Systemic, Conjunctural or Policy Created?
New Directions in Modern Economics series
Edited by Turan Subasat
Chapter 1: The crisis in context
Turan Subasat PART I: INTRODUCTION Economic crises have long occupied an important place in the political economy literature. Political economy approaches to the global crisis can roughly be divided into three. First, there are those that result from the contradictory structural characteristics of the capitalist mode of production. These explanations include theories such as the tendency of the rate of profit to fall, the profit squeeze, underconsumption, overaccumulation, disproportionality and the moral depreciation of capital. Second, many argue that crises result from the conjuncture of unanticipated events such as rapid oil price increases, rapid advances in technologies, excessive financialization, the emergence of alternative centers of capital accumulation and repositioning in the class relationships. Third, economic crisis can also result from government policies, either intentional or unintentional. This approach is prompted by the apparent increase in the frequency and economic cost of crises since the 1980s when neoliberal policies became dominant in the major capitalist countries. In this view, the crisis of 2008 was the necessary outcome of a 30- ear trend in economic deregulation in the y advanced capitalist economies. This policy shift represented a conscious choice by the capitalist classes in each country, just as the previous period of regulation had been a policy choice. Most authors in this book recognize that the separation of causes along the above distinct lines may not be easy, as systemic, conjunctural and policy- riven factors often overlap and display a complex relationship. d Let alone complicated issues such as financialization, seemingly straightforward...