international community led by the big nations summoned a meeting to evaluate the magnitude of the war, the causal, effects and nations involved in that war and to propose strategies that could be used to restore and maintain peace and order in the world. It aimed at preventing the occurrence of another world war.

Versailles peace treaty of 1919

It was an international post world war conference held at Versailles city near Paris, France. It aimed at evaluating the war and suggests explicitly solutions to restore peace and security of the world. The conference was attended by the big four few representatives from different nations in the world.

Formation of the League of Nations

League of Nations was a multilateral diplomatic organization which was deliberately formed in 1919 to guarantee independence, security and peace to all states. It was brainchild of the US President Woodrow Wilson which was presented in the Versailles peace treaty. Its purpose was the protection of independent nations from aggression and presentation of peace. The headquarter of the League were set up in Geneva. It started its work with a membership of 42 states but by 1923 the membership had grown to 54.

II. THE GREAT ECONOMIC DEPRESSION (1929-1933)

The economic depression was the great failure of the capitalist economy or total economic slump that occurred firstly in USA and then hit the global capitalist economy. It was characterized by stagnation of the production, unemployment, low purchasing power, inflation and general social miseries to the people. The depression started in USA due to overproduction against under consumption and then spread to Europe and other parts of the capitalist world with exception of Russia.

Background of the Great Depression

The origin of the great depression was situated in the development of capitalism especially in USA and occurrence of the First World War. The First World War ended on 11^th November 1920’s and during the next ten years USA became one of the strongest economic powers in the world. The war had a great effect to America, whose economy had improved as they need for food, raw materials and manufactured goods of all kinds increased. The USA made loans of US$ 10.3 billion during the war to its allies and 90% of this money had been used to buy American goods.

Features of the Great Economic Depression

During the decade of depression a large number of people lived in poor conditions, desperately in need of more food, clothing, and shelter. Yet the resources that could produce that food, clothing, shelter and other basic needs were not utilized effectively or rather at all.

•  Closure of many enterprises in the world
• Unemployment, due to many enterprises being closed
• Lowering of goods prices, and increase of food prices, running of unprofitable trade
•  Suspension  of many banks and many banks was closed
•  Reduction of government expenditures and great inflation raised in the world

Causes of the Great Economic Depression

Many factors are regarded to have caused the great economic depression in the USA and the world at large; such factors can be seen in the following aspects;

1. The improper competition of the US capitalist production which led to overproduction visa versa under consumption.
2. The effects of the first world war, that the war destructed all economic infrastructure hence stagnation of production and reduced the purchasing power of many capitalist nations in Europe.
3.  Collapse of stock exchange i.e. London stock exchange market, Thus the world became less powerful in purchasing the products from USA due to impacts of the WWI, hence failure of the economy.
4. US depended mainly on external market, so the world became less powerful to purchase the products form US due to First World War, which caused economic stagnation.
5. Foreign trade was in decline, other countries reacted to the policies of the USA government by placing high tariffs on USA goods. Therefore business in the USA could not sell effectively abroad.
6. Industries and business began to run off buyers. They could not export abroad and they could not sell to their people in the USA who were already suffering from economic hardship. As a result business began to cut back such that only few families could afford to buy consumer goods, so very few goods needed to be produced. Industries reacted by making movement back to the workforce. This seems like a vicious circle from which it was impossible to break through.
7.  International trade tariff walls. After the First World War Europeans restructured their economies through USA particularly food were prevented from entering Europe. Due to this lack of external market the first sign of a great depression was seen in USA where they had already cultivated a lot of food crops to feed Europeans during and after the war.
8. Unequal distribution of national wealth. During the period around 1929, 5% of Americans owned 32% of national wealth. Thus prosperity of Americans depended on this 5% for buying and producing goods. T his group lost its income in the New York stock exchange due to fall in prices of shares. Due to workers who were the majority lacked the purchasing power hence lack of market which resulted to a great depression.

THE CAPITALIST ECONOMIC CYCLE

1.      BOOM STAGE (PEAK)

This is a period when the economy is at the highest level. During this period the economy has the following characteristics;

i.                    High level of investment

ii.                  Lowest level of unemployment

iii.                Income to both individuals and companies are high

iv.                Stable prices of commodities

v.                  High and effective demands

vi.                High standard of living

vii.              Social and political stability

viii.            Expansion of trade

2.      RECESSION STAGE (DOWN TURN OR CRISIS)

This is a temporary decline in economic activities and it has the following characteristics;

i.                    Decrease in investment

ii.                  Decrease in employment

iii.                Decrease in incomes

iv.                Decrease in effective demand

v.                  Decrease of commodity price

vi.                Profitless trade

3.      SLUMP STAGE (DEPRESSION)

This is the period of total decline in the economy or stagnation of the economy. It has the following characteristics;

i.                    Lowest level of investment

ii.                  Highest level of unemployment

iii.                Lowest level of income as many investment died

iv.                Lowest level of consumption as purchasing power declined

v.                  Prolonged accumulation of unsellable commodities

vi.                People losing confidence of their government

vii.              Lowest standard of living

viii.            Rising of food prices

ix.                Social and political unrest

x.                  Total closure of enterprises and investment

4.      RECOVERY STAGE (EXPANSION)

This is the period when the economy started to improve and expand follows after the Depression or recession. It has the following characteristics;

i.                    Investment start to expand

ii.                  Employment start to increase

iii.                Income increases

iv.                Prices start to rise

v.                  Effective demand increase

vi.                Standard of living starts to rise

Effects of Great Depression in the World

The Great Depression affected almost all the capitalist nations worldwide and the other small states either directly or indirectly;

1.   It led to bankrupt of the capitalists due to failure of business and the closure of enterprises
2. Social miseries e.g. Famine and shortage of food
3.   Led to the rise of dictatorship regime in Europe i.e. Nazism in Germany, Japan and Spain also Fascism in Italy.
4. The great depression led to withdraw of Us loans to the European countries
5.  It led to the collapse of League of Nations
6. It facilitated the exploitation of most African resources
7.  Brought much suffering to normal people due to famine, hunger and general social miseries.

Measures taken by Colonial Powers to Alleviate the Impacts of the Great Depression

Several measures were taken by the colonial powers to revamp the impacts of the great depression on the metropolitan economies. This includes the following;

1. The expansion and consolidations of peasant’s cooperation. For this in 1930’s the colonial states allowed generation of cooperatives by encouraging the formation and training of their leaders. This aimed at eliminating the middlemen who discouraged the producer’s prices with high prices. This move motivated peasants to increase production. The colonial state also feared that preventing peasant cooperative would increase peasant agitation.
2. The initiation of growing more cash crops in the colonies. Colonialists introduced steps which were to be undertaken in order to transform the “Native” from scattered settlement and practicing of shifting cultivation of large areas under cash crops.  Example, In Tanganyika the 1930’s and 1940’s land utilization schemes included the Uluguru land usage scheme, Mlalo rehabilitation scheme e.t.c.
3. The colonial states allowed peasants to grow the prohibited crops in settler colonies. In Kenya for example peasants were allowed to grow coffee.
4. African educational curriculum was reviewed to give more emphasis to hand crafts and agricultural education, e.g. Nyakato in Tanganyika was transformed from secondary school into agricultural school in 1930 a response to service the Metropolitan economies.
5. Intensification of labour recruitment particularly migrant labour was intensified to meet extra labour free demand in the newly opened up plantation and mining activities.
6. The institutionalization of imperial preferential system. This helped the Metropolitan powers to cling more and more on their colonies was encouraged.
7. Increased taxation. Taxes of various kinds were introduced after depression in order to expand sources of income for the colonial state. These taxes involved livestock, hut and poll tax etc.

III. THE SECOND WORLD WAR (1939-1945)

The Second World War was the second imperialist war fought between the axis powers, which comprised of German, Italy, Japan and Austria against the Allies or democratic forces which consisted of Britain, USA, Russia, France, Belgium and China. The war fought from 1939 to 1945. The Second World War was the complex, widespread and deadly war in history, because it involved a wide range of advanced scientific weapons, rockets, parachute, troops, sonar and suicide aeroplanes.

Background of Second World War

The WWII can be traced back by the development of dictatorship regime in Europe i.e Fascism and Nazism in Italy and German respectively. Nazism under Adolph Hitler, who wanted to unite all German-speaking people, dominates the whole Europe and the world at large. In order to implement his mission he involved himself in armament which was against Versailles peace treaty also he withdrew Germany from League of Nations and disarmament conference in 1934. This marked increasing hostility, suspicion and fear among the European powers.

Example of deadly weapons used during Second World War

Causes of the Second World War

There are number of factors that can be used to explain the occurrence of the great World War two in 1939. Those factors were;

1.      Economic rivalry of the imperialist nations.

Imperialist nation struggled the raw materials, markets and colonies for the growing population. German was frustrated by the distribution of her territories after the First World War. It was these common economic factors that brought Germany, Italy and Japan together and embark upon the aggression which ultimately led to global war in 1939.

2.      Weakness of Versailles Treaty

Under this treaty Germany lost all her colonies including Tanganyika which was given to Britain. Worse enough the important raw materials producing areas of Germany were awarded to Poland and France for exploitation. Thus without areas for exploitation Germany capitalism would collapse. Versailles Treaty therefore failed to understand that at the highest stage of capitalist countries engaged themselves in expansionism so as to get areas for raw materials, markets, cheap labour and areas for investment. There was therefore a need for Germany to demand for the lost colonies through the war, hence the outbreak of the Second World War.

3.      Failure of the League of Nations.

The League of Nations had failed to maintain the World peace as its primary objective. The League failed to stop aggressions made by fascist states, for example it failed to prevent the Italian conquest of Ethiopia in 1935 and Japanese conquest of Manchuria also failed to stop German rearmament policy which made her violate world peace. All these situations cemented the conditions for the outbreak of Second World War.

4.      The failure of the disarmament efforts.

The League of Nations failed to achieve the disarmament policy of the peace settlement 1919. The allied powers pledged themselves to apply the same measure to them.  The refusal of the Allied power to disarm gave Hitler the opportunity to arouse the national sentiment of his country by asserting that rearmament was the only way back to power.

5.      Hitler's aggressive policies

In the 1930's Hitler began his scheme of defying Versailles peace treaty terms one by one. Hitler withdrew Germany from the League of Nations in 1933. Also he denounced the disarmament program and started rearmament and militarization. Finally with military superiority he began his campaign to create close development scheme by annexing Austria Hungary in 1938. In September 3rd 1939 he occupied Czechoslovakia and Poland a phenomena which led to immediate outbreak of the Second World War.

6.      Spanish civil war of 1939

The Second World War was also partly attributed by the Spanish civil war in which both Italy under Benito Mussolini and Germany under Adolph Hitler intervened by sending troops to assist General Franco who wanted to take power from Republicans while Russia sided with the Republicans. The war helped the fascist to test their new war equipment’s like air crafts and tankers and finally form an alliance called Rome Berlin axis between Germany and Italy in 1936. It also helped them to test hostility towards communist states especially USSR which was siding with Republicans.

7.      Appeasement policy

This was the policy adopted by France and Britain towards Germany. The two countries gave in to Hitler's demands instead of opposing him. So, while Hitler’s invaded Poland in 1939, France and Britain found it difficult to allow Germany to annex Poland. Thus on 3rd September 1939, France and Britain declared war to Germany.

8.      Effects of Great Economic Depression

The effects of the Great Economic Depression also contributed to the outbreak of WWII as during the depression, Japan, German and Italy considered they economically handicapped in trying to compete with other nations for markets, raw materials and colonies. When the economic problems increased Germany for example, could not pay for the war damages, also Britain and France could not pay the war debts to USA which caused mistrust and aggression among themselves.

Effects of the Second World War in the World.

The Second World War left many impacts on the global scale. These were social, economic and political effects. Some of these effects were;

1. Collapse of European Capitalism. Where by various sectors of their economy badly affected. eg. Industries, Agriculture, commerce, they were in deep debts.
2.  Emergence of USA dominance. After the Second World War the USA emerged as the leading imperialist power since her economy was ever not badly affected by the war.
3. Formation of United Nation Organization (UNO). It was formed so as to maintain peace and security in the World it was formed on 24th October 1945 to replace League of Nations.
4. Formation of Multilateral Financial Institution such as the World Bank and International Monetary Fund (IFM).
5.  Massive killing of people from soldiers to Civilians. The killings were more intensified than it was in the First World War. Example. German 3.25 million, USSR 3 million, Japan 1.5 million etc.
6. Devastation and Massive destruction of Economic Infrastructure, eg. Industries, enterprises, firms, banks, roads, markets, warehousing all these were badly destructed something which caused the collapse of European economy.
7.  Influx and spread of Refugees in various parts in the World, about 21 million people were displaced from their homes.
8. 8 Division of the World into two main Camps, i.e Capitalist competition under USA and socialist camps under USSR.
9. Spread and Strengthening of Socialism (communism) in the world because ideology seemed to be more acceptable due to constant capitalist contradictions, socialism spread to the whole world of Eastern Europe.

Destruction of buildings in Hiroshima after Atomic bombing

Effects of the Second World War to Africa.

During the Second World War Africa was part and parcel of European metropolis through colonialism. Thus an crisis in European capitalism would affect Africa, thus the effects of the WWII to Africa include;

1.      Intensification of exploitation in African colonies in orders to recover the destroyed European economies and occurred through intensification of development schemes such as terracing in highland, destocking, etc.

2.      Intensification of African Nationalism. After the Second World War almost all African nations were characterized by mass nationalism due to intensification of exploitation through heavy taxation, low wages, low prices of cash crops etc.

3.      Formation of UNO and Trusteeship council. After the formation of UNO in 1945 all mandate territories which were under the League on Nations, were transformed to trusteeship colonies to be ensured of granted independence on behalf of the United Nations.

4.      Increase in the number of settlers,

5.      Establishment of import substitution industries. Industries were established in the colonies to produce goods which were formally imported.