Chapter 7: Economic crises as political opportunities
Economic crises tend to have significant political consequences. The Great Depression of the 1930s led, among other things, to political realignments in Sweden and the United States and the breakdown of democracy in Austria and Germany. More recently, the Great Inflation of the 1970s and 1980s marked the beginning of a long period of austerity in economic and social affairs, resulting in the secular decline of Europe’s social-democratic parties. This chapter examines the political consequences of the worldwide financial and economic crisis that began in 2007–08, comparing this ‘Great Recession’ with the Great Depression, which is arguably its closest historical parallel (although there are many differences, as Bordo and James (2010), and others, have pointed out). There are at least three good reasons to pay close attention to the political consequences of deep economic crises. First of all, such crises create new political opportunities, and politicians know this well. As Barack Obama’s new chief of staff, Rahm Emanuel, put it two weeks after the US presidential election in 2008, ‘You never want a serious crisis to go to waste’ (Wall Street Journal 2008).
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