Academic journal article Journal of Community Positive Practices

Social Economy as a Possible Solution for the Current World Economic Crisis

Academic journal article Journal of Community Positive Practices

Social Economy as a Possible Solution for the Current World Economic Crisis

Article excerpt

Abstract: In this paper, the authors aim at realizing a comparative analysis between the Great Economic Depression of the period 1929-1933 and the global economic crisis beginning in 2008. Another objective of this paper is to highlight the causality of economic crises and the way of responding to this economic scourge that affects most countries in the capitalist world. Special attention is given to the analysis of the conception of John Maynard Keynes, the great British economist who dedicated a specialt treaty to the analysis of the big economic depression. The last part of the paper is focused on solutions for the current economic crisis and especially on social economy as a possible response to these economic difficulties.

Keywords: Great Depression; Keynes; Krugman; Derivative; Social Economy

1. Introduction

From 2008 up to the present, we have been witnessing an economic phenomenon which has shaken capitalism and which has serious economic, political and social consequences. First, panic on financial markets, media hysteria, rising unemployment, loss of homes by millions of people, chain bankruptcies, anti-Wall Street demonstrations in the United States, anti-government street protests and anti EU street protests in many European countries, a debt crisis of some countries in Southern Europe and Central Eastern Europe...We wonder how such consequences were possible. How can we stop this crisis? When will we overcome it? Is this crisis a sign of the decline of capitalism? Will it prove Marx's prophecy? We shall try to answer all these questions, which is not an easy undertaking.

First of all, we must notice an interesting aspect. As Robert Heilbroner stated, Karl Marx sentenced to death capitalism in 1848, the publication year of the famous pamphlet The Manifesto of the Communist Party. The capitalist system was declared as suffering from an incurable disease and although the fateful date was not announced, it was assumed that the agony was close enough for direct relatives - Communists - to avidly wait for the last breath that was to announce their powerful legacy. The vigil had begun even before the appearance in 1867 of Capital and with each spurt of speculative fever or with each industrial depression, the presumptive heirs rushed to the bedside of the dying, telling each other that the final revolution would occur soon...But the system did not die (Heilbroner, 2005: 195). Probably, if we keep the thread of Heilbroner's idea, the system would not die this time either. But this crisis is likely to lead to multiple changes in the capitalist system and in large corporations. We can ask ourselves, is contemporary capitalism the best of all possible worlds? Probably not, but it's equally likely that the system waits for a new Keynes to save it from perishing once again.

In order to understand this economic phenomenon, we must return to the past, to the crisis of overproduction from 1929-1933, because, according to some economists, the two major crises have a number of common elements.

Before the Great Depression of the interwar period, there were visible signs of prosperity everywhere and especially in the United States. Towards the end of the 1920s, America had found jobs for 45 million of its citizens, to whom it paid about 77 billion dollars in wages, rents, profits and interest, a stream of income that the world had never before seen. With God's help, Herbert Hoover, President of the United States during the Great Depression, was saying with sincere conviction, poverty will soon be banished from the country. In support of his prophecy, there was the undeniable fact that the average American family lived better, ate better, dressed better and enjoyed the pleasures of life more than any average family until then in the history of the world. John Raskob, chairman of the U.S. Democratic Party, noted that everyone has the duty to be rich... if an ordinary man saves $15 a week and invests in good common shares, after twenty years he will have at least $80,000 and an investment income of about $400 per month1. …

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