Daniel Cohen: A Crisis That Doesn't Settle the Problems It's Created
September 15, 2008, investment bank Lehman Brothers went bankrupt. As though prostrated by heart attack, the global economy collapsed. Even in 1929, the fall was less stark. A year has gone by. To put it briefly: governments "got the job done." The financial system was saved; the drop in demand was softened by public deficits. Certainly, the good results recorded in the second quarter (return to positive growth in France, Germany, Japan...) remain fragile: the expected rise in unemployment, the exhaustion of the impact of cash for clunkers promise some unpleasant surprises in store...
Yet it seems that the 1929 crisis will not repeat itself. So good news. But there is bad news: the present crisis is not a bit like that of 1929. It's not a Twentieth Century crisis lost in the Twenty-first Century: it's the first crisis of globalization. And from this standpoint, none of the problems it has created have been settled.
To pick up where I left off: the present crisis was born from two key ruptures. The first dates to the 1980s: that was the financial revolution that put the Stock Exchange in control of companies. It instituted a new management method within companies. Firms ceased to be organizations in the sense that was understood in the 1950s and 1960s, promoting long careers and employee loyalty. From then on, they have targeted immediate efficiency. The bonus took the place of seniority as the method for managing human resources. As Maya Beauvallet magnificently demonstrated in her book, "Les Stratégies absurdes" [Ridiculous Strategies] (Le Seuil), the imperatives of immediate performance tend to cannibalize all others. The concern for work well done, for loyalty to the company disappear, all that counts is the immediate goal, whatever pathologies result from that....
Globalization is the second rupture that shook the world. It allows emerging countries to industrialize, which produces two opposing effects: it reduces the price of industrial goods and raises the price of raw materials. Thanks to globalization, people pay ever less for their beloved flat screen and their iPods, and ever more for their basic expenditures: heating, food, transportation. The global economy advances by stepping on the accelerator and the break at the same time. Abrupt tremors have become inevitable.
In the 1970s, the rise in oil prices broke growth, engendering a new evil: stagflation. Employees demanded and obtained salary increases to compensate for the increase in energy prices, provoking an acceleration of inflation. In the 2000s, inflation has remained under control. The reduction in industrial goods prices and the erosion of employees' power to negotiate their salaries have broken salary inflation. Oil surpluses have not been covered by inflation as in the 1970s; they have wandered around within the global economy seeking remunerative investment...
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Yet it seems that the 1929 crisis will not repeat itself. So good news. But there is bad news: the present crisis is not a bit like that of 1929. It's not a Twentieth Century crisis lost in the Twenty-first Century: it's the first crisis of globalization. And from this standpoint, none of the problems it has created have been settled.
To pick up where I left off: the present crisis was born from two key ruptures. The first dates to the 1980s: that was the financial revolution that put the Stock Exchange in control of companies. It instituted a new management method within companies. Firms ceased to be organizations in the sense that was understood in the 1950s and 1960s, promoting long careers and employee loyalty. From then on, they have targeted immediate efficiency. The bonus took the place of seniority as the method for managing human resources. As Maya Beauvallet magnificently demonstrated in her book, "Les Stratégies absurdes" [Ridiculous Strategies] (Le Seuil), the imperatives of immediate performance tend to cannibalize all others. The concern for work well done, for loyalty to the company disappear, all that counts is the immediate goal, whatever pathologies result from that....
Globalization is the second rupture that shook the world. It allows emerging countries to industrialize, which produces two opposing effects: it reduces the price of industrial goods and raises the price of raw materials. Thanks to globalization, people pay ever less for their beloved flat screen and their iPods, and ever more for their basic expenditures: heating, food, transportation. The global economy advances by stepping on the accelerator and the break at the same time. Abrupt tremors have become inevitable.
In the 1970s, the rise in oil prices broke growth, engendering a new evil: stagflation. Employees demanded and obtained salary increases to compensate for the increase in energy prices, provoking an acceleration of inflation. In the 2000s, inflation has remained under control. The reduction in industrial goods prices and the erosion of employees' power to negotiate their salaries have broken salary inflation. Oil surpluses have not been covered by inflation as in the 1970s; they have wandered around within the global economy seeking remunerative investment...