Sometimes it is difficult to believe, but things change. The weather, friends, relationships, workplaces, market conditions, business opportunities – they all change. What works one day does not work another. Going out in a pair of shorts and T-shirt might have been a good idea yesterday but might not be today. Tomorrow, meanwhile, could be an umbrella and raincoat day, however much we might hope not.
It is a natural human tendency to assume that certain things do stay the time. Not just because it might suit us, but because we must plan and build. If everything always changed then it would be very difficult to do anything complex, such as develop civilisation. Hence our society's focus on property rights and stability.
It is ironic therefore that the result of giving greater significance to the wisdom of the markets, compared with the knowledge of planners in government, or the aristocracy (as in previous times), has been to not just to create much greater wealth but also greater instability. Market society has flattened class barriers and opened up society but has also created new inequalities and uncertainties (cf New Labour). Placing great store in the meaning of the market price meant good times when prices rose but huge uncertainties when prices dropped sharply. Massive volatility in the indexes our society has given great significance means uncertainty spreading throughout the economic system.
Today's recession is a significant turning point in western capitalism. It sees the demise (for now) of debt-led financial capitalism and the return of government dominance of the markets. How long the recession lasts will be significant. If it is short but sharp then it seems likely that the make up of our societies will remain largely unchanged. The power dynamics between the public and private sectors will be rebalanced slightly, but not greatly. This means evolution rather than revolution; a continuation of recent years' unexciting but quite fruitful technocratic rule (in the domestic sphere).
However, if the recession leads to real economic (and then social) strife, we may see real change. And while real change may be the demand of campaigners across the political spectrum, recreating the institutional frameworks to allow all to gain from such a transformation is likely to take many years, and may never be achieved. In short: expect a 'lost decade' of real economic and social pain if a recession lasts longer than two or three years.
5 days ago