Financial and Economic Crisis of 2008
In 2009 “The Financial and Economic Crisis of 2008-A Systemic Crisis of Neoliberal Capitalism” by David Kotz was published in the Review of Radical Political Economics. It quickly became one of the top downloaded articles of the year for the journal, so the author has provided a follow up with additional information about the popular article to feed our interest:
Since the late 1990s I had written several articles about the neoliberal (“free market”) form of capitalism in the US. The articles sought to explain how, despite the stagnation of wages under neoliberal capitalism, the US economy nevertheless had relatively long economic expansions after 1980. Who could buy the increasing output of an expanding economy if wages were stagnating? As I did the earlier research, I noticed an interesting point: the very same developments that made long expansions possible contained the seeds of a severe economic crisis. I made the latter point in an article I wrote in late 2005 which was published in RRPE in 2008 (“Contradictions of Economic Growth in the Neoliberal Era”).
When the financial and economic crisis broke out in September 2008, I wrote the article rather quickly, since by then I thought I understood how and why a severe crisis had been brewing in the US economy. Three key features of neoliberal capitalism — growing inequality, a speculative and risk-seeking financial sector, and a series of large asset bubbles — both explained the long economic expansions and also the looming crisis. In my view, the most interesting aspect of the analysis in this article is the implication that this crisis will lead to a major institutional restructuring of US and global capitalism. This conclusion draws on both theoretical analysis and historical precedent.
This article won the Distinguished Achievement Award of World Political Economy of the 21st Century from the World Association for Political Economy, for “important innovations in the theory or methodology of political economy,” presented in Suzhou, China, May 29, 2010.
