With high inflation, soaring energy prices and slowing economic growth, many economists have Compare Between today’s European economy and the economy of the oil crisis of the 1970s.
but although Stagflation in the 1970s Concerns are mounting that another pivotal decade in the continent’s history may help explain today’s economic and political trends: the 1930s.
The decade before World War II marked A general climate of fear and anxiety in the West.The economic crisis and mass poverty have widened the appeal of populist right-wing parties, while the lasting trauma of World War I combined with the Great Depression fueled isolationism and nationalist foreign policy.
Today, after the pandemic and the war in Ukraine disrupted global supply chains, countries are turning away from globalization and looking inward again.and European populism The moment of sunshine is being enjoyed as citizens bring their dissatisfaction with the rising cost of living and bleak economic outlook to the polls.
“It’s a worrying thing that echoes the 1930s. That is, this general disillusionment with what liberal democracies can do,” said Christina Furth, a historian of Central and Eastern Europe at Cornell University. Cristina Florea told wealth.
Europe’s largest democratic institution has been able to gain a foothold, but tougher challenges lie ahead growing energy crisis Prices on the mainland soar, dissatisfaction has begun sprinkle on the street and sowing department between European countries.
“What’s happening in Europe this winter could exacerbate the price spikes and fuel shortages. That’s really going to put Europeans to the test,” Florea said. “What happens in the next few months will tell us how far we are willing to go to support this democratic vision.”
The era of deglobalization
Experts say the closest parallel to the European economy of the 1930s is the transition from a highly globalized world to one that is rapidly becoming more regional.
“The most important similarity is that, in a way, this is the era of deglobalization,” Mark Harrison, an emeritus professor of economics and economic historian at the University of Warwick, told Reuters wealth.
In the 1930s, the effects of the Great Depression caused The era of protectionism: One withdraw from international trade Around the world, countries in Europe, Asia and the Americas established their own small trading circles.
“The Great Depression just plunged state after state into an economic abyss,” Florea said. “The lesson different countries have learned from this is that they need to turn to economic nationalism. The solution is self-sufficiency, just sever ties. Oppose globalization or global connections.”
One of the most famous examples is UK policy reversal In 1931, discrimination came from trade outside the British Empire. The new policy imposed tariffs of up to 100% on products produced outside the Empire, with many items being immediately slapped with a 50% rate.By contrast, today Average import duty rate 2% of products entering the U.S., although half of the manufactured goods are imported duty-free.
According to Harrison, in the 1930s, emerging and established powers, including Germany, Japan, and the United Kingdom, established self-sufficient trading blocs by imposing strict tariffs on imports from outside their circles, producing strong trade regionalization and the deglobalization of the world economy.
After World War II, globalization, spearheaded by the United States, finally reared its head again. Create the International Monetary Organization and global trade norms at the Bretton Woods Conference in 1944. But global trade volumes have been in decline over the past few decades, and with economic disruptions brought on by the pandemic and the war in Ukraine, the world may restructure again into a new and more isolationist era.
Populist governments advocate protectionist economic policies in the U.S. and Europe, as well as U.S. tariffs on China It’s been around since the Trump administration. Putin’s invasion of Ukraine only accelerated the transition to a smaller world, with Europe’s dependence on Russian energy a major burden.Countries sanctioning Russia have seen Exports to the country fell by 60%.
The COVID-19 pandemic and the resulting disruptions to global supply chains have also spurred a shift in economic activity towards more regionalization.
The U.S. and Europe now have plans in place to support domestic supplies of key commodities that were primarily imported prior to the pandemic, including semiconductor chip. The ongoing lockdown policies in manufacturing hubs like China have popularized so-called “nearshore” with many us and European Companies are bringing production back home to prevent future supply chain disruptions.
In the 1920s, European countries had just withdrawn scarred from the First World War— The most expensive war in history at the time.
Some countries, like France, have experienced a 20-something roar similar to the U.S., but many others have faced poverty and recession.In Italy, a Industrial and banking collapse led to a protracted economic crisis, and Germany— heavy debt After WW1 victory, state seeks reparations – experienced one of the worst hyperinflation in recorded history.
During the interwar period, many European countries remained deeply distrustful of their neighbors, hindering early attempts to establish a sound international system of law and order and democratic institutions Early plans for pan-European political unification and League of Nations defeatconsidered the predecessor of the United Nations
“During the interwar years, bilateral treaty efforts collapsed because the different countries after World War I really couldn’t overcome their mutual suspicion,” Florea said.
Florea said the far-right and authoritarian regimes were able to use these divisions, along with the devastation wrought by World War I and the Great Depression, to cater to voters dissatisfied with the current order and eager for change.
Today, after years of pandemic and a worsening energy crisis and economic outlook in Europe, experts say a similar shift is still possible.
“We don’t want to see people again equate economic incompetence with democracy, which is like falling into the arms of these right-wing movements,” Florea said.
Hungary and Poland It has been led by right-wing populist parties for years, but now other countries appear to be following suit.In France, centrist Emmanuel Macron win Earlier this year, he was re-elected president with far-right challenger Marine Le Pen.Just last weekend, a far-right coalition elected In Italy, by the country’s forthcoming Georgia Melloni, the first female prime minister.
Melloni keeps energy prices up a central part of her campaign, said households and businesses were “caught up” by rising costs and criticized the EU’s energy policy.Hungary’s right-wing Prime Minister Viktor Orban Blame the EU for high gas prices On the European continent, there have been recent calls for the lifting of European sanctions on Russia.
But beyond the leaders’ personal policies, populism poses an even bigger threat to European unity as the continent braces for a recession, a refugee crisis and continued pressure from Russia.
“People experiencing deep social unrest seek safety and may turn to parties that say we will maintain an order that benefits ‘ordinary people,'” Harrison said. Populist movements tend to be the loudest.
“Distrustful businessmen always have the opportunity to tell the story of the domestic enemy that led us into these catastrophic situations.”
a cold winter
While the spread of populism today during the European economic crisis does bear some resemblance to the 1930s, it has not yet posed an existential threat to the continent’s democratic institutions.
“Multinational institutions are much shallower than they are today,” Harrison said. Overall, European democracy is now stronger and more resilient than it was in the 1930s, and the EU has so far been able to unite nations against threats such as Putin and Russia’s invasion of Ukraine.
“Putin has done a great job selling the benefits of Western cooperation, NATO security and economic cooperation. It reminds us that values matter,” Harrison said.
But democratic Europe should still be wary that things could get worse.With electricity prices already high, a cold winter could put them in a bind, several banks have predicted economic recession in Europe.it may be Putin’s best hope Weakening support for Ukraine and the ensuing economic crisis would be a good opportunity for current and hopeful populist leaders to shine among voters.
European households could see their utility bills increase by as much as 2 trillion euros Fuel shortages and rationing measures could slow industrial capacity in some sectors or even shut down completely next year due to the energy crisis. That could lead to a wave of economic slowdowns and job losses, said Mauro Chavez, head of European gas research at energy consultancy Wood Mackenzie. Tell wealth last week.
Much depends on how quickly gas suppliers outside Russia can increase shipments to Europe, but with Protest against high cost of living Harrison said European countries have exploded across the continent and will likely soon have to learn to adapt to the new reality.
“People are often more adaptable than expected and more adaptable than they themselves expected,” he said. “Literally, Europeans won’t freeze this winter. People usually get by by doing things they didn’t expect they would do.”
“at the same time [the energy crisis] There’s huge room for trouble and far-right politicians to play the blame game,” Harrison added.