New Directions in Modern Economics series
Edited by Riccardo Bellofiore and Giovanna Vertova
Chapter 1: The Great Recession and the contradictions of contemporary capitalism
Capitalism is once again in a Great Crisis. To understand it, I am convinced we need to refer to and innovate Marxian critical political economy and Financial Keynesianism. That is why in this chapter, before I discuss the dynamics of capitalist economies, I shall briefly refer to these theories. I urge for their renewal in light of the new realities, and especially taking into account the rise and fall of money manager capitalism. The Neoliberal Great Moderation was a paradoxical kind of financial and ‘privatized Keynesianism’. The heart of the Anglo-Saxon model was the attempt to overcome the stagnationist tendencies emerging from ‘traumatized workers’ resulting from the transformation of ‘manic savers’ into ‘indebted consumers’. This ‘autonomous’ consumption, fuelled by finance and bank debt, was the driving force of a dynamic but unsustainable ‘new’ capitalism, manipulated by an innovative kind of monetary policy. The Neo-mercantilist export-led approach that dominated the European macroeconomic landscape since WWII, particularly since the 1960s and 1970s, was very different, but it profited from the US-based consumer-debt driven boom. The Maastricht Treaty was mainly a French project, which Germany resisted, and it was designed under the Iron Curtain. The real puzzle is to understand not only how the Euro actually came into being from such fragile foundations, but also why for many years it seemed such a happy experiment.
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