…Boom-Bust-Boom-Bust-Boom…
The
business cycle is a fundamental and undeniable cornerstone of economic
theory. However, the economics expert and former British Prime Minister, Gordon
Brown, is often quoted as demanding 'no return to boom and bust' (1997). These
fabled words will doubtless outlive him, and go down in history as a prime
example of 'man-eating-hat' - or perhaps that should be 'hemisphere-eats-hat'.
Brown was not alone. Adam Curtis's excellent documentary series, 'All
Watched Over by Machines of Loving Grace' (2011) exposed the economic
optimism which dominated the end of the 20th century and opening of
the 21st. A new-found global confidence (or complacency) meant
that major decision makers in charge of the world's largest economies garnered
the belief that recessions were dead in this age of ever advancing computer
technology, wealth and prosperity.
WRONG...... (cue 'Family Fortunes' buzzer)
They should have listened to the late-great J.K. Galbraith
(JKG) - the eminent scholar of the 1930s 'great depression' - who warned in June
1999 that this talk was a result of 'another exercise in speculative
optimism'. Speaking to the London School of Economics he warned ominously:
"Let us have both the needed warnings against speculative excess and
awareness that the ensuing slump can be painful." Nevertheless, the boom
continued unabated and the world economy stumbled and lurched its way to our
deliciously entitled 'Credit Crunch' (…a tasty sandwich now available at all
self-respecting chain-bakeries across the UK...). Ever since 2008, commentators
and journalists seem to have bemoaned the special nature of the misfortunes of
the current generation.
But was it such a huge surprise? Had we learned nothing of
close to seventy years of academic scrutiny to know that no boom can last
forever? My A-Level Economics lecturer and general font of knowledge, Mrs. K.
Matthews, was prophesying our economic doom in 2004 - that the bubble would
soon burst. I distinctly remember poo-pooing the idea of recession, having
never experienced one first hand. Poor old JKG lived to a grand old age of 97
and died (April 2006) almost 2 years prior to the global slump - he never lived
to pronounce, 'I told you so!'
Well none of the above (a rudimentary view of exceedingly
complicated economics) will come as much of a surprise. What with Robert
Peston's moaning, groaning and gurning during the Six O'clock News - and
seemingly endless political satire of disaster after disaster - the creaking-old term 'crisis' could do with
a well-earned break (Fill-in where appropriate: Debt-, Eurozone-, Financial-,
Greek-, Foreign-Currency-Speculation-, Oil-, Bankers-, Ecological-,
Development-, Food-, Water-, Fuel-,....). However, any claim that the events
effecting the global markets and national economies are new and unique
should quickly be dismissed.
Talk of the economic crisis and the Great Depression of the
1920s and 1930s is relatively commonplace. In fact many similarities are drawn
between the way that global recession played out and our own. Like now,
property prices were a fundamental cause. Like now, the slump shocked a world
which had dared to hope that things might just keep improving - people might
just keep getting richer, happier and safer. Like now, the slump led to the
fall of governments and national soul searching. First there were calls for
austerity (like our old pal ‘Dave’ Cameron, LOL). Then people got sick of that,
and demanded a change - just look to the French and Greek voters, and even
British local elections for evidence of the assonances with today. Like now,
there was also an infamous turn to the extremes and to 'strong' rulers (1920s
and 1930s: Germany, Italy, Hungary, Spain, Austria, Poland, Portugal, Romania).
The success and resurgence of an array and variety of right-wing parties in
Europe (Netherlands, Denmark, France, Greece, Britain) is a gloomy reminder of
what can happen when times are hard and people need scapegoats.
In my studies I am constantly reminded of how little humans
really change. From the Roman ‘Crisis of the Third Century’ to the ‘South Sea
Bubble’ of the early 18th century, the history of human society is cluttered
with many ‘great’ recessions. My own historical scope falls later in the great
terrible, joyful, farcical parade of human history. Studying the period from
the late 1880s into the twentieth century it is impossible to ignore the 'Long Depression', which spanned the 1870s, 80s and 90s and effected the entire
Western hemisphere. There is no question the world was a different place back
then. For the great majority life was immeasurably harder in a way which would
be hard to comprehend today. But that depression had results which we would all
recognise today:
- Interventionism - the rise of socialism in this instance - experienced a great surge of popularity and developed many of its key ideas
- Right-wing parties and ideas of population control and eugenics can be traced back to this formative period
- New economic powers surged where the old ones stuttered: in that time Britain's industrial might was challenged and subsumed by Germany and the United States - today China has continued its rise while the older 'western' economies spluttered under a mountain of debt.
- Rise in the popularity/sympathy of/with the military (as seen in the UK) and popular and social imperialism: through 'new imperialism' and the expansion of European empires (seen today recent revival of the Falkland Islands/Malvinas dispute - here intended as a device to explain the "the diversions outwards of internal tensions and forces of change in order to preserve the social and political status quo" (see H-U. Wehler, 1969))
- Censure of the 'new journalism' and its profit-driven, voyeuristic and intrusive approach (phone hacking). (Lee, A.J. (1976) pp. 117-118)
A particular area of interest for my own studies is the
development of a discourse of 'National Efficiency'. In 1896 E.E. Williams (an
economic polemicist) published the best-selling book, Made In Germany.
Williams posited that an external industrial threat (Germany) had developed as
a result of an internal British lack of efficiency and work-ethic. Amongst many
other works of this time, the discourse quickly gathered support from across
the British political spectrum. In the years 1896-1910 the idea of regenerating
a decadent, unappreciative and increasingly lazy population and economy gained
much attention. The press and politicians continually showed a special interest
in reforming every aspect of British society: education, politics, foreign
policy, industry, army, civil service, the media and even the 'national
physique'. Indeed the ideas of eugenics and Social Darwinism can trace some
of their roots back to this developing intellectual discourse. (See G.R.
Searle, 1971)
Although this movement eventually died away, its legacy did
outlast its proponents. In the twentieth century governments across Europe and
North America adopted approaches which shared the same genetic make-up. Social
reform and interventionism, technocracy, 'cult of the expert', Fascism,
National Socialism - all share elements of the ideas of these outspoken British
reformers. In its response to the perceived ills of a society of contrasts,
National Efficiency also can be linked to many of the features of our current
'modern' society. Technocratic governance in Italy (Mario Monti),
demands for industrial regeneration and rebirth (the UK in particular),
political reform (AV referendum, House of Lords reform, expenses scandals) and
demands for a change in the way the media operate (phone hacking) are all major
issues and debates upon which our commentators and political 'experts' cogitate
and masticate.
The perennial question for the historian: SO WHAT!!?? Well that’s
a tough one. Each grand recession is the same but different. There is no way to
argue that each one follows an exact model, and there are innumerable
fundamental changes in the structure and nature of each society - they belong
to distinct 'epistemes' as Foucault would probably say (although he would
probably do it in a 3 volume dialogue studying the history of chicken farming
in 18th Century Alsace). Perhaps the only thing we can truly learn is
that there is and never will be an end to the business cycle. Humans
might change their clothes, their methods of communication and what they have
for dinner - but the lumps of squidgy mush inside their little crania still go
on producing the same old answers to the same old questions.
All recessions end, and although they often bring out
the worst in humanity, they can also produce grand reform for the benefit of
all. Therefore, we should all stop mithering about it, relax and remember to
embrace the mantra of the Hitchhiker’s Guide to the Galaxy: "Don't
Panic!" (Douglas Adams, 1979).
Unless Greece defaults……
Patrick Longson
(edited by Jamie Perry)
(edited by Jamie Perry)
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