Chapter 3: Explanations of the Financial Meltdown and the Present Recession
The present economic crisis started in June 2007 and is still unfolding, with high rates of unemployment, an ongoing banking crisis in the euro zone, large public sector deficits in many of the advanced economies and unresolved problems of global trade imbalances. Explanations of the crisis are contestable, reflecting competing discourses and narratives. The languages that define each of these narratives are incommensurate in the sense that they offer competing views of the world and allow little room for agreement as to causes and what needs to be done. To say that a particular network of concepts is contestable is to say that the standard and criteria of judgement it expresses are open to contestation. To say that such a network is essentially contestable is to contend that the universal criteria of reason, as we can understand them, do not suffice to settle these contests. (Connolly 1983, p. 225) In a debate launched in the pages of The Financial Times during July 2010, Wolf (2010) pointed to the fierce debate on the themes of austerity and stimulus between market liberal ‘cutters’ and Keynesian ‘postponers’. Ferguson (2010) and Taylor (2010) favoured immediate reductions in public expenditure. The evidence is very clear from surveys on both sides of the Atlantic. People are nervous of world war-sized deficits when there isn’t a war to justify them. The remedy for such fears must be the kind of policy regime-change . . . which the Thatcher and Reagan governments successfully implemented. Then, as today, the choice was not...
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