Just as there are benefits of appreciating our economic situation in terms of a long-run historical perspective, it’s also wise to appreciate our economic situation as just one aspect of our whole political situation. I’ve been thinking about this in light of recent events and reading parts of Tony Judt’s latest book, Reappraisals: Reflections on the Forgotten Twentieth Century:
The paradox, of course, is that the very success of the mixed-economy welfare states, in providing the social stability and ideological demobilization which made possible the prosperity of the past half century, has led a younger political generation to take that same stability and ideological quiescence for granted and demand the elimination of the “impediment” of the taxing, regulating, and generally interfering state. Whether the economic case for this is as secure as it now appears — whether regulation and social provision were truly an impediment to “growth” and “efficiency” and not perhaps their facilitating condition — is debatable. But what is striking is how far we have lost the capacity even to conceive of public policy beyond a narrowly construed economism. We have forgotten how to think politically. [p. 11]
I’m going to make a darkly ironic suggestion: A good reason not to get irrational and panicky about the financial mess is there is much, much more to worry about. There are signs that everything could go to shit – and I don’t just mean the “real economy,” consumer confidence, employment (not that those aren’t going to shit too), I mean geopolitical stability, the war on terror, and what-have-you.
In other words, instead of freaking out about “the next Great Depression,” try to wrap your brain around “the next Great Depression and the nest World War wrapped up into one.” And we could still do much worse.
Let me be clear. The last thing I want to do is stir up fears. I genuinely don’t believe there’ll be another World War, nor another Great Depression — at least not if we act and think appropriately. I’m not saying bad things will certainly befall our civilization, but that’s no reason to assume that some bad things won’t happen for sure.
We are, let’s not forget, engaged in one or two fairly long wars, and as I noted a couple of days ago, Pakistan is going through some turmoil that threatens to make things even more complicated and deadly.
And here’s something else to add to the list of pan-century parallels: Norman Angell’s Great Illusion, first published in 1909:
According to John Keegan “Europe in the summer of 1914 enjoyed a peaceful productivity so dependent on international exchange and co-operation that a belief in the impossibility of a general war seemed the most conventional of wisdoms. In 1910 an analysis of prevailing economic interdependence, The Great Illusion, had become a best-seller; its author Norman Angell had demonstrated, to the satisfaction of almost all informed opinion, that the disruption of international credit inevitably to be caused by war would either deter its outbreak or bring it speedily to an end.” [Wikipedia]
I hadn’t realized until revisiting it that Angell’s thesis was specifically that it was the avoidance of credit disruption that would prevent war. I had muddled it with Thomas Friedman’s Golden Arches Theory of Conflict Prevention, which was clearly debunked about nine or ten weeks ago (how quickly we’ve moved on!) by the conflictin South Ossetia.
It’s more than a little disconcerting to reflect on Angell and then consider the implications of credit already being deeply disrupted…
Before you say, “No, that can’t happen,” stop and think about how you would have bet 3 months ago on the possibility of the investment banking industry being decimated and government capital being used in the U.K., the U.S. — and now the Netherlands – among other countries, to sustain the viability of their banks, markets, and their economic systems as a whole.
At times I worry that my worries get out of hand. It doesn’t do much good to stir up unfounded fears. But then again, it may be even worse not to be prepared for legitimate threats. It’s only by talking about these things that we can figure out what’s legitimate and what isn’t.
It isn’t totally valid to suggest that the war in Iraq is merely going through a quiet period and it’ll get worse again. It isn’t totally valid to suggest that the war in Afghanistan could go on forever and the war on terror is unwinnable. It isn’t totally valid to suggest there might be a major war within a few years involving some combination of the U.S., China, and Russia.
But on the other hand, it isn’t valid at all to suggest those things are impossible and the relative peace we enjoy right now will go on forever. History shows that prosperity and peace require both hard work and luck. Even if things continued to degenerate to the point that “the next Great Depression and the next World War wrapped into one” seem inevitable, I’d still work my ass off to make things better.
History tells us something else we can’t forget: prosperity and peace are worth the effort.
