Reflections On The Global Economic Crisis And What To Do About It

A Book Tour by Christopher Schaefer Ph.D.

This multi-year reflection on the global economic crisis lists a variety of books that I have found informative and useful in making sense of our present predicament and includes social and political perspectives without which the economic issues lack context.

  • The first book, by David Korten, When Corporations Rule the World (Berrett-Koehler, 1995), describes the marauding tactics of global corporations in bending national governments and international agencies to their will, while maximizing their profits and destroying both cultural and natural environments. It provides a good context for understanding the globalization movement and the principles and tactics of free market capitalism.
  • In 2008, just at the beginning of the American and then later global economic meltdown, Kevin Phillips published Bad Money: Reckless Finance, Failed Politics and the Global Crisis of American Capitalism (Penguin, 2008). This entertaining but depressing study, which describes the thoughts and actions of Wall Street moguls and their political henchman in Washington, both Democrats and Republicans, provides a detailed case study of how most of our institutions have failed us, from the watchdog agencies, such as the S.E.C. (Securities and Exchange Commission), the rating agencies (Standard and Poor’s) to our political representatives in controlling the excesses of the financial sector. Phillips demonstrates the truth of Gresham’s Law, “bad money drives out good money, or bad capitalism tends to drive out the good and not the reverse.“
  • A deeper look at the intersection of politics and economics is providing by the very insightful but also quite harsh reader, The Global Economic Crisis: The Great Depression of the 21st Century (Global Research, 2010), edited by Michel Chossudovsky and Andrew Gavin Marshall. This comprehensive volume covers a great deal of territory as shown by the table of contents, Part I: The Global Economic Crisis, Part II: Global Poverty, Part III: War, National Security and World Government, Part IV: The Global Monetary System, and Part V: The Shadow Banking System. The essays place most of the blame for current global problems on the United States because of its drive for global domination. Its sometimes strident tone is unfortunately seldom relieved by clear suggestions for transformation.
  • For a more conventional but still very far-reaching analysis see Joseph Stiglitz, Free-Fall: America, Free Markets, and the Sinking of the World Economy (WW Norton, 2010). Stiglitz has also written an excellent study of the reasons behind the growing disparity of wealth in the United States and how neither political reform nor economic recovery is possible without addressing such inequalities. See The Price of Inequality: How Today’s Divided Society Endangers our Future (WW Norton, 2012). Robert Reich makes a very similar point in looking at stagnant wages since the late 70s and the toxic excess of income inequalities, which led to the indebtedness of the American consumer, in Aftershock: The Next Economy and America’s Future (Alfred A. Knopf, 2010).
  • Christopher Houghton Budd’s book, Finance at the Threshold: Rethinking the Real and Financial Economics (Gower, 2012), is full of intriguing ideas and challenges to mainstream economics. It locates the fundamental problem of the world economy in the excess liquidity in global financial markets: too many dollars or yen chasing too few opportunities for profitable investments. His answer to this problem, relying on ideas in Steiner’s World Economy, would be to vastly increase the amount economic life gifts to the young, to education and to culture, thereby enhancing creativity and innovation in all sectors of society. Another essential insight is the recognition that a global economic system requires global economic thinking and a global currency, such as bancor, advocated by John Maynard Keynes, the great British economist, at the end of World War II.
  • David Korten, in early 2009, just as the Obama presidency was beginning, wrote a compelling account of how the economy could be transformed, including abolishing Wall Street, reclaiming the right of issuing corporate charters and forcing companies to implement the triple bottom line; economic viability, environmental sustainability and community responsibility. The book, Agenda for a New Economy (Berrett-Koehler, 2009), was largely ignored by politicians and the mainstream press.
  • Then there is the hopeful and moving book by Charles Eisenstein, Sacred Economics: Money, Gift and Society in the Age of Transition (Evolver, 2011). His argument is deceptively simple but difficult to grasp. Simple because he, like Steiner, sees the fundamental problem of market driven economics as being the interest bearing nature of money and the existence of private land ownership as opposed to common ownership of land and natural resources. Difficult because to think in new ways about money, price, land, work and income, requires freeing ourselves from the taken for granted “truths” of modern economics which permeate our culture. Eisenstein’s solutions in the section called “ The Economics of Reunion,” include negative interest bearing currency which devalues if not spent, eliminating rents and interest, compensating for the depletion of the commons, and taking such steps as providing a Guaranteed Basic Income. Read this book if you are looking for inspiration and some hope and then add Martin Large’s Common Wealth: For a Free, Equal, Mutual and Sustainable Society (Hawthorn, 2012), for many examples of how a tri-sectoral, or three-fold approach to economic and social questions is already emerging in western societies. Finally add Steiner’s World Economy and Gary Lamb’s, Associative Economics, and you have the basis of a new economics curriculum and a description of what I believe to be a path toward a healthier economy and society.
  • Rather than waiting for the large institutions of society to change, we can take our money out of the large banks, participate in local investment networks and work toward a sustainable local economy such as Michael Shuman describes in Local Dollars, Local Sense (Chelsea Green, 2012). That is what I have begun doing with the Berkshire-Columbia Investment Network and other activities.