Mural in Santiago, Chile. Flickr/Francisco Osorio. Creative commons.The fact that western capitalism is in a severe crisis is now so commonplace that it’s become almost a cliché. In 2008 the global financial system stood on the brink of collapse and the rescue measures undertaken by panic-stricken governments will burden their economies for years to come.
Economists and analysts of a neo-conservative, economically liberal frame of mind have nothing to add to our understanding of this. Their models simply cannot explain why a system based on de-regulated market activities can ever undergo crisis – or why it should not rediscover the path to prosperity if the state is gradually dismantled and market forces let loose.
But economists and analysts tuned to Keynesian and reformist thinking are much closer to reality: their criticism amounts to saying that the wrong kind of policies – deregulation of markets, liberalisation of the financial system, shrinking the state and the scandalous growth in inequality – had already undermined the system’s stability. In a word: the wrong policies have been pursued for 30 years and a disastrous set of policies has been enacted since the outbreak of the crisis, but the system can only be stabilized once the right policies are in place.
