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International Politics Week 7

by: Jaimee Kidd

International Politics Week 7 PSC 1003

Marketplace > George Washington University > Political Science > PSC 1003 > International Politics Week 7
Jaimee Kidd
GPA 3.6

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About this Document

The Great Depression and Interwar Political Economy; WWII
Introduction to International Politics
Class Notes
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This 4 page Class Notes was uploaded by Jaimee Kidd on Saturday February 27, 2016. The Class Notes belongs to PSC 1003 at George Washington University taught by Talmadge in Spring 2016. Since its upload, it has received 29 views. For similar materials see Introduction to International Politics in Political Science at George Washington University.


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Date Created: 02/27/16
The Great Depression and Interwar Political Economy International Monetary System  The Gold Standard o Stable international monetary system established in 19  century  o British pound fixed to gold; others follow  Limits exchange rates  o Facilitates trade and investment  Problem of Fixed Exchange Rates o Currencies cannot fluctuate in response to supply and demand o Floating Exchange Rates  Payments Deficit  Currency Declines in Value (this does not happen with the gold standard, currencies can’t fluctuate, so how do you balance the  payments?)  Your Exports Become Cheaper; Imports Are More  Expensive  Balance of Payments is Restored o Price Specie­Flow Mechanism  Payments Deficit  Outflow of Gold  Contraction of Money  Supply/Deflation  Exports Rise  Payments Restored  OR Payments Surplus  Inflow of Gold  Expansion of Money  Supply/Inflation  Exports Fall; Imports Rise  Payments Restored  The Gold Standard in Practice  o Winners:  Large economies that tend to run surpluses   Wealthy and big corporations worried about inflation   If you already have a lot of money, deflation preserves the value of money whereas inflation erodes the value of your money  Creditors (Bank Financiers) benefit because investments are preserved  o Losers:  Smaller economies with deficits  Workers, farmers, small businesses worried about unemployment  Debtors (mortgage holders)  Money isn’t worth as much when you go back to pay off loans  The Gold Exchange Standard o Not enough gold o UK pound way over valued (war inflation) o Avoid devaluing pound; payment deficit, deflationary recession o Reserves could be held in gold OR major currencies o 1929­31: system collapsesdepression  The Problem of War Reparations  Germany ruins currency  US Banks create Dawes Plan o Dawes Plan is all dependent on private US capital The Great Depression  The 1929 Crisis and Financial Collapse o Panic on Wall Street o Bank Failures Spread o Unemployment Rises Rapidly o Vicious Cycle of Low Demand  TREND: German unemployment  rise in Nazi vote  How Do Countries Respond? o Protectionism  Smoot­Hawley Tariff (1930)  Other nations retaliate  Britain abandons free trade (1932) o Competitive Currency Devaluations  Creates worldwide deflation o Collective action dilemma  Everyone doing what is rational for them but doesn’t collectively help  Explanations  Democracy and the Gold Standard o Gold standard requires costly domestic adjustments o Who bears the costs? o Extensions of franchise o Labor organization, changing nature of production o Wages, prices more rigid   As they become more rigid it makes it harder for gold standard to be a  stabilizer   Hegemonic Stability Theory o Economic Hegemon  Lender of last resort  Open markets  Solve CAD o Britain out; USA doesn’t step up  No forgiveness of allied debts  Protectionism  American Domestic Politics o Isolationism, Protectionism o 1928: Republican control of presidency, congress  The Role of System—Wide Ideas o Belief in moral, economic benefits of bearing costs of adjustment as opposed to… o Keynesianism: active use of fiscal and monetary policy to stimulate demand  A Global War Why We Focus on WW2 (1) Deadliest time period in the 20  century (2) Really important consequences, US: economic and military world leader afterwards  Japan Occupies Manchuria  Hitler’s Challenge to Versailles o 1933: Leaves League o 1936: Remilitarizes Rhineland o 1938: Anschluss with Austria o September, 1938: Takes Sudetenland and Czechoslovakia  In all of these things they go by the principle of national determination  because all these places speak German o 1939: Invades Czechoslovakia becomes clear that Hitler isn’t just interested in  taking German speaking land   Nazi­Soviet Pact 1939 o March 1939: Unilateral British guarantee to Poland o August 1939: Molotov­Ribbentrop Agreement o Mutual Non­Aggression o Division of Eastern Europe  Nazis Advance o March 1939: Invasion of Czechoslovakia o September 1939: Invasion of Poland o May 1940: Invasion of France  o June­October 1940: Battle of Britain o June 1941: Invasion of USSR  America Joins the Allies, 1941 o Japan attacks Pearl Harbor o Germany declares war on US o America enters war with Europe—first strategy The Path to World War II  See trend among German leaders before Hitler to restore Germany to pre­1940 stature o “Fulfillment”­ Gustav Stresemann  Hossbach Memorandum, 1937 o Laid out German goals in a possible coming European War  France and UK need to be defeated  USSR destroyed, Eastern Europe The War as a Continuous of Power Politics  The Distribution of Power in Europe o German power grows o Austria­Hungary gone  Soviet weakness, internal distractions, isolation  French weakness o Alliances with small powers in East o But…adopts defensive military strategy  United States absent  Great Britain o Wary of continental commitment o Convinced Versailles unjust o Still suspicious of France o Buy time The Role of Hitler  Hitler’s Role: Three Distinctions o Morality  o Consistency with past German leaders o Rationality: look back at other notes for this definition  1941: The Turning Point? o Invasion of USSR  Lebensraum: living space in the Ease, old German idea that Germans  don’t have enough space to live in  Old idea ad ideal time because Soviets were weak at this time o Declaration of War on US  But: US Rearmament minimal at this point The Centrality of Anti­Semitism  Other Domestic Causes o Humiliation of Versailles o Inability of Weinmar Republic to keep democracy strong  Germany was already economically behind compared to the other  countries and still kept ideological beliefs going strong and putting so  many resources to concentration camps and killings  Consistency with Leaders o Yes, but Nazi ideology additional ends and means  Rationality o Did weigh costs, benefits, uses information o Highly risk acceptant, not irrational o Stable Goals?


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