Austerity blues or going for growth?

Sunday 31 October, 5.30pm until 6.30pm, Henry Moore Gallery

The financial implosions of 2008-09 brought Western capitalism to its most severe economic crisis since the Second World War. Opinion remains divided on the underlying causes, and the implications for the future. In particular, views diverge today on what role if any the state must play in restoring prosperity. But are we even having the right debate?

A year ago we were all ‘Keynesians’ again, but this consensus was short-lived. Many, including the governments of Germany and Britain, argue the most important priority now is to cut back on state spending and reduce the debt burden. Without an urgent shift into austerity mode, they claim, funding could dry up, the private debt crisis will become a sovereign debt crisis, interest rates will go sky high and the economy will relapse into recession and an even deeper crisis. Others, including the White House, warn that premature budget squeezing will itself precipitate a double-dip recession. The private sector remains too weak to take up the responsibility for driving growth. The lesson of the 1930s, they argue, is that withdrawing the stimulus too quickly only prolongs and exacerbates the crisis.

But perhaps it is time to break from this Keynesianism versus Austerity discussion and recognise that neither will restore vitality to Western economies. Some argue the real problems are more substantial and deep-rooted, requiring radical change and more incisive state intervention. The state should be less concerned with short-term solutions, and focus more on addressing the long-term economic problems that brought the crisis about. Unless we can revitalise growth, other economic challenges will be far more difficult. So did the government stimulus measures prevent us from falling into depression, or merely postpone the next phase of the crisis, building up their own problems along the way? Is the private sector credit crisis now morphing into sovereign debt crises, as government levels of debt explode? Does this dilemma necessitate austerity policies? Or do we need more focus from the state on investment and rebuilding for growth?

Listen to session audio:


Paul Mason
broadcaster; author, Financial Meltdown and the End of the Age of Greed; technology editor, BBC's Newsnight

Phil Mullan
economist and business manager; author, Creative Destruction: How to start an economic renaissance

Stefan Stern
director, High Pay Centre

Rob Killick
CEO, Clerkswell; author, The UK After The Recession

Produced by
Angus Kennedy convenor, The Academy; author, Being Cultured: in defence of discrimination
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