To what extent was the New Deal successful in solving the economic crisis of the Great Depression?

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Ashley Kannan eNotes educator| Certified Educator

It is difficult to fully answer if the New Deal solved or ended the Great Depression.  World War II "interrupted" this process.  This made it fundamentally challenging to assess if the Great Depression was eliminated because of the New Deal.

Given this reality, it seems that personal ideology becomes critical.  If one believes in the free market and its laissez faire principles, the New Deal did not end the Great Depression.  Scholars who embrace this position point to several factors that influence their position.  The New Deal did not create sustainable employment.  The New Deal's programs did not solve the issue of unemployment, making the Great Depression a sustained reality. For example, in 1939,  U.S. unemployment still exceeded 20% while European countries, according to a League of Nations survey, averaged only about 12%.  At the same time, some suggest that the New Deal did not end the Great Depression because it prevented capital investment and the enhancement of supply- side economics. For this reason, it is suggested that after World War II, Congress voted against another version of the New Deal.  After the war, Congress reduced income taxes, easing the process back into a laissez faire style process whereby the Great Depression could not revisit the nation's economy.  The post- War prosperity was not assisted by a host of government approaches, but rather through economic freedom and alleviation of taxes to trigger capital investment and paths of revenue development.

Those who believed that the Great Depression was the ultimate repudiation of the free market without any sense of external influence would suggest that the Great Depression was critical in ending the Great Depression.  Thinkers in this camp would argue that many of the aspects we now come to take for granted in our economic system were established by the New Deal.  Social Security, the establishment of the FDIC, and the power of the Securities and Exchange Commission were all remnants of the New Deal that have become part of the modern definition of capitalism. Some would further argue that the New Deal ended the Great Depression because it focused a great deal of government action and revenue toward it.  The establishment of a prosperous economic system required attention and revenue that average citizens could not devote to it. Such a level of intense government energy is seen as the only possible way in which the Great Depression could have been solved. Without it, there was no sign of a possible alleviation of suffering on such a massive and seismic level.

It is in this suspended paradigm where the answer to the question lies.  The presence of political ideology as well as the sudden shift to wartime production makes it impossible to fully assess the legacy of the New Deal in solving the Great Depression.  Somewhere within both polarities, the individual is positioned.  Thus, it becomes more of a reflection of the individual's perception and ideological perspective than anything else.