All questions of World Depression of 1929-34 for UPSC CSE Exam

The Great Depression and Economic Theories
During the Great Depression, various economic theories emerged that sought to address the severe economic downturn. Among them, laissez-faire economics gained prominence, advocating for minimal government intervention in economic matters.
Understanding Laissez-faire Economics
- Laissez-faire is a French term meaning "let do" or "let go," which emphasizes the idea that economic success is best achieved when individuals and businesses operate with little to no government interference.
- Proponents argue that free markets are self-regulating and that the economy functions optimally when left to its own devices.
Context of the Great Depression
- The Great Depression, which began in 1929, was characterized by massive unemployment, bank failures, and a significant decline in industrial production.
- During this period, many economists and policymakers initially believed that government intervention would disrupt the natural market forces necessary for recovery.
Impact on Policy and Thought
- The laissez-faire approach suggested that allowing businesses to fail and markets to adjust would ultimately lead to recovery and growth.
- This theory was contrasted with Keynesian economics, which later gained traction after the Depression, advocating for increased government spending to stimulate demand.
Conclusion
In summary, laissez-faire economics became a guiding principle during the initial response to the Great Depression, reflecting a belief in the efficacy of unregulated markets. This approach ultimately faced criticism, leading to the adoption of more interventionist policies in subsequent years.

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