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Abstract:
Counting Backwards from the US Financial Crisis: On Economists, the Protective State, and “Not Using the Power of the Crown”
“As a scholar of the Great Depression, I honestly believe that September and October of 2008 was the worst financial crisis in global history, including the Great Depression,” Bernanke remarked in 2014, his last year as chairman of the Federal Reserve. By the time the crisis was deemed over, more than 300 banks had failed, 10 million houses had entered foreclosure, roughly 8 million jobs had disappeared, and over 20 percent of Americans had found themselves with a negative net worth. It has often been argued that the crisis occurred because the US government, guided by neoliberal ideas, pursued deregulatory policies, creating an environment in which financial institutions were able to run amok and take excessive risks until they inevitably crashed and burned. This narrative is not flat-out wrong, especially from a bird’s eye view, but it is incomplete in some ways and misleading in others. In this lecture, I discuss which ideas, precisely, shaped the government’s approach to risk regulation during the last quarter of the twentieth century as financialization was underway, and how they gained political traction under successive administrations beginning in the 1970s, ultimately casting the state in economistic terms.
