First published in Le Monde. Translated by David Broder.
No European sovereign, no real budget; no budget, no viable economic policy. As long as Europe does not break out of this dilemma, the Eurozone will remain mired in the vicious circle of stagnation, resentment, and conflicting responsibilities. If a budgetary federalism is out of reach, it is crucial that we can adjust exchange rates in order to give dynamism to growth and employment. And this requires leaving the currency union.
"If I told you eight years ago that America would reverse the great recession, reboot the auto industry, and unleash the greatest stretch of job creation in our history ... you might have said our sights were set a little too high." Thus boasted the former US president Barack Obama in his farewell address. But is the financial crisis really behind us? Has the strategy implemented to save the banks not, on the contrary, created the conditions for the next conflagration? Cédric Durandwrites.
An abbreviated version of this article appeared in the February 2017 Le Monde diplomatique. Translated by David Broder.
Figure 1: GDP growth in the advanced economies
Happy anniversary! On 2 April 2007, New Century Financial Corporation entered into liquidation. The collapse of this US real estate investment company — the second biggest provider of the now-infamous subprime mortgages — fired the starting gun on a financial crisis bigger than any the world had seen since 1929. Ten years on, capitalism is still yet to recover from this major shock. Growth is sluggish, under-employment endemic and the extreme monetary policies implement by central banks are reaching their limits.
In 1930, the economist John Maynard Keynes published a "letter to our grandchildren," in which he speculated about what kind of future industrial societies would have a hundred years later. Here Pascal Riché of L'obs interviews André Orléan, who has written a preface to this astonishing text. Translated by David Broder.
From an illustration by Edward McKnight Kauffer for The World in 2030 A.D. (1930) by the Earl of Birkenhead.
Les Liens qui libèrent have republished John Maynard Keynes’s odd little essay Economic Possibilities for Our Grandchildren, under the title Lettre à nos petits-enfants [Letter to Our Grandchildren]. Here Keynes journeyed a hundred years forward in order to imagine the society of the future. According to Keynes, by 2030 growth will have put an end to poverty. We will live in a society of abundance, in which we will work very little; an era in which "we prefer to devote our further energies to non-economic purposes." "The love of money … will be recognised for what it is, a somewhat disgusting morbidity." For André Orléan, the interest of this text lies in the break with capitalism that Keynes foresees therein.
Do you think this little text is a visionary one?
It really is an astonishing text. Here we discover that even at the end of the 1920s Keynes foresaw that economic activity would be "between four and eight times as high as it is today" a century later. And already today, in constant currency, the Western countries’ GDP is over four times higher than it was in 1930. This prediction is all the more remarkable given that he made it during a very troubled period — the crisis of 1929 — at a time when few statistics were available. To get a measure of the boldness of Keynes’s text, imagine the difficulties an economist today would face if she set out out to predict the level of development in a hundred years’ time.
“Before capitalism will go to hell, it will for the foreseeable future hang in limbo, dead or about to die from an overdose of itself but still very much around, as nobody will have the power to move its decaying body out of the way.” - Wolfgang Streeck
After years of ill health, capitalism is now in a critical condition. Growth has given way to stagnation; inequality is leading to instability; and confidence in the money economy has all but evaporated.
We present a reading list of titles that examine our current economic state, including Wolfgang Streeck's critically-acclaimed analysis, How Will Capitalism End? and Geoff Mann's provocative new book on Keynesianism, political economy, and revolution.
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First published on the blog of the Centre de recherche en Économie at Sciences Po. Translated by David Broder.
Upon its introduction at the turn of the millennium, the euro was widely perceived as a major achievement for Europe. Its apparent economic success, combined with the convergence of multiple economic indicators across the various countries, fed this feeling of success. A few years later, the picture looks radically different. The global financial crisis has revealed the imbalances that led to the sovereign debt crisis and which have driven the Eurozone to the brink of breaking apart. The austerity policies that became a continent-wide norm in 2011 have fuelled a long stagnation [See the reports of the independent Annual Growth Survey (iAGS)], with growth rates paling in comparison to those of the United States and the United Kingdom.
This economic under-performance has fed popular resentment against the euro, with a growing number of Europeans today considering it the problem rather than the solution. The financial community itself seems to be preparing for the possibility of leaving or dissolving the single currency, by reducing its cross-border exposure. Greece came close to breaking away in 2015. Finally, the intellectual atmosphere has also changed: leading thinkers like the American economist Joseph Stiglitz and the German sociologist Wolfgang Streeck are but the most visible representatives of a more generalised change in attitudes.