This is called congestion collapse, and it happened on the Internet in 1987. Because of this resource-wasting effect, the only way to prevent congestion is to prevent too many packets from entering the network. When there are too many packets trying to use the same path, the network has no choice but to drop some. This is not the only cause of lost packets, but it is the most common cause on the Internet. When the traffic load increases, the router queues get more full, causing network delays to increase.
Congested routers can alter packet headers to notify end hosts of congestion.
That provided flow control, but not congestion control.