People in a economy answer the three basic economic questions by relying on ritual, ancestral laws, and religious dictates.

the years following the end of world war i were a period of deep social tensions, aggrevated by high wartime inflation. food prices more than doubled between 1915 and 1920; clothing costs more than tripled. a steel strike that began in chicago in 1919 became much more than a simple dispute between labor and management. the steel strike of 1919 became the focal point for profound social anxieties, especially fears of bolshevism.

organized labor had grown in strength during the course of the war. many unions won recognition and the 12-hour workday was abolished. an 8-hour days was instituted on war contract work and by 1919, half the country's workers had a 48-hour work week.

the war's end, however, was accompanied by labor turmoil, as labor demanded union recognition, shorter hours, and raises exceeding the inflation rate. over 4 million workers--one fifth of the nation's workforce--participated in strikes in 1919, including 365,000 steelworkers and 400,000 miners. the number of striking workers would not be matched until the depression year of 1937.

the year began with a general strike in seattle. police offers in boston went on strike, touching off several days of rioting and crime. but the most tumultuous strike took place in the steel industry. then some 350,000 steelworkers in 24 separate craft union went on strike as part of a drive by the american federation of labor to unionize the industry. from management's perspective, the steel strike represented the handiwork of radicals and professional labor agitators. the steel industry's leaders regarded the strike as a radical conspiracy to get the company to pay a 12-hour wage for eight hours' work. at a time when communists were seizing power in hungary and were staging a revolt in germany, and workers in italy were seizing factories, some industrialists feared that the steel strike was the first step toward overturning the industrial system.

the strike ended with the complete defeat of the unions. from labor's perspective, the corporations had triumphed through espionage, blacklists, and the denial of freedom of speech and assembly and through the complete unwillingness to recognize the right of collective bargaining with the workers' representatives.

during the 1920s, many of labor's gains during world war i and the progressive era were rolled back. membership in labor unions fell from 5 million to 3 million. the us supreme court outlawed picketing, overturned national child labor laws, and abolished minimum wage laws for women.