Book contents
- Frontmatter
- Contents
- List of figures and tables
- Notes on contributors
- Acknowledgements
- one Varieties of crisis
- two The economic crisis and paradigm change
- three From financial crisis to fiscal crisis
- four Credit crunch, inequality and social policy
- five Global social policy responses to the economic crisis
- six Poverty, the crisis and social policy responses developing countries in developing countries
- seven South Korea after the 1997 economic crisis: a ‘paradigm shift’?
- eight China's response to crisis: what role for social policy?
- nine Tiptoeing through crisis? Re-evaluating the German social model in light of the global recession
- ten Ireland and the impact of the economic crisis: upholding the dominant policy paradigm
- eleven Waving not drowning: Iceland, kreppan and alternative social policy futures
- twelve Experiences from two financial crises in the Nordic welfare states: 1990-93 and 2008-10 compared
- thirteen Social policy and the recent economic crisis in Canada and the United States
- fourteen From economic crisis to a new age of austerity: the UK
- fifteen Responding to the challenges: some concluding remarks on welfare futures in changed circumstances
- Bibliography
- Index
three - From financial crisis to fiscal crisis
Published online by Cambridge University Press: 07 September 2022
- Frontmatter
- Contents
- List of figures and tables
- Notes on contributors
- Acknowledgements
- one Varieties of crisis
- two The economic crisis and paradigm change
- three From financial crisis to fiscal crisis
- four Credit crunch, inequality and social policy
- five Global social policy responses to the economic crisis
- six Poverty, the crisis and social policy responses developing countries in developing countries
- seven South Korea after the 1997 economic crisis: a ‘paradigm shift’?
- eight China's response to crisis: what role for social policy?
- nine Tiptoeing through crisis? Re-evaluating the German social model in light of the global recession
- ten Ireland and the impact of the economic crisis: upholding the dominant policy paradigm
- eleven Waving not drowning: Iceland, kreppan and alternative social policy futures
- twelve Experiences from two financial crises in the Nordic welfare states: 1990-93 and 2008-10 compared
- thirteen Social policy and the recent economic crisis in Canada and the United States
- fourteen From economic crisis to a new age of austerity: the UK
- fifteen Responding to the challenges: some concluding remarks on welfare futures in changed circumstances
- Bibliography
- Index
Summary
The financial crash of 2008 and the ensuing global recession have been widely recognised as the most decisive capitalist crisis since the Great Depression of the 1930s. The scale of the crash, the speed in which the circuits of finance capital unravelled, its origins within the heartlands of Anglo-American capital, the synchronised global slump in output and the gigantic scale of government reactions, marked it apart from all other post-war financial crises. Take just one authoritative real-time commentator, Martin Wolf (2009) of the Financial Times, and just one of his many interventions on the transformation in capitalism that will surely result:
[T]he glory days of financial capital are behind it for decades, the hegemonic model of the market economy is past, globalisation may be fatally destabilised by present and future global imbalances, and the prestige of the US is damaged. The state has been strengthened, and decisive action by policymakers has staved off a severe global depression, but in the process states are becoming bankrupt. Moreover, there are major uncertainties, ‘things we cannot know’: how far unprecedented levels of indebtedness and falling net worth will permanently depress Western consumption spending; how long current fiscal deficits can continue before interest rates must rise; can central banks engineer a non-inflationary exit from the bank and financial rescues they have implemented?
This list indicates a systemic crisis of capitalism, and even this does not touch on the subsequent recession in the global economy – the most serious since the Second World War.
This chapter explores the consequences of the financial crisis and its aftermaths for the role of welfare states and fiscal regimes – the ways in which the financial crisis has been transformed into a fiscal crisis of the welfare state. It begins in the first section by providing a theoretical sketch, offering an endogenous explanation of the crisis in terms of the inner contradictions of the previous phase of capitalism rather than simply in terms of an exogenous shock or of such factors as ‘irrational exuberance’. The second section details the reactions of and impacts on governments and public finances. The third section briefly describes the subsequent reactions of governments to fears of rising public debts, the switch to fiscal tightening and the targeting of welfare expenditures.
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- Social Policy in Challenging TimesEconomic Crisis and Welfare Systems, pp. 49 - 64Publisher: Bristol University PressPrint publication year: 2011
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