Economic Crisis: Consequences, Political Impact, and Solutions

Consequences of the Economic Crisis

The crisis significantly impacted various aspects of social life. It halted population development, leading to a decline in birth rates. Population movements were also affected, disrupting urban concentration as the struggling industry couldn't absorb the unemployed workforce. International migration was jeopardized, impacting immigration.

The crisis did not affect all social groups equally. Some sectors benefited by maintaining their income levels, while shareholders and business owners faced ruin. Workers lived in fear of unemployment, and peasants, though initially buffered by their domestic economies, eventually suffered.

Intellectual and Political Repercussions

Intellectually, the crisis fostered a re-evaluation of values. Rationalist and positivist principles were undermined by the effects of the Great Depression, leading to the emergence of new philosophical, scientific, and artistic movements.

The economic depression profoundly affected the political arena in two key ways:

• International Relations: It disrupted the harmony established by the Treaty of Locarno (1925).
• Domestic Politics: It discredited parliamentary democracy, fostering the development of authoritarian governments and the rise of totalitarian ideologies.

Across the West, Marxist parties gained strength, seeking power through either legal means or revolutionary paths. Fascism emerged as a response to the depression, presenting itself as a superior solution to global problems, capable of overcoming the perceived defects of liberal democratic systems.

Models for Overcoming the Crisis: The New Capitalism

The Great Depression presented the world with a difficult situation, particularly due to its universal nature, which hindered the application of immediate solutions. John Maynard Keynes, a prominent economist, proposed a series of economic measures to overcome the crisis:

• Launching a new monetary policy, even if it required devaluation.
• Reinforcing economic protectionism.
• Strengthening public investment.
• Improving the distribution of income and profits, and creating a social protection system to combat unemployment, increase wages, and subsidize unemployment. This would increase the purchasing power of workers.

The objective was to increase sales and encourage production. This program of state intervention positioned the state as an essential arbiter, saving the economy.

Key Measures Against the Crisis

The models for overcoming the crisis generally followed the Keynesian framework. Key measures included:

• Establishing strict economic protectionism. The U.S. took the first step in 1930 by increasing its customs barriers by 40%.
• Devaluation of currency.
• Implementing self-restraint in productive activities. For example, gathering the cotton crop and the American countries of coffee or sugar.
• Creating a social protection system. Various states took measures to combat unemployment, providing protection and subsidies.
• Concentration of business and capital under the power of the state mediator.