There is a nip in the London air and with it an increased sense of gloom. The unemployment figure in the United Kingdom is now 2.62 million and over one million youth (16-24 years) are out of job. Despite the personal tragedy of the jobless people, politicking continues. David Cameron and his team blame the Eurozone crisis for the plight in Britain, while Labour leader Ed Miliband terms the path followed by the government as flawed. Whatever the reason, there is no denying that millions of Britons are facing a tough time and the policymakers have no clue to get over the crisis.
When I first arrived in Britain over 12 years ago, those were the bright days of neoliberalism. The Thatcher days of high inflation and unemployment were gone. The benefits of free trade and globalisation were reaching fruition. Britain was getting things cheap from all around the world. Walking along any London street you would bump into an Indian techie, who was in town to meet the ever increasing technological demand of London, the financial capital of the world.
Under the eyes of New Labour, the business districts of London thrived but the signs of decadence in the manufacturing heartland of Britain were overlooked. As factories closed one after another in the Midlands, the then Chancellor of the Exchequer Gordon Brown carried out road shows in The City, encouraging speculation. Risk averse were considered to be outdated and trade was the mantra as manufacturing was left with the dusty world of the developing countries.
There was a sense of global merrymaking then. Indian software companies rejoiced as their business increased manifold, the manufacturers of garments in countries like Bangladesh plunged into new ventures as Primark provided cheap shirts in British high streets, The values of western modernity were muted for profits as the garment worker in a dingy room in Bangladesh sweated all day in exploitation to deliver the fruits of neoliberalism.
We were all happy then. Money was in the air. The parents and relations of people working abroad were exposed to foreign trips, western lifestyle and gadgets. Foreign cosmetics and gifts were presented to friends and relations at a much cheaper price than what was available back home. That was the day when capitalism was blooming at its best. It was spring time of financialisation. Much of the world overlooked manufacturing with the hope that financialisation would take care of all the global demands. Urbanisation was the order of the day, as if we can do without villages.
"The days of boom and the bust are over", remarked an arrogant Gordon Brown as if a new form of capitalism had unfolded. But the good days were soon to be over.
The global economy could still survive the bust of the dotcom bubble but the sub-prime mortgage was too big a burden for the American banks. The instrument which was used to justify the validity of neoliberalism, to show that even the Spanish Americans and Afro Caribbean, who are at the lower strata of the economic ladder in the US, had a stake in the system, collapsed like a pack of cards. Financial waste, as bad assets were termed, spread like wild fire and the mighty western world stood powerless.
We are yet to get over the crisis. Look at what is happening in Spain, Greece, Italy and the worst of all in Britain. People have been jobless for years; fresh graduates are languishing out of jobs after spending a fortune in higher education. The social fabric is cracking leading to economic consequences like the riots witnessed during the summer. Yet there is no solution in sight.
John Maynard Keynes provided the solution to the Great Depression of the 1930s. Could he provide an answer to the economic mess this time round and still be alive in the long run? Peter Clarke claims "Yes" but there are doubts about the Keynsian prescription of spending out of the crisis. Merely creating effective demand is not good enough. The cheap Chinese products are there to capitalise. China already pays for the huge budget deficits in the US and now there is call for them to bail out the crisis ridden Europe. Adam Smith has finally settled in Beijing but only after watching his economic doctrine of laissez faire crumble back home.
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