The rivalries between empires which lay behind much of the international conflict of the first j half of the 20th century drove forward many of the features of managed capitalism,・・・As international competition increased after industrial capitalism spread from Britain to other countries, free trade came to be eventually displaced by a protectionism that reached its peak in the 1930's . Markets could be protected, and the supply of cheap raw material maintained , by constructing empire and fencing it off from competitor nations.
By the middle of the 19th century Japan was a highly commercialized and entrepreneurial society but not yet an industrial one. After Meiji Restoration, Japan's 19th century revolution, industrialization was directed by the state as part of a programme to build a strong and independent country that could stand up to the the Western empires that were encroaching upon Japan. page 72
These empires took the form not only of colonial territories but also of spheres of influence that divided up areas of the world no under direct colonial control. While Europe first created overseas empires, the United States constructed its own less formal empire in the Pacific and Latin America, and in the last quarter of the 19th century Japan began to follow the European model and acquire its first overseas territories.
When domestic production faced a crisis, it was hard to resist the temptation to protect the national economy against foreign competition and as soon as action of this kind was taken by one country , others followed.・・・・・・the 19th century division of the world between competing empires provided the industrial societies both with an illusion of self-sufficiency and ready-made structures within which they could shelter. The result was culminate decline of world trade that made the depression worse.・・・・John Maynard Keynes argued that government could counteract tendencies towards depression by injecting demand into the economy, by borrowing and spending or lowering taxes. These 'Keynesian' policies began to make an impact in some countries in the later 1930's , though it was above all the huge state expenditure generated by the Second World War that hauled the global economy out of the depression.
Capitalism: A Very Short Introduction
The first, if limited, attempt to apply Keynes's ideas was undertaken in the USA during Roosevelt's New Deal'. However Roosevelt's commitment to a balanced budget and his consequent refusal to allow increased government spending on public works projects to exceed taxation revenues resulted in only a very gradual decline in unemployment. The Great Depression was in fact brought to an end by a widespread and substantial expansion of military spending in preparation for war, rather than a deliberate attempt to cure unemployment. page 64 Political Ideologies: An Introduction