One of the worst problems of the Great Depression was the unemployment rate. By implementing the New Deal programs, Roosevelt aimed to create a complete cycle of economic support. In this cycle, the government helps the general population with money and the restoration of industrial objects to create workplaces (Patel & Goodman, 2020). After that, people use the money for buying goods and contributing to businesses. Businesses give back to the state with tax money and create more opportunities for people to work. Furthermore, to avoid repetitions of such deep crises, the state received more executive powers, with more substantial control over banks (Conti-Brown & Vanatta 2020). During two phases of the New Deal, the government created many new regulative bodies, some of which were more productive than others. It would be hard to agree that the New Deal was the only reason for the recession of the Great Depression. Nevertheless, specific programs had great success and helped to improve the U.S. economy. I think that their relevance in modern society proves the effectiveness of the critical programs implemented.
The approach was mainly inspired by and based on Keynesian economic theory. Keynes suggested expanding governmental spending while reducing taxes to revive consumers’ demand and save the global economy. The economist used an open letter to share his ideas with Roosevelt and stated that to begin the cycle, the government should print or borrow money (Dighe, 2019). Still, initially, the program did not use such methods. According to his theories, people should use most of their income on consumption on investment to support the economy and do not accumulate savings. Even though Keynes’s theories started to show their imperfections over time, it can be said that they corresponded to at least some of Roosevelt’s expectations.
References
Conti-Brown, P. & Vanatta, S. (2020). Bank supervision, the Great Depression, and the creation of the New Deal. SSRN.
Dighe, R.S. (2019). The Great Depression, and the coming of Keynesianism to America. Research in Economic History, 35, 25-57.
Patel, R., & Goodman, J. (2020). The long new deal. The Journal of Peasant Studies, 47(3), 431-463.