8/16/2019 AP World History Unit 6 Outline

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hristien Ayers

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HAP Per 9

nit 6: Chapter 25; Economic Systems, 1900 to Present Outline

I. Divergent Approaches to the Economy

A. Capitalism (Primarily used in West)

1. 2 types: free-market capitalism and state-directed capitalism

2. Free-market capitalism: regulated or unregulated

a) Regulated means government intervention, argued that gov’t is needed to sustain stable economy

(1) John Maynard , gov’t intervene in crisis, consumer confidence flux a lot

 b) Unregulated- only market forces (supply and demand) relied on, argue this way generates wealth for the most peopl

(1) Friedrich Hayek (gov’t = malint.) and Milton Friedman

3. State-directed capitalism had political elite and economic elite partnership

a) Econ. elites could have businesses, gov’t set priorities, so state didn’t centralize or nationalize econ., trade unions o

limited workers’ rights

B. Communism (Soviet Union, most of Eastern Europe, mainland China, North Korea, Cuba, Vietnam, others)

1. Goal to rid of profit motive, eliminate private property and trade, and nationalize the economy

2. Come to power by revolution, sustain power by dictatorship usually

3. Have ambitious projects to modernize, includes collectivization (of agr.) and state-sponsored industrialization

a) Stalin’s First Five-Year plan and Zedong’s Great Leap Forward

 b) Caused famines, killed lots of people, put stress on economy and soc. life, used prison camp labor

4. Some not extremist like in Vietnam and post-Zedong China

C. Socialism (middle or third way econ.’s)

1. Emphasis on central planning, some econ. nationalized, no concern on p.p. and successful if mild

2. Some less-dev used socialism to build wealth/spur dev

II.   Boom and Bust: Towards the Great Depression and Bretton Woods

A. Long Depression (early 1870’s-mid 1890’s)

1. Econ recovery and free trade rebounded countries, but WW1 hurt Euro economies

2. North Amex enriched by WW1, caused roaring twenties, then all nations stated to greatly industrialize

B. The Great Depression

1. World economy depended heavily on U.S., and U.S. stock market crashed Oct., 1929, everyone hurt by this

2. U.S. inst. austerity measures, decrease in consumer confidence, caused run on banks, led to mass unemployment (up to 25%)

3. U.S spread Depression to rest of world, high tariffs on nations’ goods. they couldn’t export products, Smoot-Hawley Act of 1

tried to protect U.S economy

4. USSR untouched by Dep., limited connx with Eest, people saw communism as superior

5. Public works projects, social welfare, military conscription and arms build up (used by fascists) were econ. Reactions, Ex. Pre

FDR’s New Deal of 1933

6. WW2 damaged most econ.’s, Soviet’s economy devoted to fighting, U.S. rebuilt world economy

7. Jul. 1944, Allies created World Bank and IMF, also created GATT

II. Regionalization and Globalization After World War II

A. Economic Union (called European Economic Community, or the Common Market (predecessor to the European Union))

1. Created to recover Western Europe’s economy

2. Invested in social welfare systems, which usually gave universal healthcare, cheap college, etc.

3. Fast reconstruction, assisted by Marshall Plan (initiated by U.S.)

B. Rest of the World

1. Latin Amex and Africa still relied on small export goods, Middle East countries apart of OPEC, did well because of oil domin

2. Soviets and China mostly isolated from West, Japan and rest of PR adapted to global capt.

C. Industrialization to Post-Industrialization and the 1970’s

1. Based on high service, and high-tech

2. Econ. crisis throughout decade, OPEC’s 1973 oil embargo really hurt energy-dep. Econ.’s, and lots of flux in economy (stagf

hard to maintain welfare sys

3. G-7 created to coordinate econ. policies that benefited members (GB, US, F, WG, I, J, C)

4. West sought free-market reforms, instituted privatization of nat. econ. Sectors, gov’t spending reduced, caused layoffs

5. Econ. growth, wealth moved to corporate elites

D. Economic Globalization

1. Influence of multi nat. corps grew have factories, subs. in other countries, ex. McD, Coca, involved in...

2. Tax-sheltering (move assets to low/no tax place), relocation/outsourcing, exploitation of labor, some envi. problems

3. Caused creation of IEO’s and REO’s (int./reg. econ. org.) like G-8, WTO, NAFTA, APEC, SCM (Mercosur), AFTZ, EU (cre

and allowed free movt of goods, $, labor)

4. Econ. globo generates great wealth in places, and free trade sustains peace, but econ. Can be unstable, and agr., hurt (farmers<

goods), negative trends in one country can hurt a lot of others, individual econ. policiesglobo. org. policies

8/16/2019 AP World History Unit 6 Outline

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