The Battle of Economic Systems: Capitalism, Communism, and Fascism from 1920 to 1945

World War I led to an ideological battle. Revolution in Russia preceded the foundation of the world’s first communist state with Lenin at the helm. It would provide an example of the fundamental flaws in communism as the Soviet Union devolved into an authoritarian state that experienced famine and repression under Stalin. Fascist nations arose in Italy, Germany, and then Japan driven not by any consistent ideology but rather by the goal of accumulating power to demonstrate superiority. These reactionary regimes would prove disruptive, and the expansionary aims of Germany and Japan would cause the next war. Communism and fascism were seen as viable due to the crisis of liberal capitalism, which came into full view in the Great Depression. The United States’ isolationism and protectionism coupled with disastrous monetary policy led to mass unemployment and birthed macroeconomics as a field of study to explain it. Keynes led the way, describing the need for fiscal stimulus, which was first attempted in the New Deal and then fully implemented with the total mobilization for World War II. The second world war in 30 years did finally resolve the long crisis and ended with the defeat of fascism.