When the current global capitalist crisis struck a few years ago, some scholars and commentators on the left rushed to proclaim the end of neoliberalism and the likelihood that capitalist elites would respond to the crisis through a global social democratic project. At the time, there were two main reasons for such an expectation. The first reason had to do with the evident willingness of capitalist governments to intervene on a massive scale to bolster a bankrupt financial sector that threatened to bring down the global economy. The second reason had to do with the parallels that could be and were drawn between today’s Great Recession and the Great Depression of the 1930s. As a number of progressive economists pointed out at that time, just as in the case of the 1930s Depression, the current capitalist crisis was preceded by a drastic increase in the levels of economic inequality. This increase probably contributed to the onset of the crisis by undercutting consumer demand and encouraging companies to shift from productive investment to financial speculation that generated unsustainable asset bubbles, which were sooner or later bound to burst. Given the parallels in the factors contributing to the two crises, it was therefore assumed that a response, along the lines of Franklin D. Roosevelt’s New Deal, might be the obvious way out of the economic doldrums. (…)
Costas Panayotakis is Professor of Sociology at the City University of New York. His research interests are politics of scarcity and economic democracy.