The Crisis of Global Capitalism: Towards a New Economic Culture?

Professor Manuel Castells draws on arguments from his book Communication Power in discussing the structural causes and implications of the 2008 economic crisis, and in claiming that we are moving, without much understanding, towards a new form of global capitalism. The global crisis of capitalism that exploded in the Fall of 2008 is the most serious economic crisis since the Great Depression of the 1930s. It is rooted in the volatility of interdependent global financial markets resulting from deregulation, liberalization, and use of new communication and financial technologies. It has brought to a halt the period of growth largely based on consumer demand facilitated by easy credit. It has exposed the massive endebtedness of the leading capitalist governments, and highlighted the shift of economic power towards the Asian Pacific. The most immediate result of the crisis is the return of state intervention in the management of the economy, as the ideological belief in the capacity of financial markets for self-regulation has been shattered by the financial collapse. A new round of regulation is in the making but faces the difficult task of regulating global markets in the absence of a global regulator. In the Fall of 2009, the slowing of economic deterioration in the West and the continuation of Asian growth appear to alleviate the fears of a global depression. However, much of the current stabilization is due to unprecedented injection of public spending in the financial markets and in the economy at large, both in the West and in the East. The structural causes of the crisis are not being treated. It appears that we are moving, without much understanding, towards a new form of global capitalism in which the Washington consensus is being replaced by the London consensus.