Why did capitalism survive the Great Depression?

Answer 1

All countries, all economies will survive. But what the Depression means to all of us is that we become poorer. That is what it does to us all. It is about a reassesssment of how confident we are about the future: And as you can see right now, yes, it's about as bad as it looks, it doesn't look good. One day the economic sun will shine again. Until then it will be more & more difficult to get credit. And there will be casualties. there will be hardship & people will become poorer & be made homeless. & I am saying, & I am sorry to say we are looking into the abyss right now just like we were then. In the US right now you have a choice to make between Obama & McCain & it is probable that the choice you make in the US probably doesn't matter at all. All that matters is to batten down tha hatches & weather the economic storm that is to come & come out smiling, if you can. The short answer to the question is that I don't know what causes depressions or recovery from them: Experience shows that they are survivable, in time & with luck. But no, I am not saying it is, or will be easy....

Answer 2

Before I answer this question seriously, for supporters of capitalism like the Austrian School, this is a purely rhetorical question because they believe the Great Depression was caused by government and that any form of government intervention, from mere meddling with the money supply to the outright socialist systems advocated by European working classes during the 1920s, will make the problem worse.

However, it is still a serious question as to why capitalism was not destroyed by revolutions from European working classes during the Great Depression. Election results certainly suggest a very large proportion of Europe's working classes supported Marxism and what Trotskyists like Socialist Alternative and the Democratic Socialist Party refer to as direct socialist democracy, where all decisions are made by the direct vote of workers.

On the other hand, there was much in Europe that opposed the masses' support for a socialist revolution. The Catholic Church (supported by most of Europe's ruling classes and a dying peasantry) argued that Communism was inherently evil in Divini Redemptoris, and attempted to offer a "third way" between socialism and the capitalism disliked by Europe's working classes. It also attempted to show through observations of stigmata(bearing the wounds of Jesus) and inedia (surviving with no food or water except Holy Communion for decades) that an atheistic science failed completely to explain certain phenomena of certain devout Catholics like Padre Pio, Marthe Robin, Therèse Neumann and Alexandrina da Costa. There was also anti-communism among Europe's less conservative business elite, who wanted a government that would act forcefully to help the economy and prevent the workers from destroying the bosses' right to profit and to form businesses.

In combination - and aided by the conversion from Marxism of many intellectuals who were horrified at the violence during the Spanish Civil War (Simone Weil, Wystan Hugh Auden and Valentine Ackland are three examples) - these were sufficiently strong to at least temporarily prevent Europe's working classes from organising a revolution amidst the economic problems of the Depression. (It is true though that support for Marxism among European working classes remained very strong despite the repression of fascism and efforts by the Catholic Church to counter it).

In the United States and Canada, working classes were not in general supportive of socialism even amidst unemployment and lack of opportunity. Many turned to such religious philanthropists as Dorothy Day and Catherine Doherty - who did have analogues in mid-century Europe like Madeleine Delbrêl - and those who did not turned to the New Deal. In Australia the religiosity of the working classes - owing to their lower living costs and higher wages - was even more pronounced and capitalism never threatened.