A rigorous analysis of the collapse of the world economy in 2008—and why things don’t seem to be getting better.
Following a crash and a modest bounce back, the world’s economic recovery has been stalled for at least two years, write economists Temin (The Roman Market Economy, 2012, etc.) and Vines (co-author: The IMF and Its Critics, 2004, etc.); moreover, they add, “the world economy is 10 percent poorer than it would have been had economic growth continued smoothly after 2007.” The crisis has been so deep and thorough that, in many ways, it parallels the Great Depression, which occasions a longish account of Keynesian economics and its theories of stimulus and monetary versus fiscal policy—all matters in which economists will be right at home, though general readers not so much. Divided among different shifting blocs at a time of economic regime change, whence leaderless, the world’s economy risks falling into another Depression, the authors argue, unless appropriately post-Keynesian remedies are put into place, particularly to settle the deep imbalance in trade flows and payments. We need only look for examples at the imbalances that obtain between parts of the European Union and between the U.S. and China, but the authors give others over time. Examining alternatives such as a “floating exchange rate world” and a China willing to export less (and a U.S. willing to consume less, for that matter), they explore the possibilities, however remote, of avoiding further calamity. Suffice it to say that austerity is not one of them.
Dense and detailed. One doesn’t have to hold a doctorate in economics to read this sobering treatise, but it helps.