Question

Briefly summarise the two lessons learnt by economists and politicians from the inter-war economic experience.

Answer 1

The economists and politicians learnt two key lessons from the inter-war economic experience.

• First, an industrial society based on mass production cannot be sustained without mass consumption. There is a need for high and stable income which depends on full employment of the people.
• Since market alone could not guarantee full employment; government should intervene and take steps to minimise fluctuation of market forces.
• The second lesson is that the global economy is inter-related.
• The goal of full employment could only be achieved if governments had power to control flow of goods, capital and labour.