Saturday, March 27, 2010

One comrade doth not maketh a movement...

above:   Once seeming to promise much, for many Peter Garrett has failed to shine as a politician.

In this political commentary piece, Geoff Drechsler questions inclinations in the Australian Labor Party (ALP) to turn to 'high profile' 'celebrity' candidates.  For Drechsler the real business of politics is in grassroots mobilisation and cultural struggle.  If Labor is ever to return to the 'front foot', it is a lesson its leaders must learn...

by Geoff Drechsler

The recent spectacle of Peter Garrett failing federally, and Minster Madden’s current travails in Victoria, highlight a longer term issue that the labour movement and Left needs to wary of - specifically the incapacity of individuals alone to be a catalyst for any meaningful change. And more generally how to achieve reform and change while participating in existing political structures and institutions.

Both these individuals seem cut from the same cloth. Both have celebrity status: Garrett as a rock singer in band Midnight Oil, and Madden as a professional sports player. Also, both have previously professed to have held more left wing philosophical positions than their current political affiliations: Garrett as an almost Nuclear Disarmament Party senator in the ‘80s and Madden as an associate and rumoured one time running mate for former left wing independent federal member, Phil Cleary. Both now are the personification of moderate Labor (with the exception of the odd reunion concert appearance for Garrett). For a while there has been press gallery gossip that each saw themselves taking responsibility for more important roles in the future sometime (though Garrett would want to be a patient man in light of recent events), and most importantly neither have been associated with any kind of dissent or alternative agenda within caucus or the broader Labor Party since their arrival in parliament.

For this exercise, there is no need to consider the commitment of these individuals to social change (being left wingers we have faith in human nature and we willl give them the benefit of the doubt and assume that they both have “the fire in their belly” still). The real issue is whether or not they, as high profile progressive individuals alone, can be the catalyst for any sort of meaningful change in the direction of the currently cautious Labor governments that they are part of. Unfortunately, the answer to this question is a resounding “no”. What is needed is, first, political education and discussion followed by the dissemination of ideas, with activists engaging party members and supporters through campaigns around achievable goals.

In the broader community, any sort of left wing agenda or program is going to be filtered through an increasingly right wing media who owes us no favours. This undermines the process of reform as with a diluted or confused message it becomes more difficult to mobilise supporters around goals and achievements. This is more concerning in a period of declining party membership of left and centre left parties (with the exception of the Greens), breaking the ability of a political organisation to directly contact its members and supporters and mobilise them.

Also, all of this can be seen as part of a broader process of ‘presidentalisation’ occurring in Australian politics, where, like America, the media, and therefore the broader community focuses on the one individual, currently Rudd. While the author would not wish to suggest the Prime Minster is not capable of carrying out this solo role (all evidence suggests he is well suited intellectually at least), ultimately this practice undermines the likely longer term success of his government as a reforming government, and creates issues regarding continuity in the wake of his departure. There are countless examples of other left of centre leaders who have variously enjoyed significant personal popularity at times, but have stayed too long - Helen Clark in New Zealand, Tony Blair in the United Kingdom etc.

Furthermore, any meaningful process of change will last significantly longer than the period of any one particular individual’s term of office or tenure. It is not unreasonable to assume that any significant programme reform would take a generation to implement and show results (Sweden as an example) in an advanced capitalist society, be it thoroughgoing social democracy or of a more Marxist orientation. Alas, also locally unfortunately, rolling back all of the mad, bad and sad things that the Liberals did in the previous ten years will take a lot longer than one term in the Australian context too.

Even a majority of left wing MPs in a parliament, without significant grass roots activity in wider civil society through familiar allies, like the trade union movement and party activists, is unlikely to get far in the context of an advanced capitalist society. Those who favour the status quo have had the opportunity for plenty of practise preserving it. Ultimately, it comes back to creating a political culture of participation, not because we have some predilection towards internal democracy (we should have that too for other good reasons) but because the first step is “getting the message out” and spectators are only ever that - spectating.

As the refrain from the classic ‘80s Redskins tune goes "Take no heroes, only inspiration..."

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Sunday, March 21, 2010

When the Labor Party Dreams – Class, Politics and Policy in NSW 1930-32,

above: The author of the book under review - Dr Geoff Robinson.   Dr Geoff Robinson is an Australian political scientist and historian.  He teaches at the Geelong campus of Deakin University and blogs on Australian and international politics

A review by Geoff Drechsler of a book by Geoff Robinson

Robinson, Geoff, ‘When the Labor Party Dreams - Class, Politics and Policy in NSW 1930-32’, Australian Scholarly Publishing, 2009

It seems so unfamiliar for Australia. The means: strikes, rallies, angry public meetings. The end: imagined utopias of plenty. Fast forward to now: stage managed sound bites; free market feast followed by unemployment famine as capitalism lets the world down again and people start to ask why. The author, like many others in his generation of political activists, thought that Australian history was limited to the ho hum of federation, but this book shows that there was a time when the great philosophical clashes of the 20th century played themselves out in Australia: when Australia was a programmatic pacesetter for the international Left, rather than a reluctant follower. And that all of this unfolded within sight of the Sydney Harbour Bridge.

Geoff Robinson’s “When the Labor Party Dreams - Class, Politics and Policy in NSW 1930-32” by Australian Scholarly Publishing is an excellent account of the period of the last Lang government: a period of Australian history that has attracted many attempts at examination and consideration, be they in print or documentary or drama.

Geoff Robinson's book stands out primarily for two reasons. The first is that Geoff has a background as a Labor activist. He has been inside the belly of the beast, and he employs new historical methods to get down to look at the sympathies of different social groups. The result is a history of the every day: the experience of the masses rather. And he avoids being mesmerised by high politics. In the past, the larger than life Jack Lang has loomed large over other efforts to look at this period and overshadowed attempts look at the day to day.
Most significantly, this book addresses a key theme that still challenges left governments around the world today: and that is the contradiction of a government that wants to change capitalist relationships of production and accumulation, while operating within the capitalist system itself. On one hand capitalism and its failings drive a desire for change amongst the Left and its working class supporters. But on other hand capitalism and its successful operation are linked to material prosperity and employment. After all, redistributive taxation relies on production for its success. The Lang government is very important because it represents the most conscious effort by any government in Australian history, so far, to change prevailing social and economic
arrangements. This sets Lang apart from the contemporary incrementalists in modern Labor.

The acceptance by modern Labor of the market driven privatisation / deregulation "small government" model, which is universal across the Australian political spectrum now, makes contemporary Labor’s position on economics indistinct from the position of their conservative opponents. The key policy differences now lay in environment, social and IR policy. In the 1930s, economic policy was one of the key areas of policy difference between the two major parties, particularly in NSW. Lang, and NSW Labor more generally, were unconvinced that free market solutions would mean socially just outcomes for their constituents or create the kind of society they wished for. The Great Depression had also only emboldened advocates of socialist ideas in the party, who had been active since the 1920s. But we should remember not to see the world through rose tinted glasses though, Prime Minister Scullin, Lang's Federal Labor contemporary in the ‘30s, opted for very orthodox economic solutions himself in the face of the same crisis.

The other contrast between Lang’s government and contemporary Labor is that Lang had few qualms about favouring supporters, or would be supporters, while in power, as opposed to the softly softly consensus politics of contemporary Labor.

Many of the conservative detractors of government intervention in the economy have always painted the activist approach as some Sovietesque grand monopolistic endeavour that seizes whole sectors of the economy. It’s worth looking at the practice of other Labor governments in the early twentieth century, many before Lang, can still be see today in institutions such as Medibank Private, was a desire to achieve 'fairer' outcomes in the context of the operation of the market. This was usually in the form of a tripartite board or non-monopolistic government backed competitor. The interesting thing about this approach was that the stakeholders that NSW Labor played to were not always the most obvious: and sometimes it faced the dilemma of multiple sympathetic parties with competing interests too. For example, in agriculture, NSW Labor favoured the producers and the consumers and tried to squeeze ‘unproductive’ middle men.

When considering Lang historically, we need to remember to look beyond the volatile domestic political situation and the precedent of his sackingm by Governor Game, the first of two sackings of elected governments in Australian history. We need to remember the international historical context too. At this point the famous ground breaking Swedish and British centre left governments that led later to the rise of the post-war welfare state were only just struggling to consolidate their hold on power. Meanwhile the Soviet Union was still in its first decade, the horrors of collectivisation and other catastrophes not known to the wider world yet. The failure of orthodox economics had also led to the rise of Keynesian economics too during the same period. And after all, Australia did have the first elected left government in the world in the late 19th century - so Lang’s actions were followed all over the world. Though the Depression was heartbreaking for millions of working Australians, Australia had been the richest country in the world at the end of the nineteenth century, and still enjoyed relatively high living standards in the 1920s. Despite the affluence at this time, Australia was still a hotbed of union activity and left wing politics.

The other forgotten aspect of the history of Lang and his government is that it also represents the most successful 'minor' party in Australian history. While Lang and his supporters came very much from the labour mainstream, under the extreme challenges of the Depression, they chose to break with Federal Labor nationally and follow their own course.

Lang's failing, ultimately, came from two things: first his failure to build a broad enough coalition to maintain power. The organised working class was a significant player in 1930s Australia - but union membership, even amongst working class Australians still hovered around the 40% mark. Though in some sectors, like agriculture, it was almost non-existent. The largest economic players, and employers, were in the public sector but most workers worked in small factories in the private sector and identified their employer’s success with their own material well being. His inability to deal with the bugbear of unemployment, a key issue for his core constituents, also didn't help the longevity of his government. This highlights the challenges of a left wing government under capitalism again. While Lang ultimately failed, the fact that he and NSW Labor were courageous enough to try make their utopias a reality sets him apart from the stuff of modern Australian politics.

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above:  Photo of the book under review

Sunday, March 14, 2010

Australia in Afghanistan: Is the war counter-productive?

above: the author, Justin George

Justin George argues that Australia's involvement in the war in Afghanistan is compromising rather than enhancing its national security...  Similar questions face other countries.

by Justin George

With the release of the Australian government's Counter-Terrorism White Paper and its admission that Australia is at risk of 'homegrown' terrorism, the logic behind Australia's involvement in Afghanistan has been severely weakened.

Only months earlier the Rudd government was announcing Australia's continuing commitment to war against the Taliban and Al-Qaida in Afghanistan, reiterating the tired line of 'its better to fight them over there than here' that has been touted as justification for Australia's involvement in a war that it had little need to join.

While Australia joined under John Howard's Liberal government, Kevin Rudd's Labor government has happily continued involvement in the 'good' war in Afghanistan in comparison to the 'bad' war in Iraq. However public support for the Afghanistan campaign has dwindled since it began in 2001 and with this release of the Counter-Terrorism White Paper the war seems to not only have made Australia a target from external groups but it has managed to create threats within Australia through its involvement. However, the White Paper itself while it clearly identifies what the threat is, it does not identify the reasons why such threats have targeted Australia.

By reading between the lines, the White Paper has announced that the Afghanistan war and Australia's wider contribution and decision to join the so called 'War on Terror' has made the country less rather than more safe .

While many of the news reports on the White Paper released have focused on announced heightened security measures to be introduced at airports such as biometric and thumb scanners and threats from a variety of groups in the Middle East and North Africa, none of the reports have examined the more pressing and important question of ‘why?’.

Australia now faces an increased threat from home and abroad: but what connections are there between these threats and Australia's support and involvement for the 'War on Terror', the Afghanistan & Iraq Wars and even its ever growing unilateral support for Israel within the region?

All of these issues have gone largely unreported of late in Australia, yet they remain the key causes that drive and enable fundamentalist groups to recruit and indoctrinate in the areas of conflict and within Australia.

The Counter-Terrorism White Paper's solution to these issues is not one of critically evaluating Australia's role in helping the fuel and create jihadist and resistance activity, but one in which the only response to terrorism seems involve enlarging the powers of Australia's security agencies and border protection schemes.

These concerning measures fail to address the causes of terrorism; merely responding to the symptoms, the violent attacks and attempts that come from a range of issues and conditions of which current Australian foreign policy directly contributes.

With all these factors along with the wider damage to lives and infrastructure in the Middle East, continued involvement by Australia in the 'War on Terror' particularly Afghanistan, seems like the biggest cause of our apparent growing insecurity.

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“extremists who follow a distorted and militant interpretation of Islam that espouses violence as the answer to perceived grievances” (Counter-Terrorism White Paper 2010: Securing Australia,

p.ii);  It is interesting to note within the paper itself, the word 'war' appears only once and not in relation to Australian involvement in the Afghanistan and the famous phrase 'War on Terror' does not appear at all.

Sunday, March 7, 2010

Recovery requires Redistribution

above: the author: Tim Bending

A post-Keynesian take on the causes of the crisis, and on hopes for recovery

"An orderly unwinding of today's massive debts and imbalances will only be possible through a recovery of demand, and one that is not fuelled by debt. "

by Tim Bending, 16 February 2010

The global economic crisis is popularly blamed on the recklessness of bankers, and on the financial de-regulation and loose monetary policy that allowed them to be so reckless. The cause of the crash is found to be human error in medium-term economic management. The characteristic position of the centre-left is therefore to demand tougher controls, to ensure that such an accident doesn't happen again.

If there is a centre-left ideal, in fact, it is perhaps to return to a happier period in Capitalism's history: the postwar years of social-democratic, Keynesian consensus, when unemployment was low and prosperity more widespread. The whole "Anglo-Saxon" model, from Reagan and Thatcher onwards, is seen as an unfortunate deviation from good economic management. We could, and should, just turn back the clock. But could we? And would the re-regulation of finance be enough?

There is a viewpoint that sees the "Golden Age" of capitalism as dependent on a number of conditions that created strong aggregate demand. The origins of the current crisis are seen in the passing of those conditions from the late 1960's to the present, leading to a long period of underlying stagnation, excessive savings and unsustainable bubble economics. Such an interpretation of post-war economic history would lead us to certain conclusions: that re-regulation will not restore demand and is not enough; that the key to restoring demand, and therefore to sustainable recovery, is the creation of an economically fairer society; and that, in the long term, we may face questions about the viability of our current financial system as a tool for managing ageing societies with increasingly saturated consumer markets.

Explaining capitalism's "Golden Age"

This viewpoint is exemplified by a recent book: The Great Financial Crisis: Causes and Consequences by John Bellamy Foster and Fred Magdoff (Monthly Review Press, 2009). It is a collation of articles tracking the latest crisis from 2006 onwards. Their work is based on that of liberal, "post-Keynesian" socialists, Paul Baran, Paul Sweezy and Harry Magdoff, from the 1960's through to the 80's. In 1966, while mainstream economics congratulated itself on having solved the problems of unemployment and instability, Baran and Sweezy argued (in Monopoly Capital) that such periods of relative prosperity are the exception in industrialised capitalist economies, rather than the norm. The "Golden Age" of capitalism – an "Age" that lasted a whole two decades – was created by a conjunction of conditions that sustained strong aggregate demand.

To an extent, these conditions were a hangover from the Great Depression and the Second World War. They sustained both strong state spending, and a what Keynes called a high "propensity to consume", which corresponds to a low relative desire for savings. These conditions included an accumulation of personal savings after the war years, state spending on the cold war, and relative financial security, thanks to economic stability and the welfare state. They also included relatively low income inequality thanks to low unemployment, high relative wages, and welfare state policies. Poor people tend to consume more of their incomes than rich people, so decreasing inequality takes money away from those most likely to save it (the rich) and gives it to those most likely to spend it. The "Golden Age" also followed a long period, since 1929, when consumption had been weak, but in which technology and production techniques advanced considerably. It was a time of lifestyle-changing consumption for ordinary families; a time when they bought their first car, their first suburban house, their first washing machine and television. The big difference people could make to their lives through consumption was arguably an important factor stimulating consumer demand. In Europe and Japan, the postwar years were also a time of massive rebuilding for both firms and households.

The "Golden Age" becomes leaden

In the late 1960's the situation began to deteriorate. The first critical change may have been the gradual saturation of consumer markets. People had their cars and suburban houses. Buying a second car, house, washing machine or television, just doesn't provide the same utility as buying the first one. This is the same reason why rich people tend to save more; the more stuff we have, the less we benefit from buying each new thing. Consumption, as a strategy for achieving happiness, suffers from diminishing returns. Another gradual change, not yet mentioned, is the ageing and increasing life-expectancy of populations in industrialised countries: Saving is encouraged by rising expectations of future retirement and care needs. As the "perfect storm" of demand-stimulating conditions subsided through the 1970's, the leading industrialised economies returned to a state of stagnation, what economist Joan Robinson called the "Leaden Age".

But why should an increasing desire for savings, relative to consumption, lead to lower growth? Foster and Magdoff rather gloss over this, yet it is the key point of contention between Keynes and neo-classical economics. The latter has a habit of assuming that increased savings must be converted into increased productive investment leading to increases in output, employment and demand. But it is not necessary to get into the circular arguments about Say's Law (that "supply creates its own demand") to see that savings can have other places to go, and must not necessarily contribute to growth.

A second possible outlet for savings is hoarding. Stuffing cash under the mattress is more an allegorical problem than a real one, but banks building up reserves is more significant. Theoretically, in the long term, this should have little effect on demand as monetary policy or deflation should be able to restore liquidity, but in the short-term it can hurt demand. Keynes, in fact, really focused on the short-run possibility of excessive savings and falling demand tipping and economy into recession, and the possibility that a market economy may not be able to correct such an imbalance for extended periods of time, as in the Great Depression. Hence he promoted counter-cyclical deficit spending by governments to prevent economies getting too far out of balance in the first place, and to dig them out a of hole when they did. But here we are talking about a long-term decline in the "propensity to consume" which is a different kind of problem. Hoarding does not seem to be the long-term "escape valve" for excessive savings that have built up.

A third possibility is investment that leads to a decline in output. Savings can be invested in increasing productivity to cut costs and protect profits, yet without increasing output. Such investment can absorb savings yet lead to a reduction in employment, demand and even output, fuelling a recessionary spiral.

A fourth is asset price inflation. Savings may be invested speculatively, inflating asset price bubbles (e.g. in real estate or shares). Cash savings are exchanged for a promise of future wealth. This promise turns out to be false for all those holding the assets when the bubble inevitably bursts. Demand can be expected to decline in the future when people find out they are not as rich as they thought they were, and as they increase saving to compensate for the savings they suddenly find they don't have. Asset price inflation thus has the effect of maintaining demand in the present (cash savings are returned into circulation), at the expense of demand in the future.

A fifth is consumer borrowing. This is closely linked to asset price inflation because of the use of assets such as houses as collateral. Lending for consumption converts one person's savings into the disposable income of another. Again, this maintains demand in the present at the expense of demand in the future, and is thus unsustainable. In the future, there must either be a shift from borrowing to debt repayment, impacting future demand, or borrowers must default. Default means that the promises of future wealth bought with cash savings turn out to be false, also impacting future demand.

A last outlet for savings is public borrowing. This is not a direct effect of increasing savings, but a knock-on effect of declining demand. It is almost automatic when tax returns fail to meet expectations, but deliberate when governments attempt to ride-out downturns they hope are merely cyclical. Again, the effect is to bring forward demand from the future.

There is thus no law that more savings will lead to more useful investment and more growth. This attractive scenario is theoretically possible, but arguably increasingly difficult for mature industrialised economies. It depends on growth being consistently high enough to absorb rising savings, irrespective of the rate of technological advance and population growth. There is little room for external shocks like the oil shocks of the 1970's. It also depends on a high degree of business confidence; "entrepreneurs" must play a "prisoner's dilemma" game in which they must base their decisions upon a prediction of what other entrepreneurs will do. In this game, the best outcome for all players occurs when all bet on growing demand, and therefore invest in expanding output. Yet in betting on such growth, players also risk ending up with the worst possible outcome: investing in expansion just before a slump. The outcome all depends on what the other players do. In this context, it is quite rational for all players to bet on decline and invest defensively in cutting costs and protecting profits without expanding output.

Demand is borrowed from the future

So what actually happened? Foster and Magdoff are at their best in tracking the long-term trends that followed, focused on the US. The key trend, taking-off in the 1980's, has been a massive accumulation of debt by households, firms, financial institutions and (in the case of the US) government. Total outstanding debt in the US rose from 154% of GDP in 1970, to 373%, or nearly $53 trillion, at its latest peak in Q1 2009 (, table L1;, table B-1).

This trend has been accompanied by the rise of the FIRE sector (Finance, Insurance and Real Estate). In the decade of the 1960's in the US, the financial sector accounted for an average 15% of domestic corporate profits. The 2000-2008 average was 35%, peaking at 43.8% (, table B-91). This period has also seen massive asset price inflation. The evidence for the systematic, unsustainable over-valuation of assets is the worsening series of crises. We can list the stock market crash of 1987, the US Savings and Loans Crisis (1989-91), the Asian financial crisis (1997-8), the crash (2000) and, of course, the "sub-prime" crisis. Each time, so far, governments and central banks have been able to play their function as lender of last resort and have re-floated/inflated the markets, principally through a monetary policy of providing ever cheaper credit.

It is clear that the leading industrialised economies have suffered from a persistent, long-term excess of savings over and above the amount that the weakly growing "real economy" has been able to absorb. Instead, these savings have fuelled asset price inflation and consumer borrowing. The effects have been felt differently in different countries. This has probably been partly due to differing and evolving cultural attitudes to saving and indebtedness. In the United States, the UK, and other countries like Spain and Ireland, this flood of excess savings has fuelled a debt-driven consumer boom. The rich in these countries have got a lot richer and have saved like never before, while well-off professionals have saved heavily for retirement. Meanwhile, lower income groups – groups who are still struggling with life-changing consumption milestones like owning your own home – have been encouraged to borrow to an unprecedented degree. Levels of personal debts that would have been culturally unacceptable as recently as the 1970's have become an everyday fact of life.

In Japan, by contrast, inflated markets in real-estate and shares burst terminally in the early 1990's. Since then, Japan has been mired in stagnation, with the state unable to curb savings and stimulate demand. In Germany, bubble markets never really got off the ground. Both Germany and Japan have suffered from persistent high domestic savings and weak domestic demand, and have only achieved moderate growth through export to the consumer-boom countries like the US. China is more paradoxical. Its level of development would suggest unsaturated consumer markets, yet development has been very unequal and its culture, like that of Germany and Japan, seems to promote savings. China, like Germany and Japan, has weak domestic demand, a high savings rate and export-led growth. All three have lent a large proportion of their savings to the US and other trade-deficit countries. The US and UK have seemed obsessed with consumption. Indeed, there was a consumption-led boom. But nonetheless, this consumption has simply been fuelled by the excessive savings of others. Demand has been high, but it has been demand brought forward from the future.

These trends are obviously unsustainable. So far, governments and central banks have always been able to
prevent collapse, but with interest rates at rock-bottom and unprecedented quantitative easing failing to provide much stimulus to the real economy, monetary policy appears to be running out of ammunition. The last remaining option for governments is deficit spending, though some, like Greece, are already facing difficulties financing their deficits. It remains to be seen how long markets will finance the deficits of the major industrial economies.

What is to be done?

If this viewpoint is correct, it will have three main implications:

1. Re-regulation is not enough. The current crisis is not a simple result of policy errors. It was not caused by the behaviour of financial institutions or the de-regulation of what they do. I think it is safe to suppose that this de-regulation took place because it was in the short-term interest of politicians and their backers to facilitate the emerging trends, with little understanding of the long-term consequences. Tighter controls of the financial sector, including measures to curb asset price inflation, would be desirable. They might increase the likelihood that future savings are invested in the real economy by reining in the alternatives posed by speculation. But even this would do nothing to ensure that the real economy offers attractive investment opportunities. Until that happens, non-debt-dependent growth will be elusive.

2. Recovery requires redistribution. An orderly unwinding of today's massive debts and imbalances will only be possible through a recovery of demand, and one that is not fuelled by debt. For three decades, demand has been stimulated by huge transfers of wealth, both from the rich to the poor and from savings-oriented countries to consumption-oriented ones. The problem is that the money must be paid back. But demand can just as well be stimulated by a redistribution of wealth that does not need to be paid back. While we cannot fully re-create the conditions that helped create capitalism's "Golden Age", we could turn back the clock on the growing economic inequality of recent decades. The tools for doing this include legislation (minimum wage, caps on bonuses, etc.) and a more heavily redistributive fiscal system. The latter could also seek to stimulate demand through state spending on infrastructure (e.g. a Green New Deal) and through seeking to create greater financial security in the face of old age, unemployment and ill-health, reducing the desire for personal savings. It needs to be emphasised that such measures cannot be financed by public borrowing, but only by more progressive taxation. We are not talking about a cyclical problem to be addressed by anti-cyclical deficit spending, but a structural problem requiring a structural response.

3. In the face of ageing populations and saturated markets, a more radical rethink may be needed. A fairer version of capitalism might yet breath life into the moribund economies of the West, but for how long? It would begin by helping the poor to catch up on consumption, but would end up making us all richer and all more inclined to save. The problem of ageing societies will not go away. It is not clear that our current financial system is well suited to managing this situation.

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