A Study on Global Depression since the 20th Century
Authors:   Asia-Europe Perspective Association, Yoo Ki-Joon 
Published: June 2018

I'd like to inquire into the causes of the global depressions and the responses to them since the 20th century. Not a few the past researches about economic crises were restricted to the specific times case by case. Therefore they were unable to suggest a proper logic to be commonly applied to several global panics; the 1930s, the 1979s and the late 2000s.
Based on this critical mind, this paper investigated how K. Polanyi's opinion about capitalism can be applied to every global panics. Many existing articles about economic crises were based on the Business Cycle Theory and the Marx's Panic Theory. Accepting these two theories critically, I made an attempt how K. Polanyi's view about capitalism is available and holds good for us to understand not only the 1930s' depression but 1970s' and the late 2000s' economic crises.
Contrary to a lot of goods produced by labors, these three commodities - labor, land and money - are not produced for the purpose of sales. Nevertheless, if these elements are incorporated into the market mechanism by force, the capitalist system cannot help falling into confusion.
The conclusions from my investigation about three global economic crises are as follows. Firstly, I accept the Marx' opinion that economic panics basically occur from the excessive capital of various forms. As labor intensive industries transfer capital intensive ones, employment and consumption stagnate relatively and are not able to accompany with the transformation. The excessive capital rises from the firms' insufficient investment.
Secondly, the widening gap between the rich and the poor do bring economic crisis and deepen the trough of it. The wage of labors improves economic growth through consumption directly, but the profits and interest earnings of firms can contribute to it just indirectly through savings-capital formation path.
Thirdly, a economic crisis is closely related with the financial confusion like monetary stringency rather than a recession of business cycle. All of three global depressions as above were based on financial crises in common. Especially the depression of the late 2000s originated in the global and liberal transfer of money capital since 1970s.
Fourthly, an important cause of Great Depression of 1930s was the weakness of agriculture or the inelastic demand to grain, and the stagflation in 1970s was closely related to oil crisis. Agricultural products and oil are products from land in common. These two elements must not be transacted in market system indiscreetly. Otherwise economic depression could be broad and deep more and more.
Fifthly, as we can find out from the depression in the late 2000s, household expenditure and firm investment lost their intrinsic powers of economic growth. Because of the liberalization of global transfer in money capital a tremendous scale of floating money moved into the USA, a key currency nation. The great excessive money conspired with housing speculation abnormally. If all nations are unable to secure individual discretions related to economic policy as in the case of international transactions in money capital, a financial or economic crisis could rise and broaden all over the world.
The Polanyi's view that the economic crises of capitalist system are closely connected to three elements - land, labor, and money - holds good as ever and is more comprehensive than the Business Cycle and the Marx's Panic Theory. Capitalist economy is based on the rule of market. But several proper protective measures for three elements are absolutely necessary against economic panics and for evading social catastrophe.