Relaunching Western Economies: The Case for Regulating Financial Markets

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Across all classes and in all countries in the West, people feel a growing sense of being at risk. The shape of this "risk shock" varies, obviously, given the wide variety of welfare and employment structures among these countries, but the phenomenon emerges everywhere in one form or another. There is a process of marginalization and social exclusion in train that is reproducing some of the worst features of the nineteenth century in terms of both inequality and poverty. The United States has had rising income inequality since the early 1970s, and in Western Europe structural unemployment has forced a reconsideration of some aspects of the welfare state. All Western nations have suffered from a slowdown in growth. There have therefore been calls for an activist response -- both for more international policy coordination and for increased spending on education and worker training at home.

This approach is rooted in a proper concern for the dangerous social potential of current trends and represents an effort to face up to the problems. Yet while it is ambitious, in some respects it would not be ambitious enough. For what is driving the current process is now intrinsic to capitalism, and its solution requires something more dramatic. That is not to argue for old-fashioned, unworkable attempts at central planning and government ownership, but it is to insist that the economics of Keynes be revisited and updated in contemporary conditions. Western countries must attack the forces driving the current world economic order rather than simply manage their consequences.