The Economic Crisis of the First World

By Harrigan, Anthony | The Journal of Social, Political, and Economic Studies, Fall 1995 | Go to article overview
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The Economic Crisis of the First World

Harrigan, Anthony, The Journal of Social, Political, and Economic Studies

The Economic Crisis of the First World(1)

When the Soviet Union imploded, the nations of the First World -- the United States among them -- envisioned smooth sailing into the 21st century. There was much talk of a huge "peace dividend." This optimistic vision of what lay ahead has been severely eroded, if not shattered, by a variety of developments, including strife in Bosnia, Somalia, Haiti, and even within the Russian Federation. At the same time, there have been ominous economic problems, conflicts and challenges -- the near economic wars, the on-going economic deterioration of Africa, crushing economic problems within the former Soviet Union, the economic stagnation of much of Western Europe, the Mexican debt crisis, high unemployment in Britain, France, and other allied nations, and deindustrialization and underemployment in the United States.

Indeed there are several crises facing the First World including a moral crisis and a threatening crisis with rogue states with ambitious military agendas that aim at becoming nuclear-armed states. However, in this paper let us consider the economic crisis that in which the First World finds itself. In the United States, tremendous attention is devoted to economic issues, to topical issues, that is -- tax and interest rates, housing starts, and similar matters. And a superficial prosperity in the United States causes us to divert attention from the long-range, deeper problems and threats. It is important to remember that in 1928 economists, and political and business leaders, didn't consider the possibility that America was on the brink of an economic collapse that would produce a deep depression until America entered World War II. Have we a clearer vision today?

Here and there one finds students of the world economy who warn of another enormous economic crisis with grim implications for First World societies and political institutions. One of these farsighted economic observers is Sir James Goldsmith, the Franco-British financier. Two years ago, he began to voice ominous warnings. He said that in the case of Western Europe, with some 20 percent unemployed, "the critical mass is here for implosion and social upheaval and political instability on a global scale." He predicted that the Bolshevik revolution of 1917 will pale into insignificance when compared to this upheaval. And the situation in Western Europe has worsened since he issued that warning.

Now the United States hasn't this kind of unemployment problem, except in its inner cities. The overall unemployment rate for the nation as a whole has risen a bit, but underemployment has risen on a colossal scale. Millions of Americans have jobs that don't provide sufficient income to support a family -- even with husband and wife working. And many of these millions don't have the benefits associated with the good jobs that existed in the decades after World War II.

Dr. Edward M. Lutwak of the Center for Strategic and International Studies in Washington has analyzed this problem. Dr. Lutwak has observed:

The problem in question is the unprecedented sense of personal economic insecurity that has rather suddenly become the central phenomenon of life in America, not only for the notoriously endangered species of corporate middle managers, prime targets of today's fashionable downsizing and re-engineering, but for virtually all working Americans except tenured civil servants -- whose security is duly resented.

The reasons for the economic insecurity felt by millions of Americans are numerous and complex. A key element is exploding technology which has made many jobs as out-of-date as buggy-making. And this has made much employment temporary in nature, thereby endangering working people and their families who don't have advanced technical skills or the education to obtain such. But there are other powerful forces at work: and these forces have

tremendous bearing on Europeans as well as Americans.

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