Posts Tagged ‘Europe’


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Mainstream economists argued, first, that they had identified the end to capitalism’s severe crises, via the institutional and structural changes that had ushered in the “great moderation.” Then, after witnessing the unexpectedly immoderate crash of 2007-08, mainstream economists assured us that economic growth would quickly be restored.

Well now, more than eight years into the current crisis, it is clear both that the initial downturn was much more protracted than mainstream economists (including central bankers, like Ben Bernanke) had the courage to admit and that the persistent negative effects of that crisis continue to depress actual rates of growth below the earlier trend.

According to a new study by Antonio Fatás and Lawrence H. Summers (pdf), “The global financial crisis has permanently lowered the path of GDP in all advanced economies.” The severity and duration of capitalism’s latest crisis can be seen in the charts above, in the successive downward revisions in economic growth (of both potential and actual growth) for both the United States and Europe that extend far in the future. “In fact,” Fatás and Summers argue,

there is overwhelming evidence, both from the current level of output, seven years after the crisis started, as well as the estimates of potential GDP that this has become a permanent shock. It is by now well accepted that these countries will not regain their pre-trend crisis levels.

This persistent crisis of capitalism, which was ignored by mainstream economists, also challenges the mainstream traditions of explaining business cycles by technology shocks and of separating long-term growth dynamics from short-run business cycles.

What mainstream economics obscures from view is that the pattern of capitalist development leading up to 2007 created the conditions for a much more severe downturn than mainstream economists had been willing to admit, and that the severity of that cyclical downturn undermined the long-term rate of capitalist recovery going forward, which has left mainstream economists without a convincing explanation.

Clearly, the predictions by mainstream economists were wrong. But they continue to ignore the real effects of their mistakes, in both the short and long runs, which are being visited upon the working-classes in the United States and Europe.


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familyvalues karikatur für tribüne- Neue EU- Grenze


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I’ll admit I’m of two minds about all the positive references to European socialism these days. I’ve read enough police procedurals by Per Wahlöö and Maj Sjöwall to know all is not well in the kind of social democracy that many countries in Europe managed to build in the postwar period. More seriously, I think we’re setting our sights too low if our horizon is limited to what some sectors of some European countries have been able to achieve (and, of course, what they’ve left untouched)—not to mention the forms of austerity European socialists have been attempting to manage after the crash of 2007-08 and their unwillingness to deal with the current massive inflow of refugees.

On the other hand, there’s something useful in challenging the constraints imposed on discussions in the United States by referring to the kinds of life and work people have been able to create in Western Europe. Bernie Sanders, to take one prominent example, refers to universal healthcare, free public education, better childcare, and higher wages in Denmark and Sweden as examples Americans might emulate.

And then there’s Chantal Panozzo’s description [ht: sm] of the differences between working in the United States and in Switzerland.

A hiring manager at an American company who interviewed me recently for a permanent position asked me how much vacation I wanted. When I said four weeks, which is the legal Swiss minimum, she paused and said O.K., but then informed me that I would need to check my phone and email during this time.

I responded that checking my email on vacation wasn’t my definition of a vacation. She didn’t know what to say. Finally, she grudgingly said they could write it into my contract that I wouldn’t have to check my email during vacation. But the situation made me wonder, once again, if a country that bred this kind of culture was a place where I wanted to spend the rest of my working life.

Later, when I asked a different American company about the possibility of working part time, four days a week, they said they didn’t know how that would work. I tried to explain how I had successfully worked part time in several jobs overseas — even creating television commercials while doing so, but it was no use. I was fighting a culture that was not ready for my “radical” Swiss ideas. The fact that it was my own culture — supposedly so advanced and creative — only made things worse.

So, what role does European socialism play in our current debates about life and work? Well, it shows, in a very concrete way, that things in the United States don’t have to be the way they are. “Look,” we can say, “they manage to do it over there. And we’re an even richer country. Imagine what we could do here.”

But then we can also say, there are more far-reaching changes we can make to enhance the life and work of the majority of the population—even more than European socialism has thus far been able to achieve.


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