September 28, 2011 § Leave a comment
When the debt-bubble burst in 2008, the nostalgic pining for a return to Keynes gave birth to the last-ditch alliance of neo-Keynesian liberalism. As the bailout and stimulus packages shifted the debt problem back to the state, the crisis of the financial markets was replaced with a sovereign debt crisis, only on a much higher level than in the 1970s and with no leeway to repeat the operation. In the summer of 2011, policy makers have finally ‘run out of rabbits to pull out of hats’ as economist Nouriel Roubini puts it. We have been living on borrowed time. Without real growth, however, not only the question of debt sustainability becomes a tricky one. The covenant of capitalist societies itself is rendered nil and void.
What then distinguishes the current crisis from its predecessors? To answer the questions, we need to let go of the postmodern fiction of an infinitely malleable reality. By producing goods and services the way it does, capitalism creates a historical dynamic which is as material and objective as it is directional and irreversible. While we are desperate for the light to emerge at the end of the tunnel as usual, there is no reason to believe that capitalism is endowed with the enigmatic capacity for eternal self-renewal. The present crisis does not simply mark the end of one particular model of growth that will give rise to a new model sooner or later, provided we are smart enough.
Economic collapse without salvation? by Heiko Feidner
At the moment, we are pursuing a path to solution that relies on the system’s own operations. We’re using the system, and how it works and functions, to fix the system. But in the event that this only defers a final reckoning with both debt and unsustainable growth and progress — what paradigmatic changes do we have in mind to make? The shock will strike with awe. And a disorderly unraveling could be disastrous. How do you begin planning for a plan B?