The essential truth we must learn from the Great Crash of 2008 is that nationalisation is back on the agenda. We cannot afford vital strategic monopolies to be in the hands of private cartels whose aim is maximising profits regardless of the cost to society. Nationalised concerns remove vital industries from the grasp of international speculators and divert their profits to the state for the common good.Privatised utilities for example require wasteful duplication of infrastructure such as headquarters and computer systems and already we hear that power generators welcome "decarbonisation" so that they can increase further their profits made from providing householders with more expensive means to heat their homes, and industry to manufacture its goods.We must rediscover the social market economy where the commanding heights are under government control and safe from predatory equity funds and whose profits return to the state for further investment. Alas given that the main political parties in the UK are now in thrall to the idea of a deeper and wider Europe no progress can be made to roll back the American model of political economics so ardently pursued by the non-one nation Conservatives under Thatcher and the betrayal of democratic socialism by the CIA's top agent in Britain Lord Blair, and his associate, the soon to be Lord (not George) Brown. The actuality is that the EU paves the way for international capitalism by sweeping away the nation state and enforcing regulation to reduce the power of national governments to control economic policy within their own boundaries. It follows therefore that if we are to rediscover the enormous benefits of public ownership we must leave the European Union, for its Commissariat will oppose nationalisation by tooth and claw. The defeat of New Labour at the election of 2010 will give the Labour Party an opportunity to renew itself as a non-EU, social democratic party, under a principled leader, and a patriot. But is there a leader capable of such a task ?

I'm not at all convinced by Perez's theory, though it seems to be getting remarkable traction in the British left. The glaring omission from the list of historically-oriented economists offered here is Keynes, or more specifically "post-keynesian" followers and Marxist-Keynsians like Magdoff and Foster (see their latest book: www.monthlyreview.org).

From this perspective, weak demand in mature industrialised economies as resulted in stagnation since the 70's, with growth only sustained by increasing private debt, asset-price inflation and the growth of the finance sector (see also Crouch's Thinkpiece on "privatised Keynesianism". This trend is unsustainable and has resulted in a worsening series of financial crises of which 2000 and 2008 are the lastest. The ICT revolution was notable for the fact that it wasn't able to stimulate demand in a significant way, but was just another passing excuse for speculation. What lies before us, from this perspective, is either more of the same leading to an even bigger crash (sovereign debt + dollar crisis?) or a long period of de-leveraging and deep stagnation. I'm afraid I think this is a much more logically and empirically convincing analysis than Perez's pattern analysis.

Tim,

Thanks for your comment. I'm not sure that the analysis you present there is necessarily incompatible with Perez or my piece. One of the key things I tried to do was explain why the need for demand-side policy (not based on debt) becomes a strong economic imperative in the wake of a major crash and, hence, may open the door for a more progressive economics in the way envisioned by Perez.

Of course, it may be that my analysis is simply too optimistic and that the contingencies of this current crisis will not allow for a really progressive moment. I, and I think Perez herself, thinks the jury is still out on that one. The resolution of that issue though is probably as much to do with politics as economics.

So many erudite words are being spoken about this most recent economic crash that the simple underlying truth is not seen.

This is a non-academic layperson understanding:
Capitalist economy is superbly competent at producing everything society needs and desires but is lousy at distributing what it produces.
The simple reason for this failure is that while production is largely a matter of economics, distribution is largely a matter of politics.

The purpose of economic agents is to produce what we need to have and want to enjoy by way goods and services. However, economic theorising has constructed an added and unnatural burden for the economy. That unnatural burden is in the form of an expectation to deliver "full employment" as a social good. In economic reality, as opposed to economic theorising, employment is a mere "by-product" of production, not its purpose.

And here is the plain truth. No mainstream economist is willing to admit that the apparent need for full employment arises only because distribution of purchasing power essential for adequate aggregate demand is closely tied to employment.

Recessions are simply periods of over-production in relation to the purchasing power of market participants. So a "progressive" economic model has to recognise that wealth creation is not dependent on full employment. In the current and future era of "jobless growth" income distribution can not remain closely tied to employment.

Solutions are also relatively simple.
An unconditional Citizens Income --- or National Dividend is one.
A more comprehensive solution has been available for at least fifty years in the form of a mutated capitalist mode of production where everyone is a capitalist (deriving significant income from owning productive assets). This new capitalist model goes under the name of Binary Economics, a paradigm that recognises that most wealth (70-90 per cent, depending on who does the statics) is produced by capital-intensive, labour-saving processes.

Adam Lent's article was interesting. I had not heard of Perez before and she does seem to be on to something. Hopefully she is not being too optimistic about the future!

The article reminded me about a Russian economist called Kondratiev. He put forward a similar theory to Perez and Eric Hobsbawm has commented that:

"good predictions have proved possible on the basis of Kondratiev Long Waves—this is not very common in economics—has convinced many historians and even some economists that there is something in them, even if we don't know what."

One of Kondratiev's predictions was that the 1980s would be a time of recession, which is pretty impressive for someone who was shot in the 1930s!

Why don't we just start off from the point of ensuring that all actions we take are in accordance with a decent outcome for all?