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Economic Crises and Policy Regimes

Economic Crises and Policy Regimes

The Dynamics of Policy Innovation and Paradigmatic Change

Edited by Hideko Magara

In this innovative book, Hideko Magara brings together an expert team to explore both the possibilities and difficulties of transitioning from a neoliberal policy regime to an alternative regime through drastic policy innovations. The authors argue that, for more than two decades, citizens in developed countries have witnessed massive job losses, lowered wages, slow economic growth and widening inequality under a neoliberal policy regime that has placed heavy constraints on policy choices.

Chapter 11: A political analysis of the global financial crisis: implications for crisis governance

Alberto Martinelli

Subjects: economics and finance, political economy, welfare economics, politics and public policy, political economy, public policy, social policy and sociology, economics of social policy


The economies of the developed countries of Europe, USA and Japan are still struggling with one of the longer stagnations of modern capitalism. The current financial crisis is a sequence of related crises that did not hit in the same way and with the same intensity the different varieties of capitalism. Using the metaphor of a virus jumping between species, one can say that the global financial crisis, which was triggered by the sub-prime crisis in 2007 and reached a dramatic peak with the bankruptcy of Lehman Brothers in September 2008, did not cause the collapse of world finance because governments rescued banks with taxpayers' money but it contributed to an economic recession with a sharp decline in production and per capita income and a loss of jobs. The crisis entered a new phase with the sovereign debt crisis of some Eurozone economies; and then it reached another peak, adding a social and a political dimension, with a further rise in unemployment, increasing poverty and social exclusion, as well as growing political dissatisfaction, declining consensus among the middle classes, a resurgence of populist nationalism, which challenged the established parties and in some cases even threatened democratic stability.

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