The Great Recession and the Contradictions of Contemporary Capitalism

The Great Recession and the Contradictions of Contemporary Capitalism

New Directions in Modern Economics series

Edited by Riccardo Bellofiore and Giovanna Vertova

The current crisis is one of the great crises punctuating the long history of capitalism, and to be properly understood it is vital to take into account its ongoing structural transformation. This book offers plural perspectives on the Great Recession, placing the analysis of finance, class and gender at the center of the debate. It begins with a comprehensive insight into the crisis, before moving on to focus on debt, asset inflation and financial fragility. Following chapters discuss global imbalances, structural monetary reform and the management of public finance, including a investigation of the Italian experience. The book concludes with novel contributions on the gender dimension of the crisis and the analogies between a nuclear and financial chain reaction.

Chapter 12: Financial and nuclear meltdowns: the fragility of chain-reaction critical processes

Alessandro Vercelli

Subjects: economics and finance, money and banking, post-keynesian economics


The financial ‘tsunami’ that hit the USA and Europe in 2008 and culminated in the bankruptcy of Lehman Brothers in September 2008, triggered a ‘meltdown’ of the financial system that was somehow thwarted only by an unprecedented public bail-out of many big financial institutions. In March 2011, while the effects of the financial crisis were not yet fully re-absorbed, a real tsunami hit the Tohoku region in North-East Japan and triggered the partial meltdown of the nuclear reactors 1, 2 and 3 of the Fukushima1 plant. In my opinion, the analogies between these two episodes go much beyond terminology. Although the common features of nuclear and financial chain reactions have been almost completely neglected in the scientific literature, I claim that we may draw from them pregnant insights. In what follows I focus on their foundations and hint at some of their implications. I want to show in particular that, in order to understand and prevent catastrophic events in finance and nuclear energy generation, we have to focus on the critical chain reactions characterizing accident-prone systems. This sort of structural instability has to do both with the complex links between the parts of the system (as emphasized, among others, by Haldane and May 2011, Johnson 2011 and Lux 2011) and with the complex dynamics of the system as a whole.

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