1929: the problem and its solution
Profits were high in the "roaring twenties", but without the context that would have enabled them to be the means of an enlarged reproduction. The recently introduced mass production lacked a corresponding mass consumption, which would have needed a pay rise (not just at Ford's but in many other firms and sectors), which itself could not occur without some recognition of the part played by labour, and of the part of the unions as a stabilising factor. Henry Ford was a technical innovator and a social reactionary, as shown by his militant anti-Semitism and his fondness for Hitler. He only gave up union-bashing when the unskilled workers' sit-down strikes forced him to.
Until 1929, and in the years that followed, capital went into speculation because it lacked profitability. Once the Depression was there to stay, it was managed in the same narrow class attitude: a further contraction of the wage packet, a drop in production, and monetary deflation. Many factories were run part time and part pay. 1929 broke out in the stock market and banking spheres, and then took the forms of overproduction, lower prices, wages and production levels, but its ultimate cause lay in an excessively unequal sharing-out between capital and labour, paradoxically aggravated by the ability of a minority of workers to resist the lowering of their wages.
After 1917, from Budapest to Seattle, the bourgeoisie contained the proletarian push, and managed to isolate a Russian revolution that died of becoming nothing but political power over a society it did not communise. But Western bourgeoisies did not exploit their victory to reshape either society or the relations between European States: reactionary politics in France and Britain in the 1920s and after 1929; utter resistance to moderate demands, fallback on the farmers at home and on overseas colonies; priority given to finance and currency over industrial competitiveness; US isolationism; failure of the League of Nations which the Americans had left just after they'd launched it; agonizing indecision of the Weimar Republic torn between a conservative (or nationalist) bourgeoisie and a social-democracy unable to promote the class conciliation that was its programme. On both sides of the Atlantic, opposed yet converging forces combined to prevent a system from reforming itself, while exacerbating it financially and technically. It's in Germany that the contradiction was to be the most devastating: out of prestigious universities would come engineers as technically brilliant as convinced of the necessity to eliminate the Jews from Europe. Instead of mass-producing millions of medical pills or plastic toys, one of the world's most advanced chemical industries was to manufacture Zyklon B.
Keynes had understood that the preference of the rich for "liquidities", hoarding, or speculating, meant insufficient consumption and investment. (We'll see a similar phenomenon with "excessive" saving in China, and outrageous upper class income in the West.) He realised that capital has to take into account the double link between wage and consumption, and between profit and investment. He was bringing out the unreachable and indispensable (im)balance between the ability (and propensity) to consume and the valorisation of capital, in order to avoid the breaking point when production and sales, however massive, fail to create enough value.
Keynesianism acted at the crossroads. It pushed capital into treating labour as a cost and as an investment, and thus speeded up the transition to full "real" domination. It's no accident that Keynes first became known by his critique of the Versailles Treaty. The victors of 1918, France in particular, intoxicated by a military success which was no proof of the superiority of the French and British empires over German industrial might, hoped to bring Germany to its knees, as if bayonets were enough to recompose post-war Europe. Keynesianism derived its strength from a global vision that was as much geopolitical as socio-economic.
