New series: preparing for the next crisis

In 2007 the left was not prepared to respond to the crisis. This time it must be different.

Laurie Macfarlane
15 August 2019
Image: Sam Valadi, CC BY 2.0

In recent days the warning lights for the global economy have started flashing red. Yesterday it was revealed that China’s industrial output is growing at the slowest pace in 17 years, while the powerhouse of Europe's economy – Germany – is facing recession.

Financial markets have been further spooked by the inversion of the ‘yield curve’ in the US and the UK, which means that the cost of government borrowing for longer term bonds has become cheaper than for short term bonds.

Historically this has served as an accurate predictor of a looming recession: an inverted yield curve has preceded every US recession for the past 45 years. These developments confirm what many economists have long feared – that another crisis could be just around the corner.

However, as the below table shows for the US, inverted yield curves don’t immediately lead to recessions – they can take a year or more to materialise.

Yield data.png
Source: Bloomberg

What does this mean for those who are striving to create a fairer and more sustainable economy?

After the last crisis hit in 2007, a lack of preparedness meant that many were slow to respond. Without a coherent analysis of what went wrong and a credible alternative, many progressives struggled to make their voice heard in the process of reform that followed. As a result, governments around the world were able to double down on the existing neoliberal order, imposing austerity while scapegoating minority communities.

This time it must be different. In a famous remark, Milton Friedman, a key architect of the neoliberal ascendency, said:

“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.”

Today the set of economic ideas and policies that have dominated politics for the past 40 years are rapidly losing legitimacy, even in the eyes of their previous adherents.

In a remarkable editorial this week, the Financial Times – long a supporter of free market orthodoxy – declared that “markets do not allocate capital to the most productive places”, and called on countries to “drop concerns around state planning” to enable a “transition to a worker-led economy”.

As the global economy slides towards a recession, it is essential that those who want to see a fairer and more sustainable economic system start planning how to respond to the next crisis so that whenever it arrives, we do not see a repeat of 2007/08.

That’s why today we are launching a new series, ‘Preparing for the next crisis’, which is inviting contributors to debate and discuss the contours of a response that not only ameliorates the harmful effects of a recession, but which also lays the foundations for a new political-economic paradigm.

We are not simply looking for a shopping list of ideas, however. We are also inviting contributors to grapple with strategic questions relating to how to turn the necessary ideas into reality.

This includes identifying the ‘critical paths’ that need to be followed to open up space for radical change before, during and after a crisis; appraising the power dynamics of implementing bold policies and displacing entrenched vested interests; debating any key tensions or disagreements; and highlighting any research or policy development work that needs to be undertaken to fill any intellectual or implementational gaps.

If you would like to contribute to the series, please get in touch.

Can there be a green populist project on the Left?

Many on the Left want to return to a politics based on class, not populism. They point to Left populist parties not reaching their goals. But Chantal Mouffe argues that as the COVID-19 pandemic has put the need for protection from harm at the top of the agenda, a Left populist strategy is now more relevant than ever.

Is this an opportunity for a realignment around a green democratic transformation?

Join us for a free live discussion on Thursday 22 October, 5pm UK time/12pm EDT.

Hear from:

Paolo Gerbaudo Sociologist and political theorist, director of the Centre for Digital Culture at King’s College London and author of ‘The Mask and the Flag: Populism and Global Protest’ and ‘The Digital Party: Political Organisation and Online Democracy’, and of the forthcoming ‘The Great Recoil: Politics After Populism and Pandemic’.

Chantal Mouffe Emeritus Professor of Political Theory at the University of Westminster in London. Her most recent books are ‘Agonistics. Thinking the World Politically’, ‘Podemos. In the Name of the People’ and ‘For a Left Populism’.

Spyros A. Sofos Researcher and research coordinator at the Center for Middle Eastern Studies, Lund University and author of ‘Nation and Identity in Contemporary Europe’, ‘Tormented by History’ and ‘Islam in Europe: Public Spaces and Civic Networks'.

Chair: Walid el Houri Researcher, journalist and filmmaker based between Berlin and Beirut. He is partnerships editor at openDemocracy and lead editor of its North Africa, West Asia project.

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