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We're living a paradigm shift from the neoliberal system to something new. Whatever it is, it won't be politically "liberal".

A short economic history of the 20th century:

After the Long Depression of 1873-96, there is a period of liberal democracy lasting about 30 year until the Great Depression, and punctuated by the banking Panic of 1907 and WWI (1914-18). Then there is a speculative binge ending in the crash of 1929, which ends the system.

The Great Depression and WWII are a conflict between the failed liberal  democracy and two critiques of it, socialist and fascist. In the end you get a sort of synthesis of the liberal and socialist positions (think The New Industrial State). This lasts from 1945 to the 1970s, roughly another 30 years.

The 1970s is another long transition crisis, with the neoliberal paradigm replacing the bastardised Keynesianism of the 50s and 60s. There follows a 30-year period in which Social Democracy capitulates to the Thatcher/Reagan revolution and the political system is again liberal democracy. The period is punctuated by the Black Monday of 1987, the EMS crisis of 1992-3, the Asian Crisis of 1997-8, and the popping of the .com bubble in 2000. The decade of 2000 is the final binge of this liberal democratic period, ending in the subprime crisis and followed presumably by another decade of transition crisis.

Because there isn't a left ideology waiting in the wings, the system that emerges at the other end won't be a synthesis of liberalism and socialism, it may well be a synthesis of liberalism and fascism (the only new political movements in the last decade have been right-wing populist and xenophobic). Maybe a progressive (green left?) ideology will be articulated starting in the next few years, but it won't have its chance to become the new paradigm until at least 2050.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Migeru (migeru at eurotrib dot com) on Mon Jan 10th, 2011 at 05:04:19 AM EST

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