For as long as there has been capitalism, there have been economic crises which have been responsible for drastic shifts in the global economic order.
For example, the Great Depression brought about the creation of the post-war Keynesian consensus that supported economic regulation and intervention, combining a strong welfare state and labor unions. This system reigned until the stagflation of the 1970’s, which contributed to the replacement of Keynesianism with the neoliberal consensus that instead encouraged free trade, privatization, deregulation and austerity.
The shocks caused by the Great Recession played an important role in the rise of modern populism, both on the left with the growing popularity of socialism and social democracy, and on the right with the rising tides of ultra-nationalism and fascism, which while vastly different in goals and policies, both reject the neoliberal consensus. Despite the growth of these movements, however, a new economic consensus has yet to emerge and neoliberalism remains predominant. This could change quickly though.
The potential for a new economic crisis exists in a few ways, one of the most visible signs being high levels of household consumer debt. The average American household owes over $15,000 in credit card debt, over $25,000 in auto loans, over $50,000 in student loans and over $180,000 in mortgages.
The Bank of England and the International Monetary Fund have both warned that this growing consumer debt could be dangerous, as was demonstrated by the subprime mortgage crisis of 2008. This could potentially be exacerbated by the proposed tax code which the House of Representatives just recently passed, which ends deductions for student loans, effectively increasing their cost by about $24 billion over the next decade.
There are also the issues posed by climate change, exacerbating the number and intensity of extreme weather events such as wildfires and hurricanes, which over the course of the last decade has cost the United States more than $350 billion.
Beyond this, rising temperatures will likely lead to higher food prices and increased demand for energy, even if the decreases in fossil fuel emissions aimed for by the Paris Climate accords are reached.
This only skims the surface of potential crises, but the point here is not to speculate the exact nature of the next economic crisis, but to raise the question: how will we address it?
In the short run, and in the interest of weathering such a crisis, I suggest we should pursue a system of “universal basic services” to ensure that even in the worst of times, everyone has access to food, shelter, transportation and information. In the long run, we should do what we can to pursue a “post-scarcity” society that might allow us escape from the tides of economic crisis. On this subject, I recommend the works of the political theorist Murray Bookchin.
