The Great Recession and the Contradictions of Contemporary Capitalism
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The Great Recession and the Contradictions of Contemporary Capitalism

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.
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Chapter 3: Marx, Keynes and Hayek and the Great Recession of 2008

Meghnad Desai


The recession which began in 2008 started as a financial crisis of a depth not seen before since perhaps the stock market crash of 1929 and the collapse of the Kreditanstalt in 1931. That shock was called the Great Depression and lasted from 1929 till 1940 in the USA (various other dates for European economies) as the recovery in 1937 was short lived. US GDP in nominal terms was $103.6 million ($976.1 million in 2005$) in 1929 and did not exceed that level till 1941, when it was $126.7 million ($1365 million in 2005$). It was during that crisis that the new theories of Keynes won over the economics profession as well as policy makers and the ideas of Hayek and, to some extent, Marx (about economic cycles at least) were discredited or at least devalued. This time around the recession of 2008 onwards has raised questions about whether Keynesian theories and policies can explain what happened or whether we need the devalued ideas of Marx and Hayek to come back into play (Desai 2008a, 2008b, 2009a, 2009b). The latest recession is as severe as the Great Depression.

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