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 |
| Chair: | |
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Rob Killick
CEO, Clerkswell; author, The UK After The Recession |
Back in the 19th century, the creditors of bankrupt governments had very much their own ways of ensuring they got paid.
Alan Beattie, Financial Times, 2 August 2010To preach austerity as the solution to depression is the equivalent of drilling holes in your head to cure your migraine while dismissing aspirin as for wusses
Johann Hari, Independent, 30 July 2010Britain should get its priorities straight. It needs more growth and infrastructure and less regulation and banker-bashing
Daniel Bel-Ami, Guardian, 24 July 2010We have to avoid an asymmetry between bold, if justified, loosening and unduly hesitant retrenchment. There are three main reasons for starting well-designed fiscal consolidation strategies in the industrial countries now, precisely to consolidate the present recovery.
Jean-Claude Trichet, Financial Times, 23 July 2010Out of every 10 British jobs, services (public and private) now account for more than eight and manufacturing less than one.
Brian Groom, Financial Times, 21 July 2010It says a lot about the talents of John Maynard Keynes – and just as much about the shortcomings of modern macroeconomics – that when the financial crisis struck, policymakers instinctively reached not for their fancy models, but for the Keynesian idea of fiscal stimulus.
Tim Harford, Financial Times, 21 July 2010People who are sceptical about the virtues of economic growth are, writes Daniel Ben-Ami, “inhumane, elitist, conservative, misanthropic and more preoccupied with consumption than anything else.” This is not true but it’s a good start to an extremely bitter and important debate.
Bryan Appleyard, bryanappleyard.com, 19 July 2010To tighten or not to tighten – that is the question. It is one to which policymakers have started changing their answers. Are they right to do so? That is the issue addressed in the Financial Times this week, echoing the fierce debates of the 1930s.
Martin Wolf, Financial Times, 18 July 2010The US is sinking into bitter self-hatred when the world economy needs it to become an export-led powerhouse
Anatole Kaletsky, The Times, 7 July 2010
There is an alternative to austerity: economic growth
Neither the Budget’s authors nor the Budget-knockers have a vision for reinvigorating the economy.
Daniel Ben-Ami, spiked, 23 June 2010Spend now, while the economy remains depressed; save later, once it has recovered. How hard is that to understand?
Paul Krugman, NY Times, 20 June 2010
In place of GDP, Mismeasuring Our Lives introduces a bold new array of concepts, from sustainable measures of economic welfare, to measures of savings and wealth, to a “green GDP.”
Joseph E. Stiglitz, Amartya Sen and Jean-Paul Fitoussi, New Press, 18 May 2010
The financial crisis brought the world to the brink of economic breakdown. Now bankers' bonuses are back, house prices are rising again and politicians promise recovery while unemployment rises, frictions with China grow and the planet overheats. Is this really sustainable?
Philippe Legrain, Little, Brown, 6 May 2010
Mason explains how deregulation is at the heart of the collapse of the banking system in September and October 2008 and how it led to expanded subprime mortgage lending, an uncontrollable derivatives market, and the lethal fusion of banking and insurance.
Paul Mason, Verso, 1 April 2009
