Capitalism And The Great Depression Essay

1202 words - 5 pages

Some people take capitalism for granted and don’t even know what it is exactly. Capitalism is an economic system in which industry is privately owned; where the private owner has a surplus of goods that they sell to a third party, thus creating a market. This system has unerringly been around for centuries, and is used by multiple countries throughout the world, including the United States. It has proven to be a quiet successful system, where the people have control over their own market and reap the most benefits. Capitalism began to strive with the development of mass production, which was “the method of producing goods in large quantities at low cost per unit.”1 The economy was booming, and it appeared as if there was no end in sight. However, capitalism and mass production both have their downfalls, and both were witnessed in the 1930s in the form of the Great Depression. The Great Depression lasted over a decade and was ended with much help from World War II. It can be clearly seen that changes needed to be made the countries’ economic systems, because their systems preceding 1930 produced problems. The changes in the work industry under mass production led, and contributed, to the crisis of capitalism in the 1930s.
To begin, many people did not know the consequences of mass production, or even the boundaries of it. Mass production needs an open market with a high demand, which was clear and present in its early beginnings. However, once the market becomes saturated, overproduction begins, and companies begin to lose money. As if they hit the top of the roller coaster and now the only way to go is down. This is where mass production begins to falter, and once this occurred in the economy, no one knew what to do. Mass production could only strive if there is a high demand for something. Once that demand is met, mass production hits a wall that it cannot get passed, and ultimately fails on its own.
When this is applied to the real world, it needs to be monitored to avoid a collapse. However, it was not, and companies simply thought that there would always be someone to buy their product. They
1. Mass Production, Encyclopedia Britannica
Rangel 2
had never experienced a “saturated market” before. Once they began to see their sales figures fall, they simply thought they needed to produce more, so they did. They were trying to solve their overproduction problem with the same thing that got them there, which was mass production. An example of this would be a person digging for gold, and all they knew how to do was dig. So they would dig and dig, find the gold, and then continue digging to find more gold. In this case, there was no more gold to be had here. The bosses of the companies didn’t have any solutions for this problem, because this is all they knew. Mass production taught them one thing: more product equals more profit; and once that failed them they didn’t know what to do.
More importantly, the employees of the bosses were...

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