I heard this author speaking on a podcast (can’t remember which one) where he highlighted parallels between the 1930s and the current situation. Certainly by the subtitles that surround the main title (‘From the Fractured 1930s to Today’s Crisis Culture’ and ‘How to Avoid a World on Fire’), I expected more of a historical approach than an economic one. I didn’t realize that he is actually Macquarie Group’s investment strategist, and I may have approached the book differently had I known that.
This is a historical approach, relying on a generational approach (i.e. the idea that different generational cohorts behave particular ways) but it didn’t start with the 1930s. Instead his argument starts more with the Baby Boomers and the consensus of the late 1940s to early 1970 that the government was there to provide guardrails against chaos. Certainly there was conformity and repression, and life wasn’t as sunny for minority groups, but it led to two decades of economic progress and the rebuilding of societies that had been destroyed during World War II.
However, Baby Boomers did not have the experience of two World Wars and a Depression, and could not understand their parent’s acquiescence to stricter societal and moral rules as part of the ‘guardrails’ of the post war decades. Protests broke out and demands were made for ‘freedom’; economies were hit by stagflation in the 1970s, and by the early 1980s there was a new consensus that the private sector was more efficient, leading to privatization and a more mobile job market. This consensus lasted for more than two decades, until it was challenged by the Global Financial Crisis in 2008-10, followed by the COVID pandemic.
What I expected this book to be- a comparison of the 1930s with today- does not appear until half-way through. He identifies a number of similarities:
- Both the 1930s and the last 15 years have witnessed financial crises and recessions at a time when income and wealth inequalities were at historically high levels
- In both periods, investors and governments were haunted by the prospect of stagnation- that it would be impossible to grow and recover.
- The 1930s witnessed significant societal polarization- Hitler, Franco, Mussolini, Stalin Mao and Huey Long- just as we are witnessing today
- Culture and race wars were present in both. There were and are calls for a return to ‘traditional values’ and, just as today, freedom of speech was/ is contested.
- During the 1930s the world was divided into camps (i.e. democracies vs. fascists and communists). Today, for the first time since then, there are radically different alternative political, economic and social models being proposed to replace democracy
- Both in the 1930s, America’s refusal to join the League of Nations undermined its legitimacy, and it ceased to exist. Today, the United Nations is likewise rendered impotent by larger powers
- Both the 1930s and the last 15 years have been turning points. The 1930s marked the beginning of a major phase of government intervention which would last nearly 40 years. In the last 15 years we have seen the breakdown of neoliberalism, but no one really knows what is coming next.
He speaks of the Fujiwara effect, a meteorological phenomenon where two nearby cyclones orbit around a common center, often leading to one storm absorbing the other or changing their paths. He applies this term to our current situation, where Financialization and the Information Revolution, super-charged by externalities like demographics and climate (p. 148) will disrupt our economies, societies and politics.
He cites economic Dani Rodrik’s concept of the ‘Political Trilemma of the World Economy’ that argues that it is not possible to have deep economic integration (i.e. globalization), nation-states and local democracy. You can have two of the three, but not all three together.
He suggests that the Chinese economy might stagnate, as Japan’s did from the 1970s onwards, and that Russia may become more dependent on China, even though that will be resisted in the Kremlin. African nations, with their very young populations will not be able to follow the path of trade and manufacturing out of the Third World because of technological change. Migration will be impossible to stop, with the best option of a higher investment of First World money into Africa to blunt the desire for mobility.
There’s an element of prediction that runs through this book. He predicts that the next decade will be dire indeed, but that by the 2040s as the Millenials and Gen Z take political power, there will be a turn to an enlightened form of communism, with more government intervention and a renewed role for trade unions. However, he notes, both Gen Z and Millenials are more likely to support extreme political parties. Paradoxically, they will want government to provide guardrails again, while distrusting governments and institutions.
This book was published prior to Trump’s Second Coming, and it reinforced for me just how disruptive this second term has been. He seems to have in this book a now-discredited faith that the United States would not abandon democracy- something I’m not so sure of.
The book is far more economic-y than I anticipated, with many tables and figures. I did tire of him referring back to his previous book, and it did have just a touch of the thesis about it with quite heavy-handed scaffolding of chapters, introductions and conclusions. It hasn’t been particularly well edited in terms of grammar, and I wondered (but have no way of knowing) whether the facts and figures were likewise poorly edited- I should hope that they are not. I regretted the lack of an index, although it does have footnotes.
I’m not the right market for this book, given my aversion to numbers in any form. However, I did enjoy the historical and generational aspects of the book. I am fearful enough of the next decade, and it’s a little bit reassuring that perhaps there’s some sense of calm at the end of that… should I live long enough to see it. My children’s children will.
My rating: 7/10
Sourced from: Yarra Plenty Regional Library
Read because: I think that historians have much to contribute to how we look at the present day
The Resident Judge of Port Phillip 