Developments Of The Modern Day

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we can consider a normal economy. Most economies experience a �Boom and Bust� cycle, where economies fluctuate between times of prosperity and times of recession. The economist Maynard Keynes believed these cycles would occur roughly every seven years (1). However, the Great Depression was more than a normal recession and nearly saw the end of the Capitalist system, as we know it. None of the capitalist economies had predicted it, and none of their businessmen were prepared for it. Karl Marx had believed that these cycles were a pattern leading to the ultimate destruction of Capitalism. It was infact a Russian economist, N.D.Kondratiev who predicted a large economic downturn, by looking at economies over a larger time scale or �Wave� (A). However the capitalist economists dismissed his claims.
On the 28th of October 1929, a day now known as Black Tuesday, the American stock market collapsed
A) N.A.Kondratiev had studied economic cycles over larger periods of time. He measured ...

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so bad, sixteen and a half million shares changed hands (4). The price of shares plummeted, and more shares changed hands. The price of shares fell by such a substantial amount that there were no buyers at any given price level. Billions of dollars worth of shares became nothing more than bits of paper. In one day, the US market which had flourished, although artificially (b), during the 1920s collapsed into economic frailty. The repercussions of this crash were devastating.

In the US alone, millions of jobs were lost and thousands of businesses were declared bankrupt. The problem was simple. During the so called prosperity in the 1920s, millions of people bought cars and other such ...

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